Chicken meat

Chicken Juggernaut. Australian Farm Journal. 4 part series. 2012
While 99% of Australia's livestock farmers wrestle with world market prices, the fluctuating Australian dollar and variable seasonal conditions to produce red meat as efficiently as possible, a tiny few of their colleagues produce the country's most popular meat: chicken. As Asa Wahlquist found out in the first installment of this special four-part series, they farm in the most controlled livestock industry in the world which keeps its business performance cards close to its chest.

  The chicken meat industry is the unsung success story of Australian agriculture. Over the past 20 years chicken consumption has risen steadily to overtake beef as the most popular meat eaten. Last year Australians ate more than one million tonnes of chicken meat.
  The Australian Chicken Meat Federation (ACMF) claims that chicken meat  consumption has risen to 43.9 kilograms per person, rivalling total red meat consumption.
It calls chicken the number one meat in Australia, and estimates 90 per cent of the population eats chicken at least once a week, and one third eats it three or more times weekly.
    The industry expects to keep growing, but it is coming under pressure from volatile feedgrain prices, from competition between a contracting processor sector and from the supermarkets. And it could be facing challenges from the pork industry, which is similar in structure, and from the red meat industry which has been studying chicken's success and is applying the lessons it has learned.

   The industry estimates total consumer expenditure on chicken at $5.6 billion. It is largely a domestic industry: less than five per cent of production is exported. This gives it a steady demand and reliable prices that export-oriented commodities like beef can only envy.
   There are  a number of factors to the chicken success story. They range from ease of preparation in the kitchen; perceived health benefits because of its low-fat content;
its widespread use in the fast food and restaurant industry; the development of more value-added pre-prepared products; and a fall in real prices for poultry meat making it cheaper than beef, lamb and pork.
    In 1975 it took 64 days and 4.6kg of feed to grow a chicken to 2kg liveweight, a feed conversion ratio of 2.3:1. Today is takes just 35 days and as little as 3.4kg of feed or a conversion ratio of 1.7:1 to achieve the same result.
    Feed conversion for yearling beef cattle in a feedlot is around 6:1; for feedlot lambs it is around 4:1 while for housed pigs it comes in at around 3:1.  While the widespread, but totally unfounded, myth is this growth is due to hormones – hormones have never been used by the Australian industry – the reality is it is due to good old-fashioned selective breeding.
   Dr Andreas Dubs is the executive director of the ACMF, a small organisation focussed on promoting the values of chicken and research. It has no marketing budget and does no generic promotion. It is funded by a levy of a few cents per hundred birds, raising about $1.5 million/year which is matched by the Commonwealth to provide a research fund of $3 million/year.
  "Feed is the majority of our cost, about 60 per cent is for feed," he says. He points out the increased efficiency of conversion of feed to meat is reflected in the lower prices. "Fifty years ago, today's $10 chicken cost the equivalent of $40. People didn't eat chicken every day, it was rare."
    In the past fifty years, chicken meat has moved from a largely backyard activity to a vertically integrated industry with increasing corporate engagement.
    In 1975, Australians ate 13.4 kg of chicken per head, 62 kg of beef and veal and 23.7kg of lamb and mutton. Back then, chicken, lamb and beef were closely priced. But as poultry productivity has grown, the gap between the retail price of chicken and the red meats has widened, and chicken now costs less than half the price of beef or lamb.
    Martin Kneebone, from Freshlogic, a specialised consulting and analysis business focussing on the food industry, offers several reasons for the growth in chicken meat consumption. The first is consistency of supply.
    "It doesn't go through the ups and downs of availability and price volatility that other protein categories have, and people welcome that."
    The second is its versatility, and ease of preparation.
    "It is available in many forms through all the possible food distribution channels," he says. "It has a consolidated supply base, that is closer to a manufactured product and therefore you can program it. They know demand and they are continually working on various yields and forms to flow through. As a result they have got it on most menus, most retail offers and it is a high participant of fresh food, fast food. QSR [quick service restaurants like Kentucky Fried Chicken] has embraced it as well. Chicken has ended up as being seen as a lighter, healthier meat."
    Kneebone points out the industry's consolidated supply base "probably allows for more stability".
    Over 95 per cent of Australian chicken meat is processed by seven privately owned companies. The two largest, Ingham Enterprises and Baiada Poultry (which sells under Bartter, Steggles and Lilydale labels) supply about 70 per cent of Australia’s chicken meat.
Vertical integrated supply chain
   Dubs says the whole chain, including the inputs, is largely controlled by the processors. The actual growing of the chicken undertaken by about 800 contract farmers.
    The processors own and run feed mills, egg farms and hatcheries, as well the factories that process the chicken meat.
   "The chickens are owned by processors all along. There is no farmgate price, and no change of hands," Dubs observes.
    The processors provide, and pay for, the prepared chicken feed. Farmers are protected from the volatility of the grain markets.
    As the industry has grown it has become a major customer of the grain industry. Executive Officer of the Stock Feed Manufacturers Council, John Spragg, says the chicken industry has the most consistent demand for feed grains. "It doesn't show as much variability in demand as say beef and dairy. It is there seven days a week every week of the year,  and is very consistent in its annual growth pattern as well.
   "Chicken just stays there, it rarely ever goes backwards, plus it is a domestic market so it is directly linked to Australian consumption, whereas beef and dairy are much more export focussed, so they are subject to greater variability. And if we have plenty of grass around they [beef and dairy] consume less grain."
   Andrew Clarke grows chickens on his Peats Ridge property, on the northern outskirts of Sydney. Peats Ridge is one of the oldest chicken growing areas in the state. Although the city is encroaching on farmland, there are still 70 to 75 farms in the district. Most chicken farms are close to cities, because they must be within two hours of the processing plant.
    Clarke raises 128,000 chickens in five sheds. The older sheds have blinds or metal louvres outside to help control the temperature. The recently retrofitted shed is tunnel ventilated, with four giant fans down one end, which draw air through cooling pads in the walls, over the chickens and out the end at high speed. The shed's temperature is computer controlled. "If something goes wrong, we get an alarm at the house, it vibrates the whole house," he says.
   Clarke went from university to the state department of agriculture. In the early 1970s he did some work with Ingham. "I saw how good the industry was and decided to join it". He bought a three shed farm running 90,000 chickens. "We moved to five sheds and became one of the bigger farmers. Now we are just average size."
   The cost of local land, plus the need to employ a manager if he went bigger, meand he will stay at his current size. Accompanied by one of his four sons, Michael, a veterinary science student at Wagga Wagga, he shows off his shed. Pipes run the length of the shed, suspended 45cm above the ground, automatically providing water from drippers and feed from soup spoon size bowls. Chickens feed, move about and line the edges of the shed, sitting, digesting their food. Others jump up sporadically, waving their wings. That, according to Clarke, is the sign of a happy shed.
   Shane Reeves, farming manager NSW Ingham Enterprises reaches down and picks up a chicken. It is a young rooster, with a larger comb and wattles than a female.
"Have a look at that amount of breast meat sitting there," he says as he strokes it. "It is all meat."
   Reeves who is quick to dismiss the hormone myth, points out the breeding cycle is comparatively short: chickens reach sexual maturity at about 24 weeks. An elite rooster will be mated with 10 hens, quickly producing many offspring that are then assessed for the required characteristics. "We made very rapid progress in early 70s and 80s, with a good diet, and simple Mendelian genetics."
   While the layer industry has a preference for hens, Reeves says "we would love more males to occur." Males grow faster, and produce up to 450 grams more meat.
    Layers and meat chickens are very different. A layer will reach a size of 2.4 kg and lay 350 eggs over its life. A meat chicken can reach 3.2 kg, but only lays 160 eggs.
   Chickens are killed at different stages, for different markets. The largest grow out for about 52 days, by which stage the females average about 2.87kg, and the males are about 3.49 kg. Reeves says there is no difference in eating quality.
    Twenty years ago the lights were on all the time. Now the chickens get a 10 to 12 hour night. Reeves says a lot of digestion occurs while they sleep. "A bird can hold two days food in its crop, it doesn't need to eat 24 hours day. And in terms of the bird's physiology, bone development, skeletal development, a lot of those processes occur while the bird is resting and sleeping."
   Reeves said the Clarkes, like all their farmers, have a partnership agreement with Ingham. "The farmers own the land and shed, and provide labour, lights, infrastructure and water. The processor supplies day-old chicks and technical support, as well as feed, and crews [who deliver day-old chicks and pick up the grown birds, and in some cases supply litter and clean that up when the birds are grown], and transport the chickens to the farm, and back to the processing plants. The farmer is paid a fee per bird."

