A General Map of ‘Poultry of the Middle’
1
Poultry of the Middle
in the U.S.:
‘Implications for Sustainable
Producers & Scaling Up’
Laurie S. Z. Greenberg
Cultural Landscapes, LLC
for
The Agriculture-of-the Middle Initiative

July 2007
A General Map of ‘Poultry of the Middle’
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Table of Contents
INTRODUCTION 3
PURPOSE 3
METHODS 4
BACKGROUND 4
Growth of the chicken industry 4
Agriculture of the Middle 6
Poultry production & processing in the U.S.:
Two extremes 7 POULTRY OF THE MIDDLE 9
Who's in the middle? 9
Specialization by production system 11
Specialization by processing technology 14
Some examples of mid-sized companies 16
ISSUES IN POULTRY OF THE MIDDLE 21


But somewhere between these few corporate giants and the thousands
of small-scale, limited distribution, directly-marketed birds of local
farmers lies a very diverse group of businesses that we refer to in this
report as ‘Poultry of the Middle’.

The purpose of this study is to offer a first attempt at a description and
analysis of the businesses of ‘Poultry of the Middle’ in the U.S. We
believe that the group of businesses that comprises this sub-sector of
the poultry industry has potential to teach us something about what is
needed to support small-scale poultry producers as they scale up in
volume of production to mid-size.

Typically, as small and medium-sized poultry producers grow, there
are two tasks that are essential to their set-up, operations and survival.
These companies must seek out a product/niche that will distinguish
their company. They must also create for themselves the infrastructure
needed to get their product from farm to consumer. The infrastructure
A General Map of ‘Poultry of the Middle’
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needed includes all of the resources that integrated companies own:
access to genetics, hatcheries, feed, processing facilities, distribution,
marketing, sales staff and more. These smaller producers will also
eventually need further development of industry infrastructure to
include research and development, education and training,
publications, etc.

In order to aid producers who are approaching or targeting production
at that mid-sized scale with poultry, we have taken on this study.


commercialized to provide for the growing urban population of the
nation.

A General Map of ‘Poultry of the Middle’
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In the 1940s, most business along the value chain from farm to
consumer remained independent. Hatcheries, farms, feed mills and
processing facilities were located primarily in the east, south and

Midwestern regions of the country where water, corn and soybeans and
land made poultry production possible and profitable. Feed mills
extended credit to farmers for feed which was typically paid back once
the bird was processed and sold.

After World War II, like many agricultural sectors in the U.S., poultry
production and processing took a new direction. First was that the
scale of production has increased to industrialization of production and
processing. A second important change in the poultry industry in the
past 50 years has been the specialization in genetics that divided the
industry into meat and egg sectors. Standardization of poultry meat
was achieved by breeding birds specifically for meat production.
Poultry businesses found that they achieved better control of all stages
of production and processing by buying up businesses that formed the
infrastructure in the value chain (hatcheries, farms, feed mills,
processing plants and trucking operations). Thus began the vertical
integration of the broiler industry.

The National Broiler Council was formed in 1954 (National Chicken
Council 2007b). Based in Washington, D.C., its role was to represent
the growing industry businesses to the federal government and to

80.0
90.0
1960 1970 1980 1990 2000
Year

Data sources: National Chicken Council 2007 These numbers imply tremendous growth in the importance of chicken
in the diet and also growth in the poultry industry to supply, process,
package, market and transport that volume of chicken.

Agriculture of the Middle
This study’s emphasis on mid-sized poultry processors emerged from a
larger, national study examining the plight of similar sized agricultural
operations in the U.S., past, present and future.

Since 2003, a task force of academics, agricultural extension workers
and others has focused on studying a sector of agriculture in the U.S.
referred to as ‘Agriculture of the Middle’. This sector comprises a
group of businesses owned by farmers, ranchers, processors and other
entrepreneurs. These businesses produce agricultural products of
many types on a scale that is neither industrial or small farm in scale
and can be referred to as ‘Agriculture of the Middle’ (Kirschenmann et
al. 2004).

While difficult to define with exact production numbers, this sector is
characterized by a set of businesses that are between the large-scale,
vertically-integrated industrial sector and the small-scale direct market
producers. The businesses that fit this criterion have been

small-scale, alternative production.

Large-scale, conventional, industrial poultry production.
At the high-volume end of the continuum is the conventional,
industrial poultry industry. Today, the conventional, vertically-
integrated poultry industry controls and manages the production and
processing of 96% of the chickens raised for meat in the U.S. (Pretanik
2007).

