Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 11/17/10

Proposed new regulations from USDA’s Grain Inspection, Packers and Stockyards Administration would cost the broiler chicken industry more than $1 billion over five years in reduced efficiency, higher costs for feed and housing, and increased administrative expenses, according to a study released by the National Chicken Council.

“The proposed rule changes are likely to slow the pace of innovation, increase the costs of raising live chickens and result in costly litigation,” wrote Thomas Elam, president of FarmEcon, which conducted the study for the NCC. “Higher costs would put upward pressure on chicken prices, and economic theory strongly suggests that consumers would ultimately bear most of these costs.”

The estimates do not include the potential costs of litigation, lost export sales, and increased consumer prices.

“GIPSA’s proposed rules would alter long-standing contractual and business relationships between chicken companies and independent growers,” Elam wrote. “The changes that are proposed are, in part, designed to broaden the scope of GIPSA authority, reduce the latitude to pay growers based on their performance, limit the ability of chicken companies to seek grower investments and set new requirements for cessation or reduction of delivery of birds to growers.”

The cost burden from all identified sources increases over time, Elam wrote, reaching about $337 million per year in 2015. The total identified cost over the first 5 years is about $1.03 billion.  

The FarmEcon study is available on the NCC web site. 

The National Chicken Council represents integrated chicken producer-processors, the companies that produce and process chickens. Member companies of NCC account for more than 95 percent of the chicken sold in the United States

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