Broiler Industry in the Year 2,000 Here?s an extraordinary look at every major facet of produc- tion, processing and marketing, including changing factors that will affect management of assets, as predicted by the president of one of the largest broiler companies in the US. By Tom Shelton, President Perdue Farms, Inc., Salisbury, MD THE SUBJECT is ?The Broiler Industry in the year 2000.? You may ask why worry about the future when the present is more than most of us can handle? But it?s fun and it?s also a subject no one can second-guess me on! To begin to look ahead, I have listed six areas where signi?cant improvements are needed today, and which present opportunities: Labor for catching and processing Poultry housing (breeder and broiler) Poultry health Live performance ef?ciency Product convenience and value Asset management The broller industry is well positioned for the future, relative to other meat protein, because of price/ value and health/dietary considerations. However, if broiler consump- tion is to surpass beef's approximate 80 pounds per capita 15 years from now, we'll need to have solutions in many of these areas. Presented in the NatiOnal Broiler Council's survey of 21 broiler companies (for 1990 and 1995) are their projections for various categories of products and volume. I have added my own for Year 2000 as to sales and market form, and have used non-survey data for prepack percentages at retail. These ?gures show the critical nature of added labor requirements. (In two of our plants, labor increased 60% to 100% when we began to prepack product, depending upon the nature of the mix.) Based on today?s technology, I estimate the industry will increase labor required for prepackaging from 12 to 20% and for deboning white and dark meat, 23%, compared with today?s needs. About 60% of total product is going into retail channels today, 35% into foodservice and the rest into export and miscellaneous channels. Catching/processing labor: Catching is strenuo 36 us work and an undesirable job. Changes expected include: Automatic harvesting, something similar to the Tamdev loader from Ireland. Transportation of birds in cages that are ioaded on environmentally-controlled trailers. There is some possibility of cage rearing from day one to market. However, my guess is that we will grow on the floor after using starter cages for 21 days, or wire ?oors for brooding. In processing, changes we will see will include: Automatic hanging in the receiving area. which again is a dif?cult job. Stunning: Lights will be used to hypnotize birds rather than using electrical shock, as at present. Bleeding and scalding: Scalding may be done as early as 30 seconds after cutting the bird's throat by using moist air and light. or microwaves to heat the skin of the bird for faster feather release. Bleeding will be done while preparing the bird for picking. Picking one to two minutes earlier will improve ease of feather removal. Picking: Rubber ?ngers will rough the birds and a vacuum system. or something like it, may be used to remove the feathers. Bird transfer: They will automatically be transferred to the eviscerating lines after hock cutting. Sizing will be done at the same time to put uniform sizes on each evis line. This technology already is available in Europe. Evisceration: An in-line system like the Atlas machine: developed in Denmark. may be used. As we move to more fast food and retail cut-up, deboning, and further process- Ing, we will harvest only hearts, livers and Qizza'ds a limited number of birds. After ?xation, birds may be opened from either the back or abdominal area to remove the viscera for inspection, the" disposal. Crop and windpipe removal will be done by machine: the neck will be prepared for mechanical deboning or stuf?ng by removing the neck skin. Inspectipn: The day may come when we may not need to look at vrscera at all. Wholesomeness to the consumer BROILER 19? - A F. LO A) 5.5" will mean microbiological and residue safety. This will be assured by USDA inspectors, aided by food technologists. (Editor's Note: USDA already has announced it will hire 1,000 food technologists for its meat and poultry inspection program.) They will use sophisticated blood chemistry and microbi- ological techniques, aided by cameras and computers as quick measurement procedures for effective monitoring of wholesomeness. (Computers already are being used in 1 ?third generation? inspection procedures under pilot study in our Perdue plant at Accomac, VA.) Post-chiller salvage and trim of non-septic parts will be used to maximize efficiency of equipment and tenderness of product. Every time we put a knife to a hot bird today it adversely affects tenderness. Line speeds: With the development of the NELS proce- dure, and subsequent ?third generation" procedures now in progress, we can anticipate minimum control by USDA and line speeds that will permit plants to develop maximum efficiency for manpower and equipment. Chilling: This will be done with air and spray?glycol perhaps?to prevent moisture loss and drying of the skin. as is now done in