There are 10 companies that produce more than ¾ of the chicken
produced for market in the U.S. (Thornton 2007). All are
characterized by extreme vertical integration and efficiency: individual
corporations own multiple businesses or profit centers that control and
manage every aspect of the production, processing, distribution and
sale of chickens.

Breeder operations enable these companies to maintain genetic stock
of birds that enables them to select and breed for characteristics that
are desirable for industrial production. Some of these same companies
A General Map of ‘Poultry of the Middle’
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control large volumes of corn and soybeans for chicken feed that are
managed and mixed into individualized bird diets in corporate-owned
feed mills. Hatcheries are also a part of the corporate structure and
serve to provide the day-old chicks to the growers who raise the birds.

Birds may be raised on corporate-owned farms or may be raised by
contract farmers on their own farms. Farmer involvement in the
conventional industry is by contract for production only. Farmers
typically have a contract with large, corporate poultry companies. The

expertise and other requirements for raising the birds. Farmers
maintain control over the bird and its production. For processing,
farmers can either conduct their own slaughter or work with a facility
that is willing to provide processing (Fanatico et al. 2006.) Several
regions of the U.S. have developed directories of the processing
facilities that are willing to do custom slaughter.) States vary in the
A General Map of ‘Poultry of the Middle’
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type of facilities they permit and oversee. There are also restrictions on
inter-state sales unless animals are slaughtered at a USDA facility.

Small-scale producers seek to meet the financial needs of their
households and businesses while simultaneously addressing the
demands from the marketplace. Many small-scale poultry producers
have been successful at direct marketing. Many have sought to grow
their businesses to fill a larger market niche by offering their chickens
to restaurants or retail stores. Most find that they are excluded from
mainstream poultry processing facilities, distributors and marketing
operations because they tend to be controlled by large-scale, industrial
corporations. The highly integrated nature of the poultry industry in
the U.S. means that growth for small, independent producers is very
challenging.

In part, this small-scale sub-sector of poultry production has grown in
response to a market demand for poultry that is raised using
production systems outside of the conventional, confinement,
industrial model.

Free-range poultry, heritage poultry varieties, organic certification and
other characteristics are used by farmers to distinguish their products

Table 1. Selection of top 38 chicken meat producing companies in the U.S.
Source: Watt Poultry USA, />

From the Watt Poultry list (above), those ranked 1-10 (in volume of
production) produce 76.6% of the chicken meat produced in the U.S.
Even within this group of the top 10, there is wide variation in the
volume produced by each company—with Pilgrim’s Pride producing
more than 180 million pounds of chicken from 38 different plants and
Tyson producing over 150 million pounds per week at 39 plants. At the
A General Map of ‘Poultry of the Middle’
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lower end of the top 10 is Foster Farms, #10, with five plants producing
considerably less at 17 million pounds a week. At the lower end of this
group of top 38 chicken producers, by volume, is Hain Pure Protein
Corp. that processes 800,000 pounds of chicken in a week.

Using the table, it becomes obvious that defining large versus medium-
sized poultry producers is far from easy. The table also illustrates the
great variation within categories based on volume of production.

Specialization by production system
As in any industry, the survival of mid-sized companies producing
meat chickens depends largely on the company’s ability to identify a
niche market, define that niche in the marketplace and keep their
prices competitive. A niche or specialty product enables producers to
earn a higher margin that with conventional (commodity) products.
This higher margin per unit is essential to the survival of smaller-scale
producers since they can not compete effectively on price. (Higher
volume manufacturers can always undercut them on price and thus
close them out of the market.) But a specialty product is perceived as a

allowed to forage and feed on grass and insects. The amount of time
outside or specific conditions of the outdoor area are not regulated or
defined for the purposes of marketing or labeling birds as ‘free-range’
in the U.S.

Organic poultry production systems must adhere to the set of
requirements defined by the USDA’s National Organic Program
( Organic production
systems operate without chemical pesticides or fertilizers and animals
are not fed antibiotics or growth promotants. The farm where
production occurs must adhere to these and other practices as defined
by the USDA, cannot have been treated with synthetic pesticides in the
previous three years and must undergo organic certification by a third
party certifying agent.

Organic poultry production has increased dramatically in the past
decade in the U.S. with expanding and growing markets. From 2000
to 2005, production of certified organic poultry quadrupled in the U.S.
(Greene and Oberholtzer 2007).

Premiums paid for organic poultry have remained high in recent years.
The high cost and shortages of organic feed, limited processing
capacity and distribution networks account for the gap between
demand and production, and are likely to keep premiums high for
organically-raised broilers.

