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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


SouthPoint

04/29/2010


Regional poultry industry and exports

The poultry industry is the region's most important farm-producing sector. This $10 billion cash-producing sector is also the region's top farm exporter, one of the few national industries producing a trade surplus (see EconSouth Q4 2009).

According to the National Chicken Council, U.S. exports of poultry products in 2009 accounted for 18.8 percent of production. The economic impact on the poultry industry on District states is significant, according to an American Meat Institute (AMI) study. The AMI report estimated that in 2009 incomes paid by poultry companies in the region reached $8.2 billion, with the industry supporting nearly 49,000 jobs, mainly in Georgia, Alabama, and Mississippi.

Although the poultry industry this year has been boosted by improving domestic demand and lower feed costs, risks to the outlook exist, namely trade relationships with Russia and China—the nation's top poultry export markets. Chart 1 shows that in recent years, U.S. poultry export values were led by strong demand from Russia and China, countries that from 2006 to 2008 nearly doubled their purchases to $4.2 billion. In 2009 and early 2010, however, exports to China and Russia plunged dramatically as those countries boosted domestic production and placed limits on U.S. poultry imports.

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Russia had been the top overseas buyer of U.S. chicken, accounting in 2009 for about 20 percent of U.S. broiler exports. In 2009, U.S. poultry shipments to mainland China accounted for about 18 percent of overall U.S. broiler exports. About half of the chicken parts sold to China are wings and feet, which are worth only a few cents a pound in the United States. In contrast, these products in China fetch more than 60 cents a pound, a price that no other foreign market comes close to matching.

Recently, the U.S. Bureau of the Census reported that through February 2010 total U.S. broiler exports in early 2010 were down 14 percent from the first two months of 2009. A large portion of the decrease was the result of falling shipments to Russia and China.

The decline in overall poultry exports in 2010 was not offset by larger U.S. poultry shipments to Hong Kong (a 335 percent year-over-year increase) and Canada (a 21 percent year-over-year increase).

Although poultry exports are a small piece of U.S. international trade, the industry supported by this trade and the resulting wages and revenue are important to the region.

By Gustavo Uceda, a senior economic analyst in the Atlanta Fed's research department

April 29, 2010 in Agriculture, Exports, Poultry | Permalink

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