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Blanton Slides > Pig/Poultry Industry Structure > Flashcards

Pig/Poultry Industry Structure Flashcards

1
Q

Total poultry sector sales

A

$76.9 billion

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2
Q

____ of US chicken raised under production contracts

A

96%

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3
Q

Vertically integrated def

A

Tying together the control or management of two
or more stages in the production of a single
commodity anywhere between the farm supplier
and final retail, exclusively

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4
Q

Integrator def

A

A company (poultry) that owns the animals
throughout the growing process through harvest.

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5
Q

What do integrators do

A

Dictate feed, transportation, veterinary care,
marketing, and grow – out management
* They take on the risk

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6
Q

What does a grower do

A

Contracts to grow animals according to Integrator
specifications. May or may not own land, buildings or animals

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7
Q

______ and (especially) ______ production have
developed into vertically integrated industries

A

Swine; poultry

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8
Q

Other exs of vertical integration

A

Grocery store (retail sale of food and produces and transport of its own brands of food), phone, entertainment

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9
Q

What does an integrator own

A

Feed mill, breeder farm, hatchery, transport, and processor

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10
Q

For actual chicken production, the ____ enters into a contract with a _____

A

Integrator; grower

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11
Q

Marketing contract

A

Producer agrees to sell a set # of animals to processing facility at a set time for a set price

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12
Q

Where are marketing contracts still seen?

A

Swine operations

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13
Q

Who are the animals owned by in a marketing contract?

A

Producer

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14
Q

Production contract definition

A

Producer (grower) agrees to produce animals for the integrators according to standards set by the integrator

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15
Q

Where are production contracts seen?

A

Much of swine production and 100% of broiler production

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16
Q

Who are animals owned by in a production contract?

A

Owned by integrator

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17
Q

Why is a grower entering a contract?

A

To produce the chickens for the integrator

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18
Q

In a production contract, the grower provides…

A

Housing/equipment, husbandry/labor, manure management

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19
Q

Chicken barn cost

A

$9-$10/sq. ft

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20
Q

Space

A

~0.8 sq. ft./bird

21
Q

Older style house

A

40 ft X 400 ft (16k sq. ft.)

22
Q

New style house

A

54 ft X 600 ft (32.4k sq. ft.)

23
Q

What is width limited by?

A

Ventilation

24
Q

How much money is $10/sq. ft?

A

$160k to $324k

25
Q

How does a grower get paid?

A

Detailed in contract, usually a base/guaranteed payment (e.g. sq. ft)

26
Q

How does a grower get paid?

A

Premium payments which can be based on a number of factors

27
Q

Different premium factors

A

Total weight of birds, number raise, number condemned, feed conversion rate

28
Q

How do growers get paid?

A

Sometimes paid based on how you compare to other growers (competing with other growers in a cohort

29
Q

How do growers get paid?

A

It depends on contract, performance, how many chickens/building you have

30
Q

Pros of contract production

A

Decreased risk in some cases (risk is spread across different entities), significantly less initial investment, small number of houses can improve household income and provide opportunity for family members

31
Q

Cons of contract production

A

Integrator may control ability to expand (may not want more chickens or can’t produce chickens for two integrators)

32
Q

Other cons of contract production

A

Can be imbalance in negotiations, must adhere to integrator housing standard- could require reinvestment

33
Q

Until recently, most swine farms were ________

A

Farrow to finish operations

34
Q

These farrow to finish operations used __________ contracts to sell their pigs

A

Marketing

35
Q

Contract production for swine is based on ______ market

A

Futures

36
Q

Marketing contract guarantees

A

Market, price

37
Q

Marketing contract avoids…

A

Market volatility (Real price increase or decrease = no change in producer payment)

38
Q

Swine production has developed into an industry that looks very ______to poultry production

A

Similar

39
Q

The majority of new swine farms are not ___________

A

Farrow to finish

40
Q

The majority of new swine farms are ________ operations

A

Grower/finisher operations

41
Q

New swine grower/finisher operations enter into _________ contracts with a larger integrator similar to what is seen in poultry production

A

Production

42
Q

In these production contracts for swine, _____ pigs are received and they grow until ____ ______

A

Weaned; market weight

43
Q

Who owns most swine in the US?

A

WH Group Smithfield, Pipestone Systems, Triumph Foods, Seaboard Foods, Iowa Select, The Maschhoffs, Prestage Farms

44
Q

Who owns the most pork in the US? Percentages?

A

WH Group (Smithfield) -26%
Tyson Foods - 24%
JBS USA Holdings - 24%
Cargill - 13%

45
Q

The US poultry industry is

A

100% vertically integrated, consolidated, has very short production cycles

46
Q

Do the qualities of the poultry industry allow it adapt quicker than other meat-animal industries?

A

Yes

47
Q

Monopoly definition

A

One seller of good

48
Q

Monopsony definition

A

One buyer of good

Blanton Slides (9 decks)

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