Demand for organic broilers continues to be higher than the supply.
Concerns about human health, the natural environment and about
animal welfare appear to be influencing consumers in their pursuit of
organic chicken.

High Animal Welfare

An increasing concern among some consumers and producers
regarding the conditions under which animals are raised and
slaughtered has opened up opportunity for producers to distinguish
their operations by their treatment of animals.

The poultry industry has established welfare guidelines that assure a
minimum standard of animal welfare for birds raised in the U.S.
(National Chicken Council 2007). However, the companies falling into
this niche of specialization have developed a more involved set of
production characteristics in support of animal welfare and humane
treatment of animals.

As with organic, third party certification organizations have emerged to
lend credibility and an objective assessment of production operations
with regard to treatment of animals.

MBA Poultry, producing the Smart Chicken brand, announced in
January 2007 that they had been awarded the ‘Certified Humane
Raised and Handled’ label for use on their organic chickens. This
designation is awarded by a non-profit organization, Humane Farm
Animal Care (HFAC), based in Herndon, Virginia. HFAC has a set of
standards for producers of meat, dairy products and eggs that offers
inspection of production establishments and certification if businesses
comply with their standards. If awarded certification, business may
use the ‘Certified Humane Raised and Handled’ label on products and
may advertise using this designation.

A General Map of ‘Poultry of the Middle’

different stunning methods and humane treatment of birds. There is
also discussion in the literature regarding the efficiency, cost and other
characteristics of different gas combinations in CAS systems.
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A General Map of ‘Poultry of the Middle’
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As with other specialized practices, consumer demand is beginning to
have some influence on industry practices in stunning methods used in
the U.S. One example comes from a major fast food chain in the U.S.
In March 2007, Burger King announced that it would give preference
for chicken meat purchases to companies that use controlled
atmosphere stunning for slaughtering chickens (Martin 2007). In the
same article, Burger King, the second largest fast food hamburger
chain in the U.S., cited a desire to move ahead of consumer food trends
as their reasoning in making this shift.
contamination is far less likely with air chilled systems than with water
cooling. With air chilling, contaminated material (feces and other
sources of bacteria) remain segregated with the bird or birds that are
contaminated.

A General Map of ‘Poultry of the Middle’
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A University of Nebraska study comparing water- and air-chilled
chicken concluded that air-chilled chicken had 80% lower bacteria
counts than water-cooled birds; the air-chilled meat had a firmer
texture, with less shrinkage (Sanchez et al. 2002).

A second advantage to air chilling that is cited in the literature and
among processors that use it is that there is no water uptake by the
meat or leaching of natural meat juices. Water weight gained in the
immersion bath is retained and so a portion of what consumers are
paying for poultry is the water absorbed during immersion cooling.
Additionally, users of air chilling claim that retention of natural juices
offers both flavor and textural advantages.

Among other reasons plants opt for air chilling, concerns about
excessive use of water have emerged in the poultry processing industry.
When HACCP was introduced in the late 1990s, the assumption was
that water is a limitless resource to eliminate fecal contamination in
processing facilities. By 2004, a serious search for ways to conserve
water was underway among most broiler and turkey processors
(Northcutt and Jones 2004).

Who does air chilling of poultry in the U.S.?
MBA Poultry (Smart Chicken brand) pioneered the use of air chilling in

Specialty companies ranking in the top 38 chicken meat producers in the U.S.

A General Map of ‘Poultry of the Middle’
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Table 2b. General characteristics of eight companies comprising Poultry of the Middle.
Farmer-owned and operated businesses. A General Map of ‘Poultry of the Middle’
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Table 3a. Infrastructure (value chain) of eight companies comprising Poultry of the Middle.
Specialty companies ranking in the top 38 chicken meat producers in the U.S.

A General Map of ‘Poultry of the Middle’
20Table 3b. Infrastructure (value chain) of eight companies comprising Poultry of the Middle.
Farmer-owned and operated businesses.


There is wide variation in specialties: conventional, organic, free-range and
others. There is diversity in production, processing, distribution and marketing
practices among those companies within the Middle’.