Europe, rather than with immersion chilling as now used here. Birds will be automatically transferred to chilling lines after eviscerating and going through an inside-outside bird washer. All birds will be aged a minimum of four hours before cutting and deboning. Chilling will be done in a 28? room on overhead lines or on conveyors, instead of in bins and tanks. We may have tenderizing procedures by Year 2000 which will reduce this holding time. Cut-up and deboning: After aging. birds will be auto- matically transferred to various cut-up lines, depending on bird size and the desired function to be carried out. Whole birds after aging will be automatically re-sized and bagged. This technology already exists in Denmark, using only two persons on in-feed. Packaging: Parts sold in retail stores could be individu- ally packed to offer a wider choice of selection. Instead of using overwrapped trays, parts will be packaged in a heat-sealed ?lm under aseptic conditions, and possibly injected with Special gases to control microbial Whole birds will be packed in a shrink bag, rather than a loose-?tting poly bag. After grading, parts and whole birds will be automatically packaged and transferred to a 28? room for holding- Product will be held until needed by size and age- The ultimate goal is a shelf-stable product that will not require refrigeration. Weighing/ packaging/ labeling: This entire process will be highly automated, using process controllers, compul- ers and sophisticated scales and printers. Boxing and stacking of product on pallets will be done automatically by robotics. By selling packages with exact weights. W.P.L. can become much more ef?cient. Sizing and sell-by dates will be added at the time of packaging and price will be entered a! the store, as with canned goods today. Orders: Customers will tie into our computers to elec- tronically give us orders, with earlier scheduling through 0Ur plants. Individual stores may transfer this information lo s%ppliers at the same time they are giving it to their central 0 ce. housing: it has been said that poultry housing shortages (breeder and broiler) may be the thing which will BROILER 1985 A most limit our industry's growth in the future. I am convinced this is true because there are already housing shortages in several regions at current levels of production. Also, produc- ers must improve asset utilization in order to generate more acceptable returns on their investments. This is essential to keeping existing producers in the business and to encour- age new construction in the future. We must get more pounds of meat through our buildings and, at the same time, reduce labor requirements for producers. Here are my predictions for this phase of the industry: Cage start-up: Broilers will be brooded in high density cages for at least 21 days. This will be done in specially designed, well insulated, ?ltered air, labor-ef?cient build- ings, most likely company-owned. Twenty-one day old chicks will be automatically loaded into special transport cages and loaded onto environmental- ly-controlled trailers for transportation to grow-out houses. Technology also will exist to grow birds in cages to market age when blemishes are unimportant In addition, just as the turkey people do, we will use multiple-age rearing with special brooding units on a farm where chicks are started for 21 days, then removed to growing houses on the same farm. Air will also be ?ltered in these special units to control disease spread from older birds to young. A third system will be use of specialized farms where birds are started on wire or the floor until 21 days, then moved to growing farms. Densities will range from .20 to .26 square foot per bird. This is not new. We did this 10 years ago when starting our new operation in North Carolina when we were pressed for new housing. It can be done. 40 ,i anoial-Leverage $8.1 relative - proportion of debt 'to_ 5 . assets .Fciers?: Equity Financial Leverage My, i 355915 Stockhoiders? Equity Debt . I Deferred Taxes tnartCial Leverage caseca: -. .. CaseA CaseB ?quity $100 $100 $100 ff$200 $175 $150 200 1.75 1.50 will be lower in the future, Shelton particularly with what he thinks will be the? the new tax code of the cash accounting- f?tl?r-?lesibfy a six-year phaseout). Interest-free?j is: longer would be available in the form of, it would need to be replaced with more debt: esteem ?nancial leverage ratios from, say, 1240', pr: from 2.0 to 1.5. management can do with the leverage, for! points-?out, because generally equityis ai rearrange; This leaves only two areasirlE at, can enhance performance: return on ??imdziand higher asset turnover. i Breeder hens will require reduced ?oor space as tie move probably to total use of dwarf breeders. Egg colleClIO? will be automated to reduce labor and allow producers to care for more breeder hens. At present it is very dif?cumo get growers to build new breeder houses. It is a job and requires a lot of labor. Poultry health: Filtered air will be used to reduce brailer exposure to disease agents. Disease eradication from breeders will