Feed conversion is KPI on farm
    The key performance indicator of contract farmers is feed conversion. "We are looking at the amount of kilos of chickens coming off the farm, versus the total feed consumed." Reeves reiterates feed is the processors' largest single cost. "Going hand in hand with that are how the birds are performing, weight for age. If we had some chickens and put them on in a set day, we need some predictability in terms of when they are going to reach the target weights."
   Mortality is also important. "At the time of pick up we monitor downgrades, to ensure any bird that should have been culled has been culled.  There are a number of criteria used to measure the uniformity of the carcases coming through, whether there is any litter burn [damage to the bird's skin from wet litter] or any other component  we are picking up on the carcases which shouldn't be there. There are penalties applied if that occurs."
    Reeves says any ill health, or compromises on animal welfare, shows up in productivity. "Anything you do to the bird that takes the edge off it, they basically sit there and eat feed and don't grow. It is fairly obvious.
   Reeves acknowledges that animal welfare has become more important in the past decade. But he points out "birds that aren't happy don't eat and grow. We have a vested interest in birds growing. If we don't, we lose money hand over fist. Our business units and all the major players work on very fine margins, but high volumes. There is very little tolerance to make mistakes without starting to lose serious money."

Corporate chicken farmers emerging
   Most chicken farms grow 100,000 to 150,000 birds per batch, and grow out just over five batches a year. But corporates are moving into the business. Rural Funds Management runs 154 poultry sheds in NSW and Victoria, with an annual throughput of 30 million chickens.
    Daniel Bryant is CEO of ProTen, a public listed company, which is in the process of expanding its investment in chicken production. It already has 124 sheds with an annual capacity of 28 million birds, at Griffith in NSW's Riverina.
  "We have intentions of building 48 new sheds with another 48 to follow", he says.
   That will take ProTen to having 12% of Australia's chicken meat production. He says ProTen's confidence in the industry is based on projected growth and its relationship with Baiada.
    Bryant is not worried by the proposed Murray-Darling Basin plan to decrease water for irrigation in the Griffith area. He says the sheds use little water and they already have high-security water. He points out chicken meat has strong environmental credentials, with its high grain-to-meat conversion rate and the fact chickens, unlike cattle and sheep, do not produce methane. "The carbon footprint is the least amount of any protein, outside of fish".  
Box: World chicken meat outlook
The chicken meat consumption in Australia mirrors the international situation.
Twenty years ago, the global demand for meat was 173 million tonnes, with poultry comprising 23 per cent. The global demand has risen to 285 million tonnes, with poultry accounting for 100 million tonnes, or 35 per cent.
The forecast is that global demand for meat will exceed 400 million tonnes by 2030, with poultry expected to provide 39 per cent of meat consumption.
source: Rabobank
Australian Chicken Meat Federation:

nb: Andrew Marshall took pics of Andrew and Michael Clarke November 4, 2011

Chicken meat Part 2.
Australian Farm Journal, April 2012, pp16 – 18
So you want to be a chicken farmer.
There are about 690 chicken meat farms around Australia – about the same number as beef cattle feedlots. But as Asa Wahlquist finds out, that is as far as the similarities go.
    Last year the chicken processing company Ingham put out the call for people interested in becoming chicken farmers. It was backed by a television program about the industry.  Shane Reeves, farming manager NSW Ingham Enterprises says that, as a result, he was inundated by people wanting to build chicken farms.
    The industry has been growing steadily, and the outlook is for continuing growth.      The Victorian Department of Primary Industries states chicken farming "enjoys relative security compared with other livestock industries since growers do not pay for feed, stock or veterinary costs." But it warns: "Financial insecurity can be caused by a decrease in the number of chickens placed on a farm by the processors".
   The Department says while there is no information available on the industry's productivity, "however, the ability of the chicken meat industry to maintain a relatively consistent and competitive price by improving production and processing efficiencies and rationalisation suggests the industry has been experiencing reasonable productivity growth."
    But chicken farmers also face a number of risks, the main one being the power, and the financial health, of the processor.
     IBISWorld, in an analysis, 'Poultry Processing in Australia', reports the processing sector had an annual growth in volume of 6 per cent a year between 2007 and 2012. It expects the industry to have revenue of $6.65 billion in 2011/12.
     Naren Sivasailam, a senior IBISWorld analyst, says "poultry production is estimated to increase over the next five years in response to increased demand due to various factors such as the shift towards healthy eating (and thus switching away from red meats), price competitiveness and increases in variety and types of chicken products."
    He points out ABARES estimates that per capita poultry consumption is expected to reach around 40 kgs per person by 2015/16, an increase of 5.3 per cent from 2011/12.
     But IBISWorld regards the industry as 'mature': saying it "appears to have reached market saturation. Per capita consumption is forecast to continue to increase, but at a slower rate". It forecasts  an annual growth rate of 2.4 per cent for the five years 2012 to 2017.
    Reeves says Ingham was looking for more producers in South Australia and Queensland. "We are balanced at the moment in NSW and Victoria".
     He says the first criteria for a farmer wishing to enter the chicken meat industry is having a large enough acreage, close enough to the company's processing plants and hatcheries. "It is no good having a property that is six hours away from our processing plant. Normally they have to be within an hour, hour and a half of our processing facility.     
   "We generally have feed mills and hatcheries within those distances as a rule of thumb."
    He says there has been a movement into chicken farming in the Goulburn area, south west of Sydney. "Farms down there that have traditionally been fine wool merino or fat lambs with a bit of wheat."
A drought-proof industry
     Reeves says one of the great attractions of the industry is that it is "relatively drought proof, because we can still keep producing. It is just a matter of what price it is going to cost you to produce the chicken.
    "If farms are in drought and grain is in short supply and we have to import grain it is a lot more expensive, but at the end of the day Woolworths and Coles and the major retailers still want chickens on the shelves."
     In 2008, the Australian Competition and Consumer Commission (ACCC) released a report into the competitiveness of retail prices for standard groceries. In the section on chicken meat  it reported the states were moving away from regulated relationships between grower and processors. The Victorian Farmers' Federation claimed that, since deregulation, the negotiation of fees between growers and processors had become more difficult.
     The ACCC noted that "if growers were to negotiated individually with processors, the likely consequence of this imbalance in bargaining power would be the offering of standard form contracts by processors, with little input from growers and little scope for them to vary contract terms".   
    The ACCC has granted authorisations to a number of groups of farmers, to allow them to negotiate collectively with processors.  
     Ian Blyth is the Chicken Meat Group manager with the VFF, which represents the interests of more than 90 percent of Victoria's contracted chicken meat farmers.  The VFF has four ACCC authorised chicken meat negotiating groups, one for each of the processors.
   "Each group negotiates with the processor, the terms and conditions of the contract and the growing fee," Blyth says. "As a result the growing fee does tend to vary throughout the state, by quite a bit. Free range it varies from about 76c/bird through to 90c/bird depending on who you are growing with. [For birds raised in] Tunnel [sheds] goes from 67c up to 74c."
     The average chicken farmer has around 100,000 birds, and produces 5.25 batches a year. That means the farmer on 74c/bird is making $36,750 more than the farmer receiving 67c. "It is a significant sum," Blyth observes. He says farmers are well aware of the difference in fees, "all they do is talk to each other". There are variations: in some cases the growing fee covers litter, or bedding material, in others it does not.
     Blyth says farmers can change processors. "Most contracts have a 12 months notification clause in them. It is a five year contract, once you are 12 months out from the contract expiring you say to the processor,  'I don't want to grow for you anymore', you would have already signed a deal with the other at that stage."
     There is, he says, "a little bit of movement. There is not widespread migration from one processor to another, it is a fairly stable industry."  He argues farmers are better off now they have collective bargaining. "The growers on one-on-one contracts are nowhere near as well off as growers who are on a negotiated contract."
    Blyth says movement in and out of the industry ebbs and flows. "Last year we had a lot of farm sales, but four years prior to that it was totally stable. Last year we got a lot of new people into the industry or others moving farm."
      The NSW Farmers' Association, in an advice sheet  entitled "Thinking of buying a poultry farm? – things you must consider first",  points out to intending chicken farmers that processors, under law, must have a contract with a grower, and advises buyers of existing farms to ensure they have a contract that is fair and reasonable and of sufficient length to enable a return on investment.

Return on investment sketchy
     There are no available industry figures on return on investment.  An optimistic evaluation is provided by Inghams on its website promoting the industry to new farmers and investors. It refers to a 14% return on a 10 shed, $7 million investment. The NSWFA cautions it can actually be below the cash rate. It says the return depends on a number of factors, including how many batches are grown out each year, how many birds per square metre there are per batch, how many birds die; and how well the farmer grows their birds compared with others supplying the same processor.
       Chicken meat processing is a high volume, low margin business. The biggest cost is feed, and that borne by the processor.  Ingham says feed prices have increased since 2002, and that between 2005 and 2007 their feed costs effectively doubled.
   IBISWorld reports that, despite rising production and consumption, revenue growth for the processors has been "relatively subdued" between 2006/07 and  2009/10, due to declining real retail prices. Profit levels for the processors in 2011/12 are expected to be just 2.4 per cent, down from 8.0 per cent in 2006/07. This also compares unfavourably with the profit figure for all industries in the sector of 12.4 per cent.
   "The current level of profitability is low due to lower prices, higher feed costs and increases in electricity and fuel expenses,"  Sivasailam says

chicken meat (processing) industry data
year    revenue $m    enterprises    production vol kt
2002/3    5,075.9    158    689.8
2003/4    5,301.8    158    693.7
04/5    5,224.3    154    749.8
2005/6    4,921.6    150    772.4
06/7    4,956.6    145    811.8
07/8    5,068.7    141    797.5
08/9    5,220.8    140    832.8
09/10    5,199.5    137    834.7
2010/11    6,354.2    135    1,015.1
2011/12    6,652.8    134    not available

source: IBISWorld Poultry Processing in Australia, November 2011

Overcapacity and discounting
     He said industry profits "are also reportedly suffering from problems of overcapacity and discounting. Supermarket retailer Coles reduced the price of its home brand chicken by up to 16 per cent in March 2011, placing further downward pressure on overall retail chicken prices. This downward pressure on retail prices flows on to further reductions in profit margins at the processing level."
   One of the factors in chicken meat's success has been the shift from frozen whole chickens, which dominated the sector five years ago, to more processed higher-value products. Baiada, the largest chicken processor, produces 250 different products, from skinless thigh fillets to basil and chilli chicken sausages.
    The Australian Chicken Meat Federation (ACMF) says much of the improvement in the industry’s efficiency over the past five decades is due to increasingly automated poultry plants. "For example, in 1962 a typical 6,000 bird per hour processing plant employed approximately 300 people from live-bird handling to distribution, whereas today the same plant would employ 100 people."
    Reeves says even though there have been significant improvements in technology, chicken processing is still quite labour intensive. "There are systems in place. If it is chicken nuggets, it is highly automated because basically you are punching out a piece of breast meat that is the right shape, the right size, the right weight and you can drop x number of units in a bag to have a kilo and everyone is happy.
    "But particularly with the further processed products, like kebabs and adding marinades, while there is equipment in there that helps along the way, a lot of the pack-off is still very labour intensive, the grading out of the coated wings for the quick service restaurants, it is all visual appraisal and hand pack-off."
    Reeves points out the all-important clean up at the end of the day involves "a significant number of people, with the washdown, the clean up and the QA procedures to ensure it is all clean ready for the next shift, that is quite labour intensive." Ingham employs 8000 people.