A question that has arisen in the process of this study is whether or not there is
justification for further dividing ‘Poultry of the Middle’ into sub-categories. For
the purposes of this study, the Middle has been divided into ‘specialty
companies’ and farmer-owned specialty companies. Other means of
categorizing the companies of the Middle could be by: type of specialty
product(s); production systems, processing technology used, geographical
distribution or other characteristics. Poultry industry characterized by consolidation and integration
The poultry industry appears to be constantly in the process of consolidation.
The list of top 38 companies from Watt Poultry USA changes frequently as
companies buy out a competing company, increase their production and thus
rise higher on the list. Buy-outs also occur in order for one company to acquire
another piece of infrastructure—a hatchery or breeding operation or access to a
certain geographical market and thus many continue toward further integration
A General Map of ‘Poultry of the Middle’
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over time also. Consolidation and integration offer higher efficiency for
businesses, lowering their costs of production. Specialization is essential in Poultry of the Middle.
When large companies dominate the market with a standardized, conventional
product, as is the case with poultry, those producing meat on smaller scale (the

buyers) that the claims are justified. For example, organic producers (such as
Petaluma Poultry) use certifying agents. The job of a certifying agent is to set
standards or adhere to existing standards and to oversee production practices
to ensure that producers meet organic certification standards. The same is true
for other types of labeling and certification agencies—including those that
certify humane treatment of animals (Smart Chicken’s certification) or fair
labor or whatever the distinction is that can be verified by a third party agent.
Relying on a third party to verify specialty distinctions can be effective since
A General Map of ‘Poultry of the Middle’
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many consumers look for some sort of authority to assure them of authenticity
of product characteristics in their purchases.

A related problem is that product labels can be so laden with information that
consumers can actually undergo information overload. There are many terms
used in claims, on product labels and in point of sale information. Consumers
can become so overwhelmed with details, characteristics and claims that they
are confused and uncertain in making a purchasing decision. This practice of
over-labeling a product or providing consumers with too much information is a
common one. Again—a certifying agent or seal from a third party can go a long
way in conveying a large amount of information in a simple manner.

Another method to convey information about distinctions in products is
campaigns. The very largest corporations can afford to devote resources to
launch a campaign to educate the public about the distinctions of their
products. Tyson put out $70 million to launch a campaign to educate the public
about their new, antibiotic-free line of chicken meat. This is an effort aimed at
education so that the public can recognize why these specialty products demand
a higher price.


production because of the margin they earned for the specialty product. Tyson
began to change all that in June 2007 with the announcement that they will
have a new line of chicken meat raised with no antibiotics. Companies of the
Middle that specialize in that niche will need to respond adequately to assure
their places in the market.

Burger King did something similar to smaller specialty producers when
consumer demand resulted in a change in their policies. Burger King
announced preference given to chicken producers that use more humane
processing methods. A company the size of Burger King making this change
creates a huge demand for specialty meat. To what extent will companies of the
Middle be capable of addressing that demand? These companies are surely
more limber than the bigger companies and may be able to transition to the
new technology. But how many (and which) companies of the Middle have the
available capital to alter their processing technology so dramatically?

In short, specialization is not enough. Innovation must continue among
producers of all sizes. Many additional niche opportunities exist in Poultry of the Middle.
While this paper has discussed multiple specialty niches, there are many more
opportunities for specialty poultry production and sales. As Fanatico points out
(personal communication), the nature of the industrial, large-scale chicken
meat industry is so narrow in its structure and its products that it allows the
opportunity for many niche products and companies.

Among those with future potential could be:
• Functional meats—those products with specific nutritional
characteristics that may have health advantages for those who consume

been multiple attempts, in several states, to overthrow this restriction, but no
one has been able to eliminate it to date. A challenge to this restriction appears
in the proposed Farm Bill (July 2007) that appears to be promising. If
overturned, this could create multiple opportunities for producers who use
state-inspected processing facilities and who want to market their meat beyond
state borders.

Avian flu and scale of care.
Every producer of poultry and organization who works with poultry producers
is paying close attention to avian flu outbreaks across the world. Most
organizational websites have relevant policy statements, guidelines and
recommendations in anticipation of this coming challenge.

While the scenario could be very bleak, businesses of the Middle and smaller
producers may offer some hopeful opportunities. Companies that keep and
breed non-conventional, more genetically diverse poultry varieties may have
better survivorship in the face of an epidemic when compared to genetically
identical, large-scale poultry manufacturers. A possible analogy could be the
example of honeybees and the crisis of disappearance of hives experienced and
reported in the media throughout the winter and spring of 2006-07.
Remarkably, organic bee keepers apparently did not experience this crisis.
Some attribute this to the genetic variety of bees that is used by large,
conventional beekeepers (Organic Consumers Association 2007). Other
interpretations of this crisis point to the number of hives managed by smaller
scale beekeepers compared to the huge, industrial honey operations. The
smaller scale of production may enable producers to maintain certain standards
and more closely oversee colonies so that at the first sign of problems, they can
react before the problem creates a crisis (Eugene Woller, personal
communication).