Economic and Marketing Information
FOR INDIANA   FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
January   31,   1962
Marketing Poultry and Eggs—
One Stop Between Farm and Retail Store1
by Milton  M. Snodgrass, Agricultural Economics
Marketing practices for poultry and
eggs are rapidly changing. The old
live poultry dealer and egg huckster
are rapidly disappearing. For broilers, a modern processing plant is now
the single stopping place between
broiler pen and supermarket.
At these plants, broilers are killed,
picked, eviscerated, packed with ice
or frozen and sent to the retailer.
For eggs, a modern processing or
handling facility will clean, grade,
sort and probably carton the eggs—
again only one stop. Several factors
have brought about these significant
changes.
Processors Perform
More Functions
Live poultry moves in larger volumes directly from the independent
producer, or integrator who controls
the production, to the processor. Data
for 1957 show that 87 percent of the
broilers and turkeys (by weight)
slaughtered by Indiana processors
were procured directly from the grower or his representative. A study of
82 egg handlers in 1958 indicated
that 81 percent of their eggs were
purchased directly from the producer.
Many processors operate their own
pickup routes.
On the selling side, 89 percent of
the broilers and 62 percent of the
turkeys slaughtered in Indiana in
1957 went directly from the processor
to the retailer. Similarly, more than
75 percent of the table eggs sold by
handlers went directly to retail outlets with no stops in between.
Growing Importance of
Large Retail Outlets
Large supermarkets now move
huge quantities of poultry and eggs.
The impersonal nature of selling to
the consumer in the supermarket ne
cessitates a uniform, quality product
in the display counter. To meet this
requirement, supermarket managers
need to buy on rigid specifications.
This can be done more easily by dealing directly with the processor who
is probably in direct contact with the
producer and who cleans, candles,
grades and cartons the eggs. Insistence on uniform quality and volume
by retailers makes it more necessary
for the processor to transmit these
requirements to the producer. This
is best accomplished by direct contact. As a result, use of various types
of contractual agreements between
producers and processors will probably increase.
Growing Specialization and
Concentration of Producers
The average number of broilers
sold per producer in Indiana in 1959
was 27,900. This is a relatively small
number compared to Mississippi and
California. It's about the same as the
number sold per producer in Georgia.
Geographic concentration of broiler
production in Indiana is emphasized
by the fact that the two principal
producing areas (Goshen-Warsaw and
New Pekin-Corydon) account for
over 75 percent of the total. The
same is true for turkeys and fowl.
In egg production, the tendency
toward fewer farms with larger egg
enterprises per farm developed rapidly in the early 1950's. The more recent census shows this trend toward
increasing specialization was still in
full swing in the latter 1950's. Between 1954 and 1959, eggs sold by
producers was up 30 percent; number of chickens per farm up 57 percent; and egg sales per farm up 116
percent. This move toward specialization has occurred more rapidly in
Indiana than in other important mid-
western states or in the U. S. as a
whole. As evidence of the continuing
geographic concentration of production in Indiana, 20 leading counties
accounted for 49 percent of the state's
total production in 1959—up from 45
percent in 1954.
Processors seek out commercial
producers with larger unit pickups
and may encourage specialization by
producers with a premium for large
unit pickups. Also, processors commonly stipulate special requirements
such as maintenance of adequate egg
cooling facilities on the farm. Processors are following these practices
with egg producers to assure the uniform quality and large volume demanded by retailers.
Conclusions
As numbers of marketing agencies
for poultry and eggs decline, three
key agencies emerge—producer, processor and retailer. Selling in today's
large supermarket requires volume
and uniformity in quality and appearance. A proper job necessitates careful supervision of the egg, broiler or
turkey from the time it leaves the
farm until it reaches the housewife.
This is tending to pull the producer,
processor, and retailer into a closer
relationship. To assure proper quantity and quality leads to some degree
of coordination in the form of oral
or written contractual agreement. The
economies for each of the three key
agencies will likely dictate larger firm
size. Also, risk reduction is being
sought through coordinated production and marketing agreements.
1 All data reported in this article are
taken from the results of project 1082 Agricultural Experiment Station, Purdue University. Census data reported are from U.S.
Department of Agriculture.