Processing costs a secret
    Actual processing costs are a closely guarded secret. Neither Ingham nor Baiada would release those figures to the Australian Farm Journal, although Reeves says "we know our own numbers back to front. We calculate it to two decimal places, to the nearest cent and it is monitored every week. Every Tuesday our stats come out and we forecast on a 3 month and 12 monthly basis."
    It is widely believed in the industry that the processors are under pressure from the two major supermarkets. The ACCC found that Woolworths accounted for around 30% of retail chicken sales, and Coles sold around 20%. Butchers sold 18%, Independent retailers like IGA supermarkets and fast food outlets both accounted for 12%. The remainder went to restaurants, caterers and institutions like hospitals and aged care homes.
    The ACCC, in its report, says: "Although processors may have a number of outside options, Coles and Woolworths, as the two largest single buyers, are in a position to exercise some buying power in their negotiations with processors… a processor with a larger proportion of its business with either supermarket has a strong incentive to retain it even if the terms are less than favourable. Similarly, processors are likely to compete strongly for business with MSCs [major supermarket chains] because they have the attraction of a high-volume customer base."  
    The ACCC found that up until 2008 the rate of increase in poultry prices "has been significantly less than CPI or general food price inflation of the last five years". Prices have since risen. It found the increase in prices was "primarily driven by increasing production costs. However strong competition among poultry meat processors has constrained their ability to raise wholesale prices. Similarly, competition at the retail level has meant that the proportion of the increase in production costs reflected in wholesale prices is not fully reflected in retail prices."  
     Seven privately owned companies are responsible for over 95% of Australian chicken meat processing. The largest, Baiada, has according to IBISWorld a 36.5%, with a capacity to process 1.5 million chickens a week. Baiada acquired the country's second largest processor Bartter in 2009, and trades under the names Bartter, Steggles and its free range line, Lilydale.
     IBISWorld estimates Ingham has 32% share. Over the past decade Ingham has taken over Chickadee Foods and Sunnybrand Chickens. It also has interests in stockfeed and racehorses.
     Both Baiada and Ingham are based in NSW, although Bartter is Victorian. Turi Foods, which trades as La Ionica, has an estimated market share of 9%, and Hazeldeane's Chicken Farm, which has a 5% share. Turi Foods and Hazeldeane are Victorian based. Red Lea Chickens is based in rural NSW and also has a five per cent share.
     A large number of smaller processors account for the rest of the market.

Diversifying into chicken meat.  
What you will need:
The land needs to be at least 45 hectares and located within 200 km of the processor
The land also must comply with council bylaws and regulations for broiler chicken production
The initial capital investment to establish a two shed unit capable of housing 82,000 chickens is about $2.5 million. This should be considered the minimum investment
There are greater economies with the installation of more sheds. The installation of ten sheds is estimated to cost $7 million.
New broiler farms with 10 sheds measuring 152m x15.2m and a capacity for 410,000 birds per production cycle could expect an annual return of up to $1 million, depending on variables such as cost of land, facilities, utilities and level of farming skill.
source: Ingham. "About the opportunity".   
The positives
reasonably steady income which is not weather dependent
inputs are provided by the processor, so the farmer does not have to deal with fluctuating markets
there is a high level of technical support
The risks
the threat of market power, because there are so few processors
processing companies completely control the quality and variability between farms of the inputs like feed
processors do not offer a guaranteed income
processor shed requirements continually change
an inability to sell to the highest bidder on the market
possible conflict with neighbours over noise and smell
source: NSW Farmers Association

Chicken meat Part 3
Australian Farm Journal, May 2012 pp 17 – 19
Chicken meat fits with consumers' lifestyles – but ethical labelling needs sorting.
by Asa Wahlquist

    Australian chicken consumption has been rising steadily for the past 40 years. It passed one million tonnes in 2010/11, according to the Australian Bureau of Statistics, after growing at an annual rate of 4.4 per cent over the past 12 years.
    The question facing the chicken meat industry is, will it continue to rise at the same rate. The challenge facing its competitors – beef, lamb and pork – is how can they claw back some market share from chicken. There are already signs that beef is applying the lessons learned from chicken, and achieving some success.
    Martin Kneebone from Freshlogic, a food industry consulting and analysis business, expects chicken consumption to continue to rise, though he points out "it would be fair to say some of the early gains aren't likely to be repeated". He sees the biggest threat to chicken coming not from red meat, but from pork. "If the consumers change their view towards pork, it could very easily consume more of the protein market because pork is really like a big chicken, it has the same controlled production systems. If they bred an advantage into animals they were using, it is going to come through to the market very quickly and its value is quite strong."
    He thinks there is a demand for "ethical food benefits", and people will pay a premium of up to 20 per cent for free range chicken. "People are conscious of animal welfare, eggs lead that, chicken is pretty close to it." But while he thinks consumers are interested in free range and organic meat, Kneebone argues chicken meat suffers the problem in common with other organic products: lack of one national labelling standard.
     Dr Andreas Dubs, Executive Director of the Australian Chicken Meat Federation (ACMF) says the rise in production "is a combination of growth in population and increased consumption," cautioning: "there will be limit to that".
    Only between four and five per cent of production is exported, and Dubs does not see that growing in the short term. Competitors include the US and Brazil. "Everyone uses the same chickens and the same technology. Essentially it comes down to cost of production."
    The only chicken meat that can be imported into the country is cooked chicken from New Zealand, and canned chicken that has been fully retorted in the can.

Chicken Welfare and free range
   Animal welfare is one of the major issues facing the chicken meat industry. An
intensive animal industry, chicken farming is under constant scrutiny from welfare organisation.  Consumers are buying more free range and organic products, which now account for about 15 % of the industry.
   Dubs says the industry has a national code of practice, and an industry animal welfare standard. There is no third party auditing, but he points out the processors virtually control the farming. "They essentially audit the farms, they visit the farm quite regularly but you can't call it third party".
   Hope Bertram, the Humane Food Marketing Manager with the RSPCA believes the industry code of practice does not go far enough. At the beginning of 2010, the RSPCA introduced an approved farming scheme for meat chickens.
   "The principles behind our standards is they allow for the animals' behavioural and physiological needs," she explains. Shed production is acceptable, but at lower stocking rates and with strict light controls, litter management and perches. "When we introduced our standards, some of the responses were meat chickens don't perch. But they have found the birds are using the perches, and by doing that they develop leg muscles and leg strength," Bertram says.
    The RSPCA assesses the farms four times in the first year, and if management is satisfactory it then drops to twice a year. RSPCA approved farms include the free range Mt Barker, in WA, Freedom Farm Chickens which is owned by Cordina Farms, and Coles RSPCA Approved chicken.
     Bertram says there is "a growing number of consumers that are questioning more where their food comes from and how it is being produced". She argues the live cattle export issue "was a wake-up call to some consumers to start thinking about farm animals".
    Dubs says the RSPCA standard provides "another way to proceed. The only concern we would have is that you can't just look at animal welfare, you have to look at the whole picture."  He acknowledges that animal welfare is an ongoing issue, but adds "you have to put that in context. It is the focus of a group of consumers, but most chickens are sold on price, not on animal welfare. Is the consumer prepared to pay is the real test."

