Trends affecting poultry farmers in the US and beyond

In late 2021, US President Joe Biden, signed executive orders to “empower family farmers and increase their incomes by strengthening the Department of Agriculture’s tools to stop the abusive practices of some meat processors”. He is referring to a lack of competition in the US meat and poultry processing sectors which, his administration says, has caused damage to consumers, farmers and the US economy.

The associated funding will increase competition and create more options for producers and consumers in the short term by kick-starting 15 independent processing projects. In the long term, the US Department of Agriculture will also work with banks and other lenders to make more capital available to independent processors, enabling them to expand.

For insight into this issue and other trends, we contacted representatives of Farmer Focus (FF), a US organic poultry company that already functions as an independent processor and partners with farmers to help them hold onto control of their farm businesses for generations to come. In 2021, FF was the fastest-growing chicken brand. In 2022, the company’s ‘pre-seasoned’ products, which have received multiple NEXTY awards for flavour innovation, will be released. Product flavours include black garlic, umami and mid-Eastern (tahini, sumac and pomegranate).

FF CEO and founder, Corwin Heatwole, applauds Biden’s commitment to support independent processing which, in turn, supports the financial viability and sustainability of US chicken farms. He sees 2 main problems for farmers that have been caused by the dominant US chicken industry business model – integrated conglomerates contracting farmers to raise birds, with no bird ownership by farmers. These problems are a lack of farm operation control for farmers with a payment system that pits them against each other. Stories of farms returning to success from the brink of bankruptcy. You even see the next generation returning to the farm.

This year FF plans to continue expanding its partner-farmer model while it also celebrates progress. The company has already seen the average age of its farmers trend about 10 years below the national farmer age average, among other benefits.

“We’ve found that when you empower farmers with ownership and control, enabling farms to be viable and sustainable for the next generation, incredible success stories emerge,” Heatwole says. “Stories of farms returning to success from the brink of bankruptcy. You even see the next generation returning to the farm.”

Right now, as the Biden administration mentioned, meat and poultry prices are high. They are even higher now due to inflation related to the pandemic. However, a lack of industry competition also plays a role in higher chicken prices, as does supply and demand. These factors, in turn, are generally driven by things like feed ingredient sourcing scarcity, labour shortages and disruptions in the supply chain. FF chief financial officer, Debarshi Sengupta, explains that all these forces are creating a strong push and pull right now in the US chicken market.

“We’re facing a faster-than-anticipated economic recovery period that’s characterised by not only higher consumer demand for food and beverages (more consumption of food both away from home and at home), but also significant global raw ingredient supply issues, supply chain distribution disruptions, labour shortages and higher labour attrition,” he says. “All of this results in materially higher input costs that consumers are ultimately seeing show up on sticker prices.”

Sengupta adds that according to S&P Capital IQ Market Intelligence, the cost of groceries was up 4.5% year on year in September 2021. Sengupta advises food processors to evaluate their entire supply chain to identify their costing pressure points and take strategic and methodical action in partnership with vendors and suppliers. “On a similar note, food processing customers should also recognise the pressures food processors are facing due to rapid input cost inflation,” he says, “and approach tackling cost inflation pressures in a collaborative manner.”

FF’s chief sales officer Ed Hinson adds that the meat supply chain is currently in a situation where demand is outpacing supply. More people are cooking at home and grocery stores are busy. “We see foot traffic up in some partner retailers 13% year on year,” he says. “When you look at the meat supply chain, it takes weeks for poultry to catch up to demand, months for pork and years for beef due to the timelines required on farm. Even if Covid-19 is not a concern for much longer, there will be a recovery period for the supply chain.”

Kathryn Tuttle, FF’s chief marketing officer, notes that there are many trends currently affecting poultry consumption. One is an interest among consumers in ‘claims-based’ meat (claims on the package about health, shared values, etc.). Consumers are also ‘hungry’ for new meat products and interested in plant-based ‘meat’ products as well. With regard to claims-based products, Tuttle says “younger shoppers tend to be more focused on both health and values while being less meat-centric, so to keep them in the category, there’s going to be more and more emphasis on unique product attributes (humane, paleo, etc.) and brand benefits (sustainability, social good, etc.).”

She adds that “the at-home cooking from the early pandemic has been a trend that we see having some staying power. Because of this trend, consumers are increasingly demanding quick and easy at-home options that don’t sacrifice taste, quality of ingredients, or health.”