Poultry industry slips with export troubles

MISSISSIPPI STATE - Worldwide, unrealized fears of an avian influenza outbreak hurt exports of Mississippi poultry, bringing the estimated value of the state’s largest commodity down 10 percent.
calendar icon 15 December 2006
clock icon 4 minute read
Poultry posted an estimated 2006 value of almost $2 billion, down 10.4 percent from the $2.2 billion value posted in 2005. Broilers took the biggest hit, down almost 12 percent to $1.8 billion from the $2.1 billion posted in 2005.

“We had a challenging year,” said Tim Chamblee, poultry specialist with the Mississippi State University Extension Service.

The biggest slow-down was importing nations’ fears of an avian influenza outbreak. The United States has no cases of the disease, but some countries ended all chicken imports.

“We’ve had an oversupply of chickens. If you look at placement data from the end of November, we’ve only placed 92 percent as many birds as the previous year,” Chamblee said.

He said exports had recovered by year-end, and world consumers have a much higher level of confidence in the industry.

With U.S. and Mississippi poultry exports down, supplies of processed birds are up, and poultry companies are slowing production.

“We’re probably going to be down 7 percent on the number of birds produced this year in Mississippi,” Chamblee said. “However, we will produce more pounds this year because the average weight of birds has gone up.”

The average weight of a broiler grown in Mississippi is 5.73 pounds compared to the 5.58-pound average produced in 2005.

Prices initially dropped with too many broilers on the market. Chamblee said prices returned to last year’s levels of about 66 cents a pound by year-end, up from about 58 cents a pound in April and May.

“Even with prices recovering, the industry still faces some financial issues because corn prices are going up as energy sources compete for corn,” Chamblee said. “Corn is the major ingredient of poultry feed, and these prices are continuing to increase, as do energy costs.”

Laurel-based Sanderson Farms, Inc., the state’s largest Mississippi-owned poultry company, announced annual data in early December that showed net sales for 2006 were $1.048 billion compared to $1.053 billion in 2005. Fourth quarter performance helped the company’s overall numbers.

“Our fourth quarter performance reflects an improvement in market prices for poultry products over the first half of fiscal 2006,” said Joe F. Sanderson Jr., chairman and chief executive officer of Sanderson Farms. “Overall, we are pleased with our results during the quarter.”

Sanderson Farms reports that 2006 prices decreased 6.1 percent from 2005, with bulk leg quarter prices down almost 25 percent for the year. Leg quarters are a big export item, and the concerns over avian influenza have made conditions “difficult” in the export market during the first half of the year.

The estimated value of egg production in Mississippi was up 4.3 percent. Chamblee said egg production was slightly higher than in 2005, but demand was down and there was an oversupply of eggs.

At year-end, egg prices remained depressed at about $1 a dozen, but much higher than the 40 cents a dozen price they brought in the summer.

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