Coles adopts RSPCA-certified chicken
   Chris Nicklin, the business category manager for meat with Coles, says customers "are starting to respond" to RSCPA Approved Chicken. Currently about 10% of chicken purchased by Coles customers is RSPCA approved.  "We hold a lot of hope for RSPCA Approved Chicken. We see it as the place to be going forward. There is a premium at the moment of about 10 per cent, but we see us working with our suppliers and looking at cost structures and economies, and our goal is we give you those attributes but you pay the same price."
    Nicklin says the RSPCA Approved Chicken is in line with other moves, like
sow-stall free pork, hormone growth promotant-free beef and RSPCA approved eggs. "We believe that is what our customers are wanting and that is where we are heading." While the nationally, free range and organic chicken is 15% of the flock, in Coles they account for over 28%.
   "We have started to learn from why chicken has been successful and apply that to beef," Nicklin says. He thinks consistency is the main quality chicken offers.
   "We advertised that all our fresh beef is HGP-free and straight away that struck a chord with our consumers. We have tried to get a much more consistent product so in the specs we are buying and the way in which we buy we are absolutely after consistency.
   "Our ultimate goal is a bit like the chicken, you don't need to sort through our display. If it is a sirloin steak you can just grab any one. If you have a basic knowledge [of how to cook it]  you can have a great eating experience."
    The result has been stunning. Nicklin won't give any figures, but he says "we have had some tremendous growth in beef. I can say it has been significant. We have grown beef consumption."

Box 1: In court over free to roam
Last September [2011] the Australian Competition and Consumer Commission instituted proceedings in the Federal Court against Baiada Poultry and, Turi Foods and the Australian Chicken Meat Federation.
The ACCC alleged the companies and the Federation engaged in "misleading or deceptive conduct in relation to the promotion and supply of chicken products" over claims meat chickens were free to roam. It alleged "that the population density of meat chickens raised in barns preclude such movement".
The case will be heard in March 2012.
source: ACCC

Box 2: Conventional, free range and organic chickens
Conventional chicken production occurs in large sheds with a maximum density of 28 to 40 kg/square metre, depending on shed ventilation. It accounts for about 85 per cent of Australian production.
Free range chickens live in sheds, but have access to an outside run after 21 days of age. The stocking density is lower at 16 to 32 kg/sqm. The feed remains inside the shed, so it won't attract wild birds which pose a disease risk. Birds treated with antibiotics cannot be sold as free range. Free range chicken meat accounts for about 15 per cent of chicken produced. The main certifier of free range chicken meat in Australia is Free Range Egg and Poultry Australia Ltd.
Organic chickens are stocked at a lower density, 25 kg/sqm. They must be free range and must have access to the outside and to grass from 10 days of age. They must be fed certified organic feed. Birds cannot be treated with routine vaccination. Organic chicken meat is usually certified by one of half a dozen accreditors. Less than half a per cent of chicken meat is certified organic.
RSPCA Approved chicken. If in sheds, stocking density most not exceed 28kg/sqm for naturally ventilated sheds, and 34kg/sqm for mechanically ventilated sheds. There are light and dark requirements. Birds must have perches or straw bales.
The chemical free label refers to processing: it means no chlorinated water has been used in the processing plant. Instead the water has been sanitised by UV light, and the carcasses cooled by exposure to cold air, rather than an iced water bath.
At Coles stores in January 2012 a conventional whole chicken cost  $4.90/kg,
a Lilydale free range whole chicken cost $6.60/kg, and an Inglewood Farms whole organic chicken cost $9/kg.
Sources: Australian Chicken Meat Federation, RSPCA, Coles online.
Box 3: The way Coles is heading
Sow-stall free pork, HGP-free beef and RSCPA Approved eggs and chicken meat are now on the shelves at Coles.
Business category manager for meat at Coles, Chris Nicklin says those products all mean Coles is "clearly differentiated by our animal welfare status. All those things individually are OK, but cumulatively in the eyes of consumers they are offering a clear proposition that is not available elsewhere.
   "We believe that is what our customers are wanting and that is where we are heading."
   Nicklin says Coles is taking the process slowly, building up volumes so prices will not rise too high. "We are conscious you can't do this and charge them 30 per cent more. That is why it is taking a long time to move and change techniques and processors in order to get good value for money."
   The customers are clearly liking it, with 28 per cent of chicken meat sold at Coles being either free range or organic, compared with the national average of 15 per cent.
   And the Coles approach to beef is paying dividends. "We have had some tremendous growth in beef".
    "We have looked at our branding and the attributes of our brands, and in particular we have removed the hormone growth promotants." He says consumers quickly responded to the HGP-free beef.
    But it is about more than HGPs. They are working towards a more consistent beef product, while offering competitive prices.
    "We have done a double whammy," Nicklin explains. "We have done what we term the down down-worths which has given you great prices on the key beef lines, and we have given you that with those added attributes of age for tenderness and the HGP free. We have increased beef consumption. We are talking about week in, week out. We haven't seen that for years."
    Nicklin says there is a move to better quality "and not having to pay through the nose for it. Better quality with some good customer attributes around welfare or eating quality.
We are basically reviewing each of our categories against that criteria."
     Provenance is increasingly important, with more beef being labelled according to breed and the area where it was grown. "All our beef in Western Australia now comes from WA. We are starting to reflect that provenance and that local content within each of the states."
    Nicklin says consumers are "voting with their feet and are seeing us in a space where no one else is really in. The message to farmers is: don't forget who is the end consumer, it is not who buys your stock. It is who consumes it."

