In a recent Southern Ag Today article, Anderson and Maples addressed increasing slaughter weights in beef cattle while also mentioning slaughter weights are increasing in swine and poultry. In this article, we will address poultry weights, specifically broilers.
Broiler slaughter weight has been increasing, however, the reasons for the increase are different than was outlined in the referenced beef article. The trend is a long-term situation rather than a short- or intermediate-term phenomenon. Broiler weights have been on a steady increase since the 1920s. The primary driver of these increases is market-derived; it is a slow change based on U.S. poultry consumers’ desire combined with the changing genetic potential of the birds. Unlike the beef industry, where the producers, feeders, and packers are usually separate entities, the poultry companies producing chicken own the chickens and control their genetics and production from the egg to chicken sandwich.
Most chickens in the U.S. are produced to meet specific market demands, and this requires varying sizes of birds. Grocery store chill-packaged products like split breasts or boneless breasts usually come from birds in the 6– 7-pound range. Fast food chicken restaurants like Popeyes or KFC typically require smaller birds to fill their “pieces” menu. These birds are usually 3.5-to-4-pound slaughter weight. The same companies sell chicken sandwiches that require filets from larger birds of upwards to 9-pound slaughter weight. Frozen processed chicken fingers and sandwich filets at the grocery store are best produced from larger birds as well. As consumers have demanded more chicken sandwiches, chicken fingers, breast filets, etc., and fewer whole birds or cut-up pieces, poultry companies have moved their genetic target toward producing birds that more efficiently meet these demands per square foot of grow-out space. Simply put, you can get more chicken fingers per square foot of grow-out space from a bigger chicken. This demand has pushed companies to produce more of the larger birds and increase the size of the larger birds (Fig 1). Since companies own the chickens and control the genetics and production, they can make these changes in response to consumer trends quickly and sustain those changes over time. From 1955 to 2021, the combined average of all broiler sizes in the U.S. increased from 3 pounds to approximately 6.5 pounds, or 116%, in response to U.S. consumer demands. But that’s not the whole story. Along with increasing weights, the poultry industry has decreased the amount of feed needed by 38 percent, from 3.0 pounds to 1.85 pounds of feed per pound of gain. The time it takes to achieve average market weight has decreased by about 20 days. Overall mortality has also decreased, though recently a change in production methods has caused a slight uptick in mortality (Fig 2). All these changes have been achieved by foundational efforts in genetics, nutritional advances, and grow-out environment/housing improvements. Overall, this represents a case study in sustainability – producing more output with fewer inputs. In commercial poultry’s case, that means more chicken for less feed, over less time, with less environmental impact.
Fig 1. Broiler weights (bird size) have increased a remarkable amount from the 1950’s to the modern bird of today. These changes have been the result of focused genetics, improved nutrition and bird environment.
(Source: Aviagen Inc.)
Fig. 2: From 1955 to modern day, average broiler weights have increased by 116 percent. At the same time, feed conversion has improved by 38 percent. Days of age to slaughter have also decreased by 27 percent, and mortality by 21 percent.
Lbs/Percent on the left and days on the right. (National Chicken Council data)
High input prices in recent years have significantly reduced profit margins for rice producers in the Mid-South. The negative impact of tightening profit margins is felt most acutely by rice producers renting cropland. A significant portion of rice ground in the region is rented using crop share arrangements, and the most common lease used is a net crop share lease. The terms of crop share leases differ by crop and region. Typically for rice in the Mid-South, the landlord supplies the land and pays all below-ground irrigation expenses (well, pump, gearhead fixed expenses) in exchange for a share of the crop. The tenant pays all above-ground irrigation expenses (irrigation power unit fixed expenses, irrigation energy), supplies all machinery, and pays virtually all variable costs. The rice drying cost is the only variable cost shared between the two parties. Other crop share leases exist where specific costs like fertilizer are shared, but these lease types are less common than the net crop share lease.
Net crop shares are very similar throughout the Mid-South. In Eastern Arkansas, the landlord’s share of the rice crop is typically 25%, but 20% crop shares are also common (ASFMRA, 2024). In Northeastern Louisiana, the landlord’s share of the rice crop is typically 20%. Crop share leases are used less frequently in Northwestern Mississippi relative to cash leases, but when a crop share lease is used, the landlord’s share of the rice crop is also typically 20%.
Crop share arrangements tend to change little over time, but increasing crop prices, rising input costs, or new technologies make it occasionally necessary to reevaluate the equitability of crop share arrangements for both parties (NCFMEC, 2011). This article demonstrates the contributions approach as a method to calculate equitable crop and cost shares for rice rental leases. The first step is to calculate the percentage contribution provided by each party in value of non-shared expenses. Remaining shared inputs and income are then shared in the same percentages as the collective non-shared contributions made by both parties.
Table 1 demonstrates how the contributions approach reflects the typical net crop share lease used in the Mid-South. In this example, the only cost item shared is drying costs. All other cost items are contributed solely by the landlord or the tenant. Total non-shared contributions equal $1,311, of which the landlord provides $250 (19.1%) and the tenant provides $1,061 (80.9%). The assumption then would be that drying costs and crop income would appropriately be shared at the same 19.1 / 80.9 percentages, which approaches the 20% landlord, 80% tenant split seen in many net crop share leases in the Mid-South.
