Iowa Public Television

 

Drought Plagues Poultry Industry; NAFTA Brings Hope

posted on December 6, 2002


Two-thousand-two has been tough on poultry producers. Earlier this year, a ban on U-S chicken by Russia, the number one export market for American poultry, backlogged the industry.

Still hindering poultry producers are trade issues with the European Union over chicken meat sprayed with chlorinated water and the costs to prevent an outright epidemic of avian flu on the East Coast, a disease that ravaged Virginia flocks.

Last month's meat recall, the largest in U-S history, saw retailers sending back turkeys and other poultry just before the Thanksgiving holiday.

Now, a powerful winter storm has pounded the East Coast. Power losses from the snow are just the latest problem for poultry producers who have other end of harvest concerns.

 

Drought Plagues Poultry Industry; NAFTA Brings Hope

Moisture from this week's blizzard is too little, too late for the drought stricken Northeast and its poultry producers.

Tight supplies of corn and beans nationwide and historically small harvests in the Northeast due to dry conditions are driving up the price of feed for producers in the Delmarva Peninsula. Corn, the main ingredient in chicken feed, currently costs two-ninety per bushel, up nearly 50 percent from 2001. The price of beans has also increased and most of that crop is still in the field, hindered by fall moisture which came much too late to have any positive impact on yields. As supplies dwindle in the Northeast, producers will be forced to buy Midwest grain, adding another 35 cents to the cost of a bushel of grain.

The Delmarva Peninsula, which encompasses parts of Delaware, Maryland and Virginia, is one of the most prolific poultry regions, raising and processing more than 12 million chickens each week.

While the future looks bleak for poultry producers there is some brighter news as the New Year approaches. Mexican imposed duties on U-S agricultural goods allowed under the North American Free Trade Agreement, or NAFTA, are set to expire January first. While this means little to many vegetable and fruit growers, it could have a major impact on meat sales including chicken and pork. Some U-S produced meat products currently are less than one quarter the price of domestic Mexican products. When the tariffs fall that margin is expected to widen even further. Mexico's National Agricultural Council estimates the elimination of duties will result in the loss of 750 thousand jobs. Mexican President Vicente Fox has said he will fight to protect Mexican farmers. Midterm elections in Mexico are only six months away, a prospect that dims the hopes of U-S producers for duty-free trade with Mexico.

Some in the U-S pork industry have called the Mexican producers inefficient and are salivating at the opportunity to increase exports to Mexico. But a small sector of Mexican pork production is able to compete in the world export market. As part of free trade negotiations with Japan, Mexico is attempting to strike a deal that gives Mexican pork producers preferential treatment. Mexico is the number two export market for U-S pork; Japan is number one.

 


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