Chicken meat part 4
Australian Farm Journal, June 2012 pp 41 – 43
Feeding meat chickens: genetic elite
In the final of the four-part series on the chicken meat industry, Asa Wahlquist investigates its importance to the feed grain sector and how genetic selection is used to continually improve feed conversion – the broiler farmer's key to economic success.

   The chicken industry is a major user of the fast-growing feed grain sector.  It uses cereals – feed grade wheat and barley – sorghum and protein meals, left over after the extraction of oil from canola and soybeans.
   In 2010/11 the chicken meat industry consumed 21 per cent of the 8.9 million tonnes of feedgrain. Dubs said the industry prefers to use Australian grains, but had to import grain during the last drought. Most of the soymeal, which typically comprises eight per cent of the feed, is also imported. Because soymeal is not separated into genetically modified (GM) and non-genetically modified in most international markets, that means the soymeal was most likely from genetically modified crops.
   On its website, Ingham states: "While we try to source poultry feeds that do not contain GM ingredients wherever possible, this isn’t always feasible because these ingredients must meet specific quality standards and be available in the quantities that are economically sustainable for large-scale producers. Because of this, Ingham chickens may sometimes consume feed which contains GM ingredients."
   Dubs said that over the past 18 months, the industry has tended to use canola, rather than soymeal. Australia produces a comparatively small soybean crop. Sorghum is more widely grown, and research is underway into improving its digestibility in chickens.   
   Dr Vivien Kite, research and development manager with the ACMF, says sorghum "just doesn't perform as well as it should do, and we don't entirely understand why that is."
    She says when it comes to the nutritional qualities of grains and oilseeds, it all comes down to energy. "What the industry is doing is buying energy, that is the key thing and buying energy at a reasonable price, with some understanding of what the energy content of those feeds is going to be, so things that have anti-nutritional factors in them, that reduce digestability, that can be an issue."
   Kite says some of the consistency problems are overcome with feed enzymes. "With wheat, for example, it is routinely the case that feed enzymes will be used, because you do occasionally get wheat that might be high in non-starch polysaccharides which can reduce their metabolisable energy content, but if you chuck a bit of feed enzyme in that tends to over come that".
   Work is also underway to find a more rapid way to assess the critical protein level in grains. While the pork industry has bred specific grains, Kite says the chicken industry is unlikely to follow suit.
    "It is possible that we might with other organisations, with other end users invest in some breeding. But we don't see a lot of value in just breeding grains for the chicken industry."
   John Spragg is the Executive Officer of the Stock Feed Manufacturers' Council.
   He says the key grain quality assurance and traceability issues are the same for chicken growers as other end users. "It is a common issue. Correct use of chemicals and  potential residues that is the major issue."
    The feed millers' concerns with grains are weed seeds, mould and salmonella. Spragg points out most of the major producers "are integrated, so they own and operate their own feed mills as well as contracting feed supply with other independent manufacturers" and thus control the standards of pelleted feed. Grain used by chicken farms comes though the common receival systems.  
   "Every grain grower would be aware of the requirement to meet receival standards. It is a familiar issue, it is quality of grain, whether it is mould, weed seeds, whatever it is."
Spragg says there are no specific grain requirements for the chicken meat industry, and there are no specialist chicken feed graingrowers. "They [chicken meat industry] are just another buyer of grain and they will buy grain to meet a defined specification."
    Spragg, who is also involved in projects with the Grains Research and Development Corporation, says the critical factor is the energy in the grain, "and it is how the birds utilise that energy, so it is measuring the performance of the chickens against the parcels of grain. Theoretically, in the future, it should be possible to breed grains that have a higher available energy content, but practically it is a question of  the relative return on doing that additional breeding work versus the cost of developing those varieties and segregation."