Table 2 shows how the contributions approach may be applied to a crop share arrangement where several cost items are shared between the landlord and the tenant. In this table, the two parties share fertilizer, herbicide, and drying costs. The sharing of fertilizer and herbicide costs between the two parties is in accordance with the concept that yield-increasing inputs should be shared in the same percentage as the crop is shared (NCFMEC, 2011). An argument can be made that irrigation energy costs also fall into this yield-increasing input category. However, the cost of items to be shared or not shared in a crop share lease are based on negotiation between the tenant and the landlord.
Note in this example that the landlord’s share of the crop becomes larger when more cost items are shared between the two parties. This result occurs because the total proportion of contributions made by the landlord (particularly the land contribution but also irrigation wells) becomes larger when more costs are shared between the two parties. The equitable crop shares for each party, based on Table 2, are 24.5% of the gross returns for the landlord and 75.5% of the gross returns for the tenant.
a Annual cost items except Land and Management are rice production costs averaged across 2024 University of Arkansas rice crop enterprise budgets.
b The land charge is calculated as the average value for irrigated cropland in Eastern Arkansas reported in ASFMRA (2024) ($5,963/acre) multiplied by the rent-to-value ratio for irrigated cropland obtained from USDA NASS Arkansas (2024) ($152/acre cash rent divided by $4,200/acre for irrigated cropland).
c The management charge is calculated as rice gross return multiplied by the mid-range of charges for professional farm managers (5 to 10%) reported in NCFMEC (2011).
a Annual cost items except Land and Management are rice production costs averaged across 2024 University of Arkansas rice crop enterprise budgets.
b The land charge is calculated as the average value for irrigated cropland in Eastern Arkansas reported in ASFMRA (2024) ($5,963/acre) multiplied by the rent-to-value ratio for irrigated cropland obtained from USDA NASS Arkansas (2024) ($152/acre cash rent divided by $4,200/acre for irrigated cropland).
c The management charge is calculated as rice gross return multiplied by the mid-range of charges for professional farm managers (5 to 10%) reported in NCFMEC (2011).
Since November 2023, grocery inflation (food-at-home, FAH) has slowed to around 1%, following fluctuations in 2021 and 2023 that peaked at 13.5% (US BLS). However, the perception of grocery inflation remains relatively high. Our monthly consumer survey of approximately 500 primary grocery shoppers in the US reveals that a significant share of consumers still perceives grocery inflation as high (Figure 1).[1] Over 60% of respondents reported high inflation perceptions between July 2023 and May 2024 when the average FAH inflation rate was 1.8%. While this is lower than the peak of 73% in July 2022, it remains well above the pre-high inflationary period average of 33% (January 2017–August 2021). Several factors contribute to the persistently high perception of inflation among consumers.
First, the sustained high inflation perception among consumers is expected because current moderate inflation indicates that prices for many goods and services continue to rise, even after a significant jump during the high inflationary period (Figure 2). Inflation measures the rate at which prices increase over time, calculated by comparing prices in the current period to those from the same period one year earlier. Falling inflation rates do not imply that prices are decreasing; instead, they indicate that prices are rising at a slower pace. This often confuses consumers, who may misinterpret news about decreasing inflation rates as a reduction in overall price levels. Disinflation (i.e., a slowdown in the rate of inflation) should not be confused with deflation, which refers to an actual decrease in general price levels (Marks, 2023).
Second, consumers often compare current prices to those they were accustomed to prior to the period of high inflation, rather than to prices from one year ago as inflation metrics do. For example, comparing the FAH consumer price index (CPI) from May 2024 to May 2020 reveals a substantial cumulative inflation rate of 24.68%, as demonstrated in Figure 3. This tendency could lead to a heightened perception of current inflation.
Third, frequent purchases of essential items like groceries amplify inflation perceptions. As noted by D’Acunto et al. (2021), frequent exposure to necessity purchases heightens inflation awareness. A survey by Balagtas and Bryant (2024) found that consumers were more sensitive to food price increases compared to other goods, despite actual food inflation (2.2%) being relatively low compared to items like housing (4.5%) and auto insurance (22.6%). Understanding what inflation is and how it is calculated is essential for consumers to bridge the gap between actual inflation and their perceived inflation. Historically, grocery prices rarely decrease (US BLS), making it unlikely that inflation perceptions will quickly return to pre-high-inflation levels. However, rising incomes (US BLS) are expected to gradually ease these perceptions over time. Identifying and addressing evidence-based causes of persistent high inflation perception can improve public understanding, boost consumer confidence, and help policymakers to communicate more effectively with consumers about economic conditions.
Figure 1. the Inflation Rate of Food at Home (FAH) Based on Consumer Price Index versus Consumer Inflation Perception of FAH, represented by the Share of Respondents Who Strongly Agreed Noticing an Increase in Grocery Prices
Source: U.S. Bureau of Labor Statistics and a consumer tracker survey managed by the University of Florida’s Florida Agricultural Marketing Research Center (FAMRC).
Figure 2. Food at Home (FAH) Inflation Rate Fluctuations versus FAH Consumer Price Index
Source: U.S. Bureau of Labor Statistics.
Figure 3. Actual Inflation Rate of Food at Home Based on Consumer Price Index versus Consumer Inflation Perception, represented by the Share of Respondents Who Strongly Agreed with the Inflation Statement
Source: U.S. