Source:  Ann Bagel Storck, MEATINGPLACE.COM, 5/19/10

Competition is alive and well in the broiler chicken industry and benefits chicken farmers, poultry companies and consumers, according to a study of the industry by agricultural economist Thomas Elam commissioned by the National Chicken Council.

The study was released in advance of a USDA/Department of Justice meeting on competition in agriculture scheduled for Friday. 

While USDA has characterized the series of meetings as "workshops," others have described them more as an investigation of the meat and poultry industry and its competitive practices.

"Intense competition among chicken companies leads to product innovation and lower prices for consumers," Elam wrote in the study. "The vertically integrated structure of the industry has given it an advantage compared to its competitors and allowed it to respond quickly to changing consumer demand."

The vertically integrated system also benefits the independent family farmers who raise chickens under contracts with the companies, Elam wrote, citing a study by the Farmers' Legal Action Group that found that 75 percent of broiler growers surveyed were satisfied with their decision to go into broiler growing.

"Contract growers are insulated from integrator margin risk by fixed price contract terms. They receive payments that are not tied to market variations in prices of chicken and feed," the study said. "These risks are largely shifted to the integrator."

While the study noted that the broiler chicken industry is more concentrated today than it has been in the past — with the top four companies having 53 percent of production in 2009 compared to 40 percent in 1992 — it also pointed out that the chicken industry is less concentrated than meatpacking at 79 percent or pork processing at 65 percent.

To read the full study, click here. 

For more stories, go to www.meatingplace.com.