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The North Carolina Poultry Industry

The poultry industry plays a significant role in the economy of North Carolina. In 1992 it contributed more than 30 percent of the state's farm income, and the gross sale value of its products is over $2 billion annually. In addition, more than 23,000 North Carolinians work in processing plants, hatcheries, feed mills, and other segments of the industry, earning more than $300 million annually. Over 4,400 farmers grow poultry in North Carolina, and one of every six farms with annual sales of more than $10,000 is engaged in poultry production.

North Carolina's poultry industry is highly integrated, encompassing all aspects of production and marketing. Its components include poultry hatcheries, live production, food mills, and the processing and transporting of raw materials and products. To promote better understanding of the industry, this publication describes its structure and organization.

Poultry Commodities

Commercial poultry products in North Carolina include broilers and roasters, turkeys, table eggs, and quail. Broilers are young chickens raised for meat, generally to a live weight of 4 or 4.5 pounds. Meat-type chickens raised to 8 or 9 pounds are classified as roasters. A recent increase in demand for specialized, highly processed products, such as chicken and turkey nuggets and deli items, has given rise to technological changes for raising broilers sex-separate, often to greater weights (6 to 8 pounds). It has also led to the introduction of new types of processing equipment.

It is standard practice to raise turkeys sex-separate. Hen turkeys (females) reach the market at 12 to 15 weeks of age at a live weight of 12 to 15 pounds. Tom turkeys (males) are ready for market at 16 to 19 weeks of age, when they weigh 22 to 29 pounds. Hens are most often sold to be baked whole, whereas toms are often used to make more highly processed products, such as turkey breast roast and turkey ham.

Nearly all of North Carolina's table eggs are produced by layers kept in automated cage facilities. The eggs are washed, sanitized, graded, weighed, and placed in egg cartons for shipment to retail outlets. The most recent trend, reflected in the design of new table-egg production facilities, is toward in-line production and marketing, in which both production and processing are conducted on the farm.

Broiler and turkey hatching eggs, in addition to being used for poultry production in North Carolina, are exported to other states and countries. For example, broiler hatching eggs produced in North Carolina are shipped to support the broiler industries in Virginia, Maryland, Delaware, Pennsylvania, and Canada. North Carolina also has two primary broiler and turkey breeder firms that supply breeder stock both nationally and worldwide. North Carolina's turkey hatching eggs and poults are shipped over the entire East Coast and to several foreign countries. Quail products have grown to be a significant part of the commercial poultry industry in the state.

Industry Structure

Production and Marketing

The poultry industry is vertically integrated, meaning that two or more stages of production and marketing have been combined. Most North Carolina poultry are grown under contract between the farmer and the firms that process and market the products. There are still a few independent producers of turkeys and commercial eggs in North Carolina, but they usually have contractual arrangements with other firms to process or market their products (or both), or they control some other aspect of production such as feed manufacturing. Therefore, most of these independent poultry producers are also involved in vertical integration, owning and combining functions such as feed manufacturing and production or egg processing and production.

A large proportion of the industry is totally vertically integrated, which means that all activities starting with procurement of raw materials and ending with marketing of the final product are incorporated within one organization (hereafter referred to as the integrator). Nearly 100 percent of North Carolina's broiler industry is totally integrated, as is 90 percent of its turkey and commercial egg production. Figure 1 is a diagram of a typical integrated broiler or turkey operation.

 

Flow Chart of a Typical Integrated Broiler or Turkey Operation

a. Normally produced under contract arrangement with grower.

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In many cases, however, integrated commercial egg organizations do not exactly conform to this diagram because pullet chicks are supplied directly from the primary breeders, a step that eliminates the need for a hatchery. Figure 1 also indicates that actual live production is accomplished mainly through contracts between farmers and integrators but occasionally by means of company-owned poultry housing.

Contracts with farmers vary, but most stipulate that the farmer provide the land, poultry house, and equipment and also bear the costs of labor, utilities, insurance, taxes, waste disposal, and other miscellaneous farm expenses. Integrators generally supply the feed, day-old or adult birds, medications, and supplies. In return for their investment and time, farmers are paid according to the amount produced (pounds of birds or dozens of eggs). Both parties can benefit from this arrangement. Farmers avoid a large capital investment in feed and birds, and they are exposed to less market risk, while integrators benefit from having less long-term investment and a steady, known supply of products. According to a 1992 North Carolina Poultry Federation survey, 4,469 poultry farmers work under contract arrangements in North Carolina.

Product Value

The annual farm value of North Carolina Poultry and egg products exceeded $1.5 billion for the first time in 1989. The farm value of the state's poultry products was $1,595 billion in 1992 (Table 1) and continues to exceed that of any other North Carolina agricultural product.

Table 1.

Farm Value of North Carolina Poultry and Eggs in 1992

Product

1992 Value ($ million)

Broilers

$ 855.70

Turkeys

475.40

Eggs

180.00

Miscellaneous

84.30

Total

$1595.40

Source: USDA, Statistical Research Service, POU 3-1(93).

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Income statistics show a strong growth pattern within the state's poultry industry. A closer analysis indicates that production of some poultry commodities is growing faster than others. Table 2 shows the growth of the various poultry commodities in North Carolina over the past 20 years. Table 3 presents similar data for the United States poultry industry over the past 10 years. The number of eggs produced in North Carolina and in the United States has decreased slightly for the past 10 years, a result of the reduced demand for table eggs.

Table 2.

North Carolina Poultry Production-Farm Value and % Change 1972,1982, and 1992

Production (millions)

Change (%)

Product

1972

1982

1992

1972-82

1982-92

Broilers:

# produced

301.8

418.6

559.3

38.7

33.6

Farm value

$163.6

$422.0

$855.7

157.9

102.8

Turkeys:

# produced

12.0

27.0

62.0

125.0

129.6

Farm value

$42.2

$195.9

$475.4

364.2

142.7

Eggs:

# produced

3,433.0

3,065.0

3,026.0

-10.7

-1.3

Farm value

$98.4

$169.3

$180.0

72.0

6.3
1972 data: North Carolina Agricultural Statistics, No. 126, 47-49.
1982 data: North Carolina Agricultural Statistics, No. 147, 50-51.
1992 data: USDA, Statistical Reporting Service, POU-3-1(93).

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Table 3.

U. S. Poultry and Egg Production-Farm Value and % Change, 1972, 1982, and 1992

Production (millions)

Change (%)

Product

1972

1982

1992

1972-82

1982-92

Broilers:

 

 

 

 

 

 

# produced

3,074.9

4,149.0

6,388.0

34.9

54.0

 

Farm value

$1,622.6

$4,502.2

$9,156.0

177.5

103.4

Turkeys:

 

 

 

 

 

 

# produced

128.7

165.5

289.0

28.6

74.6

 

Farm value

$536.9

$1,254.7

$2,386.8

133.7

90.2

Eggs:

 

 

 

 

 

 

# produced

69,219.0

69,718.0

70,528.0

0.7

1.2

 

Farm value

$1,780.7

$3,458.9

$3,389.1

94.2

-0.2

1972 and 1982 data: U.S. Egg and Poultry Statistical Series 1960-89; USDA, ERS, Bulletin No. 816.
1992 data: USDA, Statistical Reporting Service, POU-3-1(93).
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The strong growth in the broiler and turkey commodities is opposite to the pattern for eggs. The number of broilers grown in North Carolina increased 34 percent since 1982, during which time broiler production increased by 54 percent nationally. Even stronger growth has occurred in North Carolina's turkey industry. The number of turkeys grown in the state increased by 130 percent in the past 10 years, compared to a 75 percent increase nationally. This growth in broiler and turkey production has occurred primarily because people are consuming more of these products. Increased production and processing efficiency has caused continued low costs for producing broiler and turkey products resulting in low prices for consumers.

Geographic Location

Poultry production and its supporting functions are located throughout North Carolina and the United States. Energy costs play a key role in determining where poultry facilities are located because the cost of transporting both raw and finished products is a significant portion of total product cost. North Carolina's mild climate is conducive to the survival and growth of poultry and to their efficient use of feed. The abundant supply of land, labor, and fresh water; an excellent highway system; and proximity to retail markets are other advantages that North Carolina offers for poultry production and processing.

Rankings of states in broiler production, turkey production, and egg production in 1991 are given in Table 4, Table 5 and Table 6, respectively. The ranking for broiler production has changed little over the last 20 years. Major production areas are in the Southeast (Arkansas, Georgia, Alabama, and North Carolina) and on the eastern shore of Delaware and Maryland; California contributes a large portion of the West Coast's supply.

Table 4.

Rank of States in Broiler Production, 1982 and 1992

State

1982 Rank

1982 Farm Value ($1,000)

1992 Rank

1992 Farm Value ($1,000)

Arkansas

1

$667,829

1

$1,529,660

Georgia

2

610,735

2

&1,286,096

Alabama

3

487,726

3

1,194,901

North Carolina

4

421,969

4

855,729

Mississippi

5

336,657

5

664,814

Texas

6

258,100

6

553,784

Maryland

7

328,624

7

403,920

Delaware

8

245,363

8

401,798

California

9

259,637

9

350,549

Virginia

10

150,017

10

330,145

Pennsylvania

11

127,182

11

183,142

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Table 5.

Rank of States in Turkey Production, 1982 and 1992

State

1982 Rank

1982 Farm Value ($1,000)

1992 Rank

1992 Farm Value ($1,000)

North Carolina

1

$195,939

1

$475,416

Minnesota

2

172,887

2

283,185

Arkansas

4

87,542

3

196,650

California

3

157,560

4

194,298

Missouri

5

85,104

5

163,590

Indiana

8

56,525

6

146,824

Virginia

6

71,555

7

137,879

Iowa

7

57,540

8

90,558

Pennsylvania

9

47,829

9

74,659

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Table 6.

Rank of States in Total Egg Production, 1982 and 1992

State

1982 Rank

1982 Farm Value ($1,000)

1992 Rank

1992 Farm Value ($1,000)

California

1

$363,290

1

$277,944

Georgia

2

300,440

2

269,654

Arkansas

3

214,429

3

264,974

Indiana

5

208,320

4

211,751

Pennsylvania

4

280,993

5

197,090

Texas

6

178,995

6

180,755

North Carolina

8

173,485

7

180,047

Ohio

10

117,088

8

170,296

Alabama

7

178,738

9

170,188

Mississippi

12

86,233

10

96,331

Minnesota

11

100,320

11

95,838

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In contrast, the state ranking for turkeys has changed (Table 5). North Carolina has risen in turkey production from ninth position in 1966 to first in 1986 and has remained first since that time. The state ranking for table egg production has fluctuated over the past 20 years (Table 6). Changes in transportation costs have has significant impact on the location of egg production units. These changes can be traced to the early 1970's when the Southeast had strong growth. When energy costs for transporting grains and processed products rose in 1973, midwestern and northeastern producers gained a competitive edge in table egg production and marketing. This shift did not occur in broiler and turkey production, however, because brooding requires less energy in milder climates, resulting in greater production efficiencies that offset the higher transportation costs.

Figure 2 shows the location of general poultry production within North Carolina in terms of total farm value of poultry. The leading North Carolina counties for broiler production are Alexander, Bertie, Chatham, Duplin, Montgomery, Moore, Randolph, Union, Wayne and Wilkes. Turkey production is even more concentrated, with Anson, Duplin, Lenoir, Sampson, Union and Wayne counties being the largest producers. Table egg production is spread throughout the state, with Franklin, Nash, Pitt, Stanly and Union counties being the largest producers.

 

Figure 2.
Leading Poultry Production Counties in North Carolina

Leading Poultry Production Counties in North Carolina

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Hatcheries, Feed Mills, and Processing Plants

Hatcheries, feed mills, and processing plants make key contributions to the production of poultry. There are 18 feed mills, 30 hatcheries, and 13 processing plants connected with broiler production. The turkey production and processing sector is served by 17 feed mills, 8 hatcheries, and 6 processing plants. The egg sector involves 11 feed mills and 11 processing plants. More than 23,000 people are employed in hatcheries, feed mills, and processing plants.

Processing

In the past, processing plants slaughtered and dressed whole birds. Today they produce a variety of poultry products. Where whole birds once dominated the consumer market, they now make up only a small portion of that market. Consumers today prefer more convenient products. For the poultry industry, this change in demand means producing diverse items that include cut-up chicken or turkey; boneless, skinless nuggets; individually quick-frozen precooked products, and individual prepared fully cooked meals.

Companies used to pack whole birds in ice and ship them to retail markets where they would be repackaged for sale. Now most companies package their products immediately after processing and chill them to 28 degrees F before shipment. Along with this trend toward prepackaging has come the branded product. Many poultry products are now marketed under recognized brand names. As a result, consumers have developed loyalties to specific companies and their products. One advantage of prepackaging is that the product shelf life is extended because contamination after processing is reduced.

Another market that has increased greatly over the past decade is food service, particularly the fast-food market. Poultry products have found their way into almost all of the fast-food chains and restaurants. One reason for this growth is the attention consumers are giving to good nutrition. Because of this growth in both the consumer and food service markets, per capita consumption of poultry products has continued to grow (Figure 3).

Figure 3.
Per Capita Consumption of Meat, Fish and Poultry Products.

Per Capita Consumption of Meat, Fish and Poultry Products.

Note: 1993 to 1995 data estimated by the Economic Research Service.

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Per capita consumption of eggs (Figure 4) has continued to decline for several reasons, including consumer changes in breakfast preferences and concern over cholesterol intake. However, research is being conducted and new technologies are being developed to address these concerns-for example, the reduction of cholesterol from the egg and the development of "designer" eggs that have different profiles of fatty acids and other nutrients that affect cholesterol uptake. These efforts will help stabilize egg consumption in the future.

Figure 4.
Per Capita Consumption of Eggs.

Per Capita Consumption of Eggs.

Note: 1993 projections made by the Economic Research Service.

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An increasing share of total egg production is going to the liquid egg market. Improved pasteurization and packaging technology have made it possible to produce attractive, high-quality egg products with extended shelf life. These products are in demand by restaurants, institutions, and retail grocery markets.

Processing Facilities

Modern poultry processing plants are efficient, continuous-line facilities in which the birds are moved from one operation to the next by overhead shackles. Live birds are hung on shackles, electrically stunned, bled, scalded, plucked, eviscerated, government inspected, washed, sanitized, chilled, packaged, and refrigerated or frozen. Further processing may be done in the same facility (in which case the bird proceeds down the line rather than being packaged), or whole or cut-up birds may be shipped to another facility for further processing.

Consumer and Employee Protection

Product Inspection and Labeling

Poultry products are inspected by the Food Safety and Inspection Service (FSIS) of the U.S. Department of Agriculture. The speed of the line is based on the number of inspectors and the inspection system used. The FSIS establishes specific regulations governing how poultry can be slaughtered and processed. Plants vary greatly, but the inspector's basic mission is consumer protection. The inspectors follow detailed guidelines for checking each operation and have the authority to stop processing until a problem is corrected. Inspectors in plants take samples for in-plant and laboratory testing to guard against chemical and microbiological contamination, ensuring that consumers receive a high-quality product.

In October 1989, the FSIS announced its intent to implement a Hazard Analysis and Critical Control Point (HACCP) approach in poultry inspection operations. HACCP is a logical and simple but highly specialized system designed to prevent public health problems and regulatory violations. HACCP models are currently being tested in selected plants.

On November 8,1990, Congress passed the Nutritional Labeling and Education Act of 1990 (NLEA), which makes nutrition labeling mandatory for most packaged food products regulated by the Food and Drug Administration (FDA). The FSIS has concluded that it has statutory authority to mandate nutrition labeling for meat and poultry products. Because the FSIS believes greater consistency in federal food labeling requirements is essential, it intends to make its nutrition labeling regulations for meat and poultry similar to those established by the FDA.

Employee Safety

Worker safety programs are a high priority for the poultry industry. Most jobs in a processing plant are very specific "factory line" type jobs, they involve one very specific task repeated rapidly. To offset the repetitive motion problems associated with this type of task, many plants rotate their employees to different tasks periodically. Other plants have their employees participate in exercise programs scheduled periodically throughout their shift to relieve stress and reduce muscle strain.

In addition, the industry has programs for accident prevention, safe handling of chemicals, fire safety, environmental protection, and response to emergencies. Each company handles its safety programs differently. In a recent survey of North Carolina poultry processors, 90 percent of the companies responding reported the use of employee committees to involve workers in the safety programs.

The government also plays a role in ensuring worker safety. In North Carolina, federal Occupational Safety and Health Administration (OSHA) programs are carried out through the North Carolina Department of Labor's Division of Occupational Safety and Health. The division's inspectors visit all types of manufacturing and processing plants in the state to ensure that each plant is meeting state and federal regulations on worker health and safety. In the last four years, OSHA inspections have been made in 80 percent of the North Carolina poultry processing plants. In addition, plants are inspected by local fire departments and by the plants' insurance companies.

Prepared by
Thomas A. Carter, Specialist-in-Charge, Poultry Science Extension
Patricia A. Curtis, Extension Food Specialist
Kelly Zering, Extension Economist
North Carolina State University
3/94 PS&T Guide # 39

 

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