Donahue discusses broiler economics at DPI meeting
OCEAN CITY, Md. — Mike Donahue, of Agri Stats Inc., reviewed the economics of the broiler industry over the last 30 years to kick off a full day of presentations at the National Meeting on Poultry Health, Processing, and Live Production sponsored by Delmarva Poultry Inc. on Oct. 9.
The conference was held Oct. 7 to 9 at the Clarion Resort Fontainebleau Hotel. In 1980, literature at the time said a four-pound chicken could be produced in 52 days with a 2.1 conversion rate, he said.
“That really was a marketing number,” Donahue said. “That was the top 5 percent or 15 percent at the time.”
Now, from a genetic standpoint, he said “you can raise a 4-pound chicken in 31, 32 days with a 1.55 conversion. And we haven’t reached the edge of the world in terms of making progress.”
Discussing industry size, Donahue said, “These are big numbers. …Around 80-million-day-old breeder chicks last year, 75 million hens housed, a billion dozen hatching eggs, 9.5 billion broilers, 9 billion broilers at the end of the day, 51 million tons of broiler feed.”
He said his job is to identify the economics of the industry.
“A penny on 50 billion pounds of chicken is worth $500 million; so pennies and tenths of a cent and hundredths of a cent make a difference for our industry,” he said.
Over the 31 years he has been collecting data, he has seen whole bird field-caused condemnation drop from about 1.2 percent to 0.2 percent. For an average plant doing 30 million pounds per month, he estimates the result is an annual increase of $2.5 million due solely to that one percent reduction.
Donahue said livability peaked at 96.25 percent and has been dropping in the last couple of years. He attributes that drop “to an increase in mortality and poorer performance as we have moved to more antibiotic-free chickens.
“We are down to about 94.5 percent livability in the first half of ’19,” he reported, noting that mortality is somewhat higher during the winter months. By the end of the year, he expects the number to be at about 95 percent.
In 2013, he said, the average first-week mortality was 1 percent, climbing to 1.8 percent in 2018. He cited proper brooding temperatures, access to water and feed, cleanliness of the house, and the removal of antibiotics from the hatchery among the factors determining first-week mortality.
Donahue has seen an increase of 1.1 to 1.2 percent in pullet mortality between April 2017 and August 2019 to a total of more than 7 percent. He said 1 percent is “so important” and every grower needs to know what one percent is worth to them, “because it has significant economic value and it’s climbing right now.
“An increase in mortality is one of the factors that has limited our ability to increase production in the last couple of years.”
Discussing feed conversion ratios, Donahue said in 1988 the ratio for a 4.2-pound chicken was 2.05 while currently it is 1.8 for a 6.5-pound chicken. He termed this increase in feed conversion “a real triumph.”
He noted feed costs affect the broiler industry significantly. “Every time corn goes up or down by $1 per bushel, it affects our live production costs by 2-1/2 cents per pound.”
For soybean meal, he said, $100 per ton price increase is worth 2.5 cents per pound.
Trade issues also have affected broiler economics, Donahue said. He noted soybean meal is abundant at about $325 per ton because of reduced demand from China related to trade issues and the loss of between 30 and 60 percent of the pigs in China to African swine fever.
He said both chick cost and housing expense have risen in recent years. He attributes part of the increase to the adoption of NAE programs that has increased downtime between flocks from 14 days to 19 or 20.
Chick costs also play a role in production costs he said. “With advances in genetics, the day-old chick cost has gone up rather significantly over the last number of years.”
For the last several weeks, Donahue reported, the United States has produced more than 175 million chickens per week for the first time since 2007, before the recession began. In 2007 he said live weight was 5.40-5.45 pounds compared to 6.30–6.40 currently.
“We have had three weeks out of the last five, where for the first time in history, we have surpassed 1.1 billion live pounds in production,” he said, predicting that the number will continue to grow over the next several years.
Examining the correlation between downtime and livability, he said more downtime increased livability, but the longer birds are kept out of the house, the higher the housing expense.
For about 18 months, some 50 to 52 percent of production has been fed an NAE diet, Donahue said, while only about 10 or 11 percent of the pounds being sold as “antibiotic free,” the trend being mostly in the smaller birds and tray pack sector.
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