Future for feed millers
    Spragg estimates over half the feed used by farmers contracted to the chicken processors is manufactured by the processors themselves, and that is the long term pattern.
   "There have been no new feed mills built for a long time, they (processors) have had sufficient capacity or they have increased capacity to supply their increasing demand."
   He points out building a new feed mill "is a large capital investment and their preference recently has been to invest in their own processing and farming operations."
    The processors also rely on the feed mills for extra product, and Spragg says the trend has been for the larger processors to work with the commercial feedmills. He says Ingham and Ridley "have formed a closer relationship in the last couple of years, so that the commercial feedmills, particularly Ridley have probably benefited from that."
    John Murray, the chief executive and managing director of Ridley Corporation, says his company "tends to supply the larger end, the Inghams and the Baiadas".
   "There is a lot of work that is ongoing in the industry between the chicken companies and companies like ourselves."
    He says the industry has a high growth rate, and it is consolidating. "All of our customers have been growing quite strongly through the last few years." He said the industry is very demanding. "The margins in growing a chicken are small. They are squeezed at the consumer end by the market power of supermarkets and then they are at the whim of what raw material prices are doing, so improving their feed conversion ratios is vital.
  "We are constantly working with them on new diet changes." He says because the industry uses all the major feed grains "generally the diets are adjusted to try and take advantage of the cheapest grains at any point in time". Disease prevention is a high priority, and Murray says the chicken companies "rigorously audit our feed mills to ensure that our house keeping and our processors minimise the chances of the introduction of things like salmonella into the chicken feed".
   Murray thinks the industry will continue to grow. "You only have to go into the shops and see how price competitive chicken is, it is by far the cheapest form of protein, and I think it is generally perceived as a more healthy inclusion in the diet than red meats."

Building a bigger chicken
Chicken breeding throughout the seventies and eighties resulted in rapid increases in size. But that advance occurred at the expense of other factors, including leg strength, immunity and egg laying.
   Shane Reeves, the Farming Manager for Ingham Enterprises, explains an increase in meat production means the hens lay fewer eggs. "So the whole time we are looking at all the economics and trading off which bit you are going to give up in order to have that."
   Twenty years ago, Australian chicken producers bred their own birds. But these days commercial chickens come from two lines: the Cobb line out of Arkansas and the Ross bird from Avigen in the UK.
   The Australian industry imports fertilized eggs. From the quarantine hatchery, the young chicks go to three great-grandparent farms, where each bird is assessed. "We will work out their weight, how much meat they have on them, their leg strength and measure the shank length and all sorts of things. The best 10 per cent of males will be used, and the best 50 per cent of the females will be retained for breeding," Reeves explains.
   The 4000 chicks are then multiplied up to between 12 to 15,000 birds that move onto six grandparent farms. The next generation of 43,000 to 50,000 goes to the 46 parent farms. "There are enough there to produce about 150 million broilers," Reeves explains.
Reeves says breeding is now focussing on ensuring the bird "has good, sound and solid legs, that it is well feathered by the time it goes into the processing plant, making sure that it is robust and it is going to perform well out in the commercial environment."
Peats Ridge chicken farmer Andrew Clarke observes the birds have also "got a lot quieter". He began chicken farming in the 1970s. "Ten years ago you would have a massive big bird, little tiny legs, no feathers on its back, fairly flighty."
One of the biggest killers back then was scratches on the back of their unfeathered legs that became infected. Now they are protected by feathers. "In the past they had these skinny legs with massive big long nails, I'd come out with scratches all over me."
Clarke has also seen an improvement in overall chicken health. In the earlier days, they chickens were regularly fed antibiotics. "I wouldn't have used antibiotics for ten years, which is how it should be," Clarke comments.
Box: Chicken meat production facts
Chickens are hatched at hatcheries owned by the processors. The eggs also come from processor-owned farms.
An egg takes 21 days to hatch.
During the first stage, the eggs are held in little cups that are rotated once an hour, at a 45 degree angle. The movement ensures the embryo floats: if it sticks to the eggshell wall it will die.
At day 18 the eggs are transfer to the hatcher and placed in loose trays. They can be vaccinated at this stage for diseases like infectious bronchitis, Newcastle disease or Mareks disease, using a technique called innovo vac. A tiny hole is made into the air cell at the blunt end of the egg and 0.1 to 0.2mm of vaccine is dripped into the air cell.
The success rate is 80 to 85 live chickens per 100 eggs.
At one day old the chickens are moved to farms.
Between the first day and 16 or 17 days the baby chicks get 'starter' feed with 22.5 per cent protein. The feed is mixed to have an aggregate size of 2-3 mm.
Baby chicks cannot regulate their body temperature, so their sheds are heated to 32C.
For the following week to ten days (until 24 to 27 days or a size of 1.2kg) they go onto 'grower feed' which is slightly lower in protein, 21.5 per cent in a slightly coarser aggregate of 3 to 3.5 mm.
Then they move on to a 'finisher' pellet, 5 to 6mm long, 4mm diameter with a lower protein level of 20 per cent.
By the time the chicken is 28 days old, its fluff dander has developed and the bird is fully feathered. The shed temperature is dropped to 20C.
At this stage the bird can be sexed by its wing feathers. If the bottom row has grown longer it is female, if it is the same as the other feathers it is male.
At 30 to 35 days, when they weigh 1.7 to 1.8 kilograms, 40 per cent are taken for the manufacturing and quick service restaurant industries, such as Kentucky Fried Chicken.
After 40 days, more birds will be taken out to be sold as whole birds.
The remainder grow out to 52 to 60 days, reaching up to 3.3 kg. The larger birds are generally used for chicken pieces such as drumsticks, breasts and wings.  
An average meat chicken will eat 5kgs of feed in a lifetime of  42 days.
The carcase weight is about 70 per cent liveweight.
The inedible portion is used for the meat and bonemeal component of stockfeed, in blood and bone fertiliser, in pet food, and in pharmaceuticals and other chemicals.
The average dressed weight of a chicken is 1.9 kg
80% processed poultry products are sold raw (fresh or frozen whole birds or pieces)
20% are sold ready to cook, or already cooked

Comments are closed.