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 College of Agricultural & Environmental Sciences UGA Cooperative Extension
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Published on 11/04/96

Poultry Prices Likely to Fall -- Slowly

Farming is like a seesaw. You're going either up or down. And whichever you're doing, the person on the other end must do the opposite.

So now, when feed grain prices are dropping, cutting profits for grain farmers, livestock farmers' profits are on their way up.

"When feed grain prices drop, it costs less for poultry farmers to raise their chickens," said Stan Savage, a poultry scientist with the University of Georgia Extension Service.

In the past two months, feed grain costs have dropped about $1.50 per bushel, Savage said.

"A good rule is that for every 10-cent-per-bushel drop in grain prices, it costs two-tenths of a cent less per pound for the consumer to buy chicken," he said.

But since we don't buy anything in tenths of a cent, you probably won't see dropping grain prices reflected at your grocery store's poultry case.

"Until production costs drop 2 cents to 3 cents per pound," Savage said, "retail prices aren't likely to drop." And even then, it will probably take 10 to 12 weeks for consumers to see a price decrease."

Savage explained that many poultry companies buy their feed supplies months in advance. So a feed grain price drop today won't affect the cost of the grain they buy for another two or more months.

But the industry will feel it.

Georgia ranks a close second in the nation in poultry production. Only Arkansas produces more poultry products than Georgia farmers, who raise 105 million pounds of broilers every week. That pumps more than $1.2 billion into the state's economy every year.

Savage said with so much poultry in the state, even a half- cent decrease in per-pound production costs can save the industry half a million dollars every week.

Georgia invests a lot in poultry production. Although farmers grew 580,000 acres of corn, millet and soybeans this year, it isn't enough to feed Georgia chickens. The state's poultry farmers here have to ship in grains.

Georgia poultry farmers use two and a half million bushels of corn every week in chicken feed.

"We have enough land in Georgia to grow only a few weeks' supply of corn for the chickens in the state," Savage said.

Dewey Lee, an extension feed grains scientist, said Georgia farmers harvested a good crop this year.

"The dryland areas had low yields," he said. "But irrigated land -- about 35 percent of the acreage -- had great yields."

Feed grain prices have been on the rise over the past year as supplies dwindled. But this year's yields were high across the nation. Georgia farmers planted 190,000 acres more corn in 1996 than last year. Soybean yields are up, too.

"The increased supply right now during harvest will give poultry companies the opportunity to buy feed at lower prices," Savage said. "Lower production costs can help them increase the number of chickens on the market. That drives retail prices down, too."

Every week, Georgia poultry farmers produce enough chicken to feed every person in the United States about 5 ounces of chicken.

"When you're looking at that much volume every day, all year, even tiny changes in production costs make a huge change in the value of the industry to the state," Savage said. "Sometimes it's good, as it is now. Sometimes it's not."

Experts/Sources:
Stan Savage
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