Poultry holds on to top spot, but issues remain

By Wally Northway/Mississippi Business Journal

JACKSON — It looks as if poultry will easily hold on to the top spot among Mississippi’s agriculture commodities as the industry’s value in 2010 is expected to show another increase — 8 percent compared to 2009.

This would mark the 14th consecutive year that poultry ranks first among agriculture commodities.

However, 2011 is shaping up to be a year of challenges. Input costs are expected to rise, sticking points remain in the recent lifting of the ban on U.S. poultry by Russia and a dispute between the industry and the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA) grows more heated by the day.

“I would give 2010 a solid B, maybe B-plus,” said Mark Leggett, president of the Mississippi Poultry Association

The estimated value of the state’s poultry industry in 2010, calculated by researchers at the Mississippi State University Extension Service, was about $2.5 billion. That is more than double Mississippi’s No. 2 commodity, forestry ($1.08 billion), and is more than the combined value of soybeans, corn, cotton, rice, catfish and cattle.

Breaking that figure down, the state’s total broiler value is forecast at $2.3 billion, eggs at $178 million and chickens at $5 million.

According to numbers from the MPA, the state’s poultry industry employs in excess of 24,000 workers directly and creates another 23,000 indirect jobs.

Mississippi, which is also home to the nation’s largest table egg company, Cal-Maine Foods Inc. in Jackson, has nearly 2,000 poultry growers/producers operating approximately 8,000 poultry houses.

More than 10 percent of the nation’s poultry supply comes from the Magnolia State. Mississippi is fourth in the nation in broilers produced at 853 million, totaling nearly five billion pounds.

“The increase in poultry value stems from all segments of the industry,” said agricultural economist John Michael Riley with the Extension Service. “Broiler production increased almost $175 million, up a little more than 8 percent from 2009. That segment saw an increase each month from Nov. 2009 to Nov. 2010. Egg production had an increase of just under $19 million, which is a 12 percent increase from 2009.”

The wobbly economy has actually buoyed the industry as consumers look for inexpensive sources of protein.

Danny Thornton, Extension poultry specialist, said, “If anything, the current economic situation has encouraged even more consumers to turn to inexpensive ways to feed their families. Not only are consumers buying more chicken, they are buying a lot more eggs. Eggs are an incredibly cheap source of protein.”

The poultry industry enjoyed good news in 2010. One was the announcement last September that Peco Foods was building a new, $25 million feed mill at Lake in East Central Mississippi.

Peco CEO Mark A. Hickman said the mill, which is expected to begin operations in 2012, will initially produce 13,000 tons of finished feed per week, and when fully completed will produce more than 17,000 tons per week.

Arguably the biggest news in 2010, however, was the lifting of the ban of U.S. poultry by Russia. Russia lifted the embargo in June after blocking U.S. imports for months on the grounds that U.S. poultry processing was unsafe for Russian consumers. In an international bargain, Russia agreed to lift the ban in exchange for favorable treatment from the U.S. in Russia’s bid for World Trade Organization membership.

The industry’s joy has been tempered.

Leggett said Russia continues to impose restrictions. He said it appears Russia wants “Russian chickens to feed Russian people.” Because of this, Leggett ranks the Russian ban-lifting as “good news, not great.”

It is the GIPSA controversy that could dominate headlines this year. The GIPSA has proposed rule changes that the U.S. poultry industry claims are unconstitutional, in defiance of court rulings and congressional mandates and will have a long-lasting, adverse affect on the relationship between chicken companies and their farmers.

The comment period on the new rule proposition closed last November. However, the USDA has agreed to hold off on implementation, and is conducting a cost-benefit analysis. Leggett said he expects a decision sometime early this year, but added that the new Congress might take a look at the issue, further clouding just if — or when — there will be a resolution.

Leggett and other poultry officials believe a rise in input costs will be the key issue in 2011. Grain prices are up — good news for row croppers, but bad news for poultry producers as a rise in feed costs is expected. Also, less corn is available for feed due to the demand for ethanol to fuel vehicles.

Fuel costs are also trending up at a time when demand for domestic poultry is “softening slightly,” Leggett said.

Leggett said 2008 was a tough year for the industry, mainly due to increased costs for feed and fuel. This year could be more of the same.

At the Legislature in 2011, Leggett said a big effort will be to expand the state’s Emerging Crops Fund. Announced in March 2010, the program offers loan assistance through the Mississippi Development Authority, extending conventional financing.

Leggett said he will push for producers who have already received assistance to come back for more aide after that loan is repaid. That funding could be used for needed farm enhancements and expansions, he said.