eliminate egg transmission to the chlok- Production of speci?c pathogen-free birds should retluIre less intense inspection for wholesomeness at the process- ing plant. Immunizations will be accomplished through the use Of puri?ed antigens, rather than by using live and inactivated vaccines. These puri?ed antigens will be of a gener'c nature, rather than speci?c for each disease. An end result of this sophisticated disease control be much improved feed conversions, more predictable WBithS. improved livability and quality, and lower condem- na?ons. I In support of these programs, live haul will be modi?ecito accommodate cleaning and sanitation of eQUipment, will be returned to farms free of disease agents. Grow?out Operations must accomplish massive reduc. tions in salmonella, campy/abacter, E. 00?, Selim/000?? and clostridl'an organisms, all of which may be involved ll"t human food-borne diseases. Those who meet these des're standards will be the survivors in the marketplace. I There will be a decreased dependence on medicatlo 3" Phases 0f meat production because of consurne pressure. ns in Live performance efficiency: Even though today W: 19" m?hx?rzz er meat is produced more ef?ciently than almost any other form of protein, we must continue to make great strides. Please refer to the charts to show how much improvement we have made in actual live performance from 1977 through 1985 with these Agrime- Irics ?gures. Next, a look at growth rate and feed ef?ciency since 1940. and predictions for the year 2000. Product convenience and value: As mentioned earlier, there will be a strong move to plant packaged, further prepared cooked and uncooked poul- fry items for retail markets. We are currently test-marketing i?Perdue done itl", a line of further- processed, fully- or partially-cooked, fresh items. Also, a higher percentage offotal poultry will be sold in the i category. I Here are some additional predic- tions in this area: Branded products. Fresh. Lower fat products. Birds are at 15 i to 16% fat today; that should lower to 10 to 12% as we eliminate the fat pad In cutting and boning. There will be many new further- processed dark meat items. There will be higher quality products and improved service. More microwave-able items. I Higher average live weights due to Why scratch around for cures when you can stop problems at the source? hatchery, field and egg sanitation. So you produce. And profit. Find out what other The BioGuard poultry people have Poultry Sanitation been crowing Program keeps about for over bacteria and other thirty years. invaders at bay The BioGuard ry Sanitation Program. Because prevention is always better than cure. with a systematic ?search and des- troy? program for ?5 Poult The BioGuard Poultry Sanitation Program PROGRAMMING FOR FARMS. BioGuard is a registered trademark of Bio-Lab. Inc. PO. Box 1489, Decatur, Georgia 30031 USA Circle No. 23 on Inquiry Card Controlled feeding system for broiler breeders - Separate male and female rations with Cablevey?s dual feeding system. I i The common layout two ternole feed lines on each side of building with nests and litter in a the center. The male feedline may be installed between the female leedlines on the slatted portion, or csingle feed line through center 0i building over the litter. The grill work on our female Preliminary commercial figures show improved fertility and hatchability with the dual feeding system. Feed consumption of males has been reduced thus maintaining a desirable breeding weight. Write or call for complete details. See us at Booth 2227 at the Southeastern Show. Dun feeder prevents the males Tom eating from it. The male pan feeder IS elevated to a height out of reach of i?e females. Here's what a CABLEVEY Broiler Breeder dual feeding system can do for you: I instant feed availability in every pan when System is activated 2 feedlines remain charged at all times 3 controlled feed delivery to all feedlines 4 use separate rations with dual system 5 greatly reduces migration of all breeders. INDUSTRY NOVEMBER, 1985 .515 FEMALE LINE MALE LINE The grill work on our female pon feeder prevents the males from eating from it. The male pan feeder is elevated to a height out of reach of the females. PO. Box 379, Oskaloosa, IA 52577 In Iowa 1-800-452-1060 Outside Iowa I-800-247-3344 Circle No. 24 on Inquiry Card We Got! Lake first and second wing joints in eight 5 lb. printed bags or 15 1b. bulk pack. Your label? Of course! LAKE FOO DECATUR, ARKANSAS 72722 SALES OFFIFE: 501?752-3223 Circle No. 25 on Inquiry Card AL DS DIVERSIFIED IMPORTS No. 1 in poultry watering systems for broilers Er DRINKER The Plasson really has No Equal. It provides excellent distribution of water to the birds from day old to maturity and has withstood the years in field operation with an excellent performance reputation. Others may imitate the way we look, but no one can imitate the way we work. Plus a North American distributor network that stands behind Plasson systems with ex- pert installation, service; stocking original spare parts. I 0 Due i?ed 1095 Towbin Ave. 0 P.0. Box 539 Lakewood, New Jersey 08701 D. .V. Co. Phone: 201-363-2333 - Telex: 132462 Circle No. 26 on Inquiry Card . Equity. . Case 8 Case c. I 2.3% .. 