FALL FARM 2022: Bird flu among among concerns facing poultry farmers

Disease, high costs of utilities and other inputs such as feed, rising interest rates, and logistical challenges lingering from COVID are issues for poultry farmers in 2022.

"Producers need to revisit to see if their biosecurity measures are enough to prevent diseases ... and that they remain at bay," said Dr. Adam J. Kantrovich, full extension specialist of agribusiness, assistant director of the Agribusiness Team and director of the Clemson Extension Tax School. "This can be devastating to a producer and the surrounding farms if a flock were to become infected due to poor biosecurity."

"During the spring and fall bird migrations, we tend to see an uptick in HPAI around the country," Kantrovich said. "Most backyard flocks do not have any biosecurity protocol as many of the birds are in the open and outside and are able to interact with wildlife, including migratory birds and predators which may infect the domestic flock, even through wire mesh."

Avian influenza is an airborne respiratory virus that spreads among chickens via nasal and eye secretions and manure. The virus can spread between poultry flocks, from wild birds, or via infected poultry, equipment, or the clothing or shoes of caretakers.

The H5N1 of the virus was confirmed by testing at a commercial poultry farm in Arkansas earlier this month. State officials said 57,000 birds were destroyed.

The case detected in Arkansas was the highly pathogenic H5 type, which is more severe and causes high mortality in poultry flocks.

The virus is not a threat to public health; it does not affect poultry meat or egg products and such products remain safe to eat, the release stated.

Avian flu cases have now been detected in 42 states, but South Carolina has been largely been spared from the epidemic.

The avian flu will have an impact on the consumer this Thanksgiving.

Experts say rising avian flu cases and inflation will likely mean smaller, more expensive turkeys this year.

Wholesale turkey breast prices around the middle of October were averaging about $5.61 per pound or 156% higher than last year, reflecting tighter supplies, according to the United States Department of Agriculture.

The impact of the outbreak on the broiler industry has been far less than with turkeys.

Of the 43.8 million commercial birds depopulated this year, only 2.3 million were meat-producing broilers. This represents less than a 10th of 1% of typical annual slaughter, according to the USDA.

The impact on exports has also been smaller as the vast majority of outbreaks were outside of major broiler-producing regions, and most major trade partner regionalized trade restrictions.

With the exception of three flocks in North Carolina that were depopulated in early April, commercial flocks in the top four broiler-producing states (North Carolina, Georgia, Arkansas and Alabama) have avoided HPAI, according to the USDA.

Higher retail prices is no indication that farmers are making more money as feed and utility costs are also rising, eating into any grower profits.

"It may be time to have an energy audit done of the farm to see where some capital improvements may help reduce costs over time and increase production efficiency," Kantrovich said.

"Feed prices have narrowed the profitability margin this year," he said. "Feed prices continue to remain elevated, if and when some of the global conflicts begin to calm, we should see feed prices begin to decrease if demand stays steady."

"Right along with feed prices, most input costs remain elevated, continuing to put pressure on all producers, especially those that raise livestock and poultry due to the need to purchase or raise their feed," Kantrovich said. "Prices across the board have not come down enough yet to provide enough breathing room for many producers."

Other issues are facing the poultry farmer in 2022.

• Rising interest rates.

"This may cause cash-flow issues for some," Kantrovich said, suggesting farmers perform "a good financial analysis to determine if any changes can be made to help with cash flow and whether any restructuring may be required."

• Good incentives could come with tax liability.

"As contracts between some integrators and growers are being renewed or in initial stages for new contract growers are developed, some integrators are offering some good incentives, but you need to be careful because some across the South are going to cause a significant tax liability," Kantrovich said. "It would be wise for the contract grower to work with a trusted tax professional to look at the situation and determine some good tax strategies that will not create future tax liability issues."

The wildcard for 2022 was still COVID.

"There are some remnant impacts from COVID, but primarily dealing with logistical issues," Kantrovich said. "The labor challenges were already gaining speed prior to the COVID pandemic, and they are continuing to be a challenge for many farmers and others within the agricultural industry as well as for the rest of society."

