Chicken Farm Organization

As the number of chickens produced in the United States continued to increase over the past several decades, the structure of the industry changed dramatically. Since mid-century, the industry transformed from a backyard industry, which fed the immediate family and local markets, to specialized hatchery and broiler operations which produce more than 900 million birds for meat and 72 billion eggs yearly, mostly under contract. Usually broiler needed more than layer because broiler age only one month already consume but layer can age until 2 years.

Poultry farming went from largely sideline to big business in just a few decades; Manchester, forthcoming). Today, the chicken broiler industry is one of the most tightly coordinated of the major commodity subsectors in the US food and agricultural sector (Schrader, 1981). (Schrader, 1981). A 1994 Feedstuffs editorial stated “The increasing use of contracts is changing every growing commodities, shipping them, selling them, and using them.”

The traditional economic model used to analyze agriculture is the perfectly competitive model that includes buyers and sellers, diffused market power, and no control over price. The market's operation hinges on the entrepreneurial farmer who provides the day-to-day management, makes the decisions, controls the marketing of the products, and owns and controls the inputs (Paul, 1974). Contracting alters the parameters of farmer entrepreneurship by separating ownership, management, and labor. These changes, however subtle, result in changes in the way that returns are distributed.

Few industries have enjoyed the success of the poultry industry in gains in production and marketing efficiencies (Lasley, 1983). Contracts are an essential Recently, however, the sparkle of sure returns from contract poultry farming has been tarnished by reports of slimmer margins for farmers and complaints about the process of determining returns to farmers.

Several things have happened to bring on this discount. Record-high corn prices in 1995 raised the cost of chicken feed, while the competing cattle industry, was liquidating herds at low-cycle prices. Domestic per capita poultry consumption has been flat since 1995, after growing steadily for more than a decade. 1995.

Exports were imperiled as China proposed a 100-percent tariff on top of its 45-percent levy on US Poultry. In 1996, Russia temporarily banned chicken, imports while threatening to impose more lasting quotas. More recently, the European Union delayed imports of poultry from the United States after disputes over poultry inspection and processing methods (California Poultry Industry Federation, 1996).

Broiler production has increased about 5 percent per year, and exports continue to rise. Still, Morison and Lee (1996) assert that flagging domestic (1996 ), demand required that contractors cut back on their placements, and/or lower their payments to farmers producing broilers. Recent perceived declining returns to farmers raising poultry generated complaints about the nature of contracting in broiler production (Morison, 1996a and 1996b; Guebert, 1996; duction (Morison, 1996a dan 1996b; Guebert, 1996; Russell, 1996; National Contract Poultry Growers Russell, Association).

As the channels of production from farmer to consumer are realigned, the distribution of earnings will change. The poultry industry is often cited as a model of the organization that may characterize most of US farming in the future. This report provides a unique look into broiler farm structure, management. This report, the first study about broiler farms to incorporate farmer responses from a nationwide survey, provides the following:

Broiler chicken Farms Organization, Management, and Performance Janet Perry, David Banker, and Robert Green Janet Perry, David Banker.

• An overview of the poultry industry;
• An overview of contracting, with special attention to
• A presentation of the financial structure of broiler
• A comparison of the financial returns to broiler operation generating sales of $50,000 or more with other farming enterprises with no poultry;
• Management characteristics of farmers producing
• Household and operator characteristics of broiler the broiler industry and of a possible future for some other segments of agriculture. It provides an empirical analysis that integrates the farmside structure of broiler production with the returns to farming and the well-being of broiler farm operator households.