2.7% =40 1.75 1 dams 35.0%. 7 be enhanced not only by double rowing target-birds. running tines faster, as: tau facilities. lee: Shelton points out. use of starter cages for - map's- in; stir-filtered heuses, during the time when 76% of their energy needs from Estheitime When Eimmunosuppressive mea- - est effective before housing. The effect is to 3 0f healthier birds through existing housing an opportunity for higher returns'to .. no standard practices to enhance use of id ?6 teaser/roots receivable to the mini? to: extend. payables as far as practi: eeprrinvedtofies to a minimum (iust-in-time A Ethe Japanese. is cited by Shelton). king iactors in that, as industry $$Sing. moon larger inventories are egress; products. His formuia of_ produce $1.00 in sates can only be . for such produots. I . pressure for deboned meat. Aseptic packaging and shelf-stable products. Smaller package sizes. Packaging, distribution and marketing will make UP a much higher percentage of cost. A higher percentage of our products will be sold in huge super stores and in convenience stores. Direct sales and service forces will be developed as product lines widen. We already have six lines from self- service delis to cooked roasters. Continued growth of volume and number of poultry Items sold in fast-food outlets. . Consolidation of the industry into the hands of marketing- I oriented companies. There will be fewer companies but more of them will be market-oriented than at present- Asset management: With the tremendous Cap'ta? requirements because of industry's move to more Va'ug' added products, the continued cyclical nature of our ness. and the almost-certain loss of cash basis we must learn to do a better job with asset managemeqt' In evaluating the sensibility of an acquisition, or 01? mak'ng a major capital expenditure, I look at the potential return 0" these new assets. A simpli?ed method of doing this is to use the duPont formula, which is broken down into three segments: . I Return on sales after taxes asset turnover ?nanc'a leverage. The product of these ?gures gives return 0? stockholders' equity. My predictions relate to changes in factors which BROILER 1935 on sale?Sh- re; fatter-tax profit margins on: net" Selling price EX 550% Tax rate I: ?30 .QBeturn on Sales 'i [at Asset Turnover the amount of sales generatedbyi aset'gioilar. .i the last two parts of this formula, asset turnover and ?nancial leverage. Leverage factor: Loss of cash basis accounting. Higher long-term debt to equity ratios. Closer working relationship Sages- we between those who borrow and those who lend. We will be eat Assets Asset?Turnover dealing with a wider range of lenders, i.e. 5-: Leverage factors wall be lower. 257-100 lbs. Asset investment ?m Asset management: Counter-balancing factors which 50?/lb. Selling price both help and hurt asset management: Negatives: Increased ?nished product inventory. Higher investment in propertY. plant and equipment as we add :0 b0 value. Accounts receivables will increase because of higher Asset Turnover .5 selling prices and a different customer base. . 5 Positives: Faster line speeds. Two-and-a-half to three shifts. Just-in-time inventory systems to minimize inputs, er such as less grain storage. Shorter growing cycle. Improved "Clal I payloads on trucks delivering product. due to higher dollar -- g; 3T value and more edible product being shipped. sset Turnover 'l?e l-Stockholders? Some final i t' . ed none, as the Industry looks at the Case A Case a Case; next 15 years. There will be more employee involvement and a decided move away from current management .- 2'09" 20% sal styles. .4.0 . 4.6- 5.3 '5 I Poultry will exceed per capita consumption of beef, Ali?? perhaps in 1990. The industry will shift geographically to the best mix of areas of lower cost and closer to where the 16.0% 15.0%? customers are. I our I I E. Former Miss America to "ill Duram Picking Fingers . . . speak at Southeastern creating new standards MARILYN VAN DERBUR will be the fea- tured speaker for the Ladies Day 9? 19%: ?m - a for the industry! a" ?9.9.95 Salli? Friday "a morning brunch on Jan. 24. Recently named "Outstanding Woman Speaker in America,? she is lhe Omy woman to re- ceive the Speakers Hall of Fame Award. he She has been hosi- ess for 23 networkTV GE Superb quality fingers, reliable efficient service combined with expertise and a desire to fill all your needs. And we try harder. . . all the reasons that make us the fastest growing fingers in the industry. Fingers are available in 5 degrees of hardness to fit any machine. M- Delhi" 3 a specials and W35 ontact us direct or call your local area unc" .0 representative. member of the President's Advrsory 0 El on Adult Education. ma PO Box- 6072 MEYHEN . CONAGRA, St. L0uis, MO,has appointed (N Y.) 718/728-0909 Long 'SIand C'ty? 11106 Herrmann national sales manager, ConAgra irc . 404/ 534-7717 Foodservice, Banquet and Armour Fromn 1? 44 Circle No. 28 on Inquiry card 8m 55 I9