A look at the birds

Looking at egg production, Kantrovich said locally broiler egg set was down the week ending Oct. 8, which was the lowest egg set week since early September.

"South Carolina is down 3% compared to the same period last year for egg set and 30% down for chicks placed compared to the same period last year," Kantrovich said.

Nationally, Kantrovich said broiler egg set is up 3% and chick placement is up 5% compared to the same period/month last year.

"Layers and egg production for South Carolina have been good from a production standpoint," Kantrovich said. "South Carolina is up 5% for layers on hand. South Carolina is also up for the number of eggs per 100 birds laying when compared to the same period last year."

Nationally the numbers in both areas are down 2 to 3%, Kantrovich said.

Despite challenges facing the poultry farmer, Kantrovich said poultry prices are "decent right now."

"The price is above 2021 and above the 2019-21 average," he said. "The bad news is that the data right now is showing an expectation that we could see a softening of those prices with a possible increase in production."

"We will need to push exports a bit more or a possible increase in domestic demand making a switch from beef and pork products to poultry," Kantrovich continued. "It is expected that this Thanksgiving will be another one with higher-than-normal turkey prices and possible scarcity in some parts of the country."

Kantrovich said while poultry supplies continue to strengthen, supplies are still below most of the previous four to five years for broilers being placed.

"Market activity has been slow at best for some poultry products/parts with some others seeing moderate interest," he said.

Kantrovich said slaughter is continuing to increase while weights have been below the same period last year.

"Broilers in cold storage have also continued a slow creep upward and are above 2022 levels presently for 2022 while remaining below 2017-20," Kantrovich said.

Demand is steady for poultry and is expected to increase as the Thanksgiving season nears, Kantrovich said.

"We have lost a turkey, layers and other poultry to HPAI without seeing a major change in domestic demand," Kantrovich said. "The saving grace to the U.S. consumer is that export demand has dropped with a lot of that decrease due to the strength of the U.S. dollar."

Kantrovich said it is difficult to gauge how trade agreements/imports/exports are impacting poultry prices.

"Right now our monthly broiler exports have nose-dived below 2020 and 2021 levels and are presently below the 2017–21 year average," Kantrovich said. "We have seen increased shipments to about four countries, which is not enough to offset the decrease in most others."

"Most believe the issues with the export market are not due to any trade agreements or trade wars but simply due to the strength of the U.S. dollar vs. other foreign currency, making it much more expensive to most trading partners including Mexico, which we have seen a 25% decrease in exports for the month of July, year over year," Kantrovich said.

Impacting poultry farmers locally is also the announcement earlier this year of Carolina Precision Foods opening a $10 million chicken-processing plant in Florence County, which will help booster the poultry industry locally. The company promises to create 402 new jobs.

Carolina Precision Foods specializes in deboning, portioning, marination, custom further processing and mechanically separating food.

Poultry overview

Many local farmers contract with Pilgrim's Pride or Columbia Farms.

The companies provide the birds, feed and veterinary services, while the growers provide the labor, housing, litter and utilities.

Generally, over the last five years, the region's poultry sector has stabilized in chicken farms after seeing a decline over recent decades. 

Production has decreased somewhat.

There were 59 broiler chicken farms in Orangeburg County in 2017, compared to 57 in 2012. The number of broiler chickens decreased in the county from 4,354,176 in 2012 to 4,129,552 in 2017, according to the ag census.

This ranked the county fifth in the state.

Calhoun County has seen the number of chicken farms increase from six in 2012 to nine in 2017. The number of chickens produced decreased from 1,093,600 in 2012 to 925,000 in 2017.

This ranked the county 15th in broiler inventory.

In Bamberg County, chicken farms continue to be a rarity, with five farms in 2017 compared to four in 2012.

The number of broiler chickens in the county was 350,200 in 2017. This ranked the county 20th in the number of broiler chickens. The 2012 numbers were withheld to avoid disclosing data for individual farms.

Like other agricultural sectors, the county's poultry industry is comprised primarily of farmers contracting with large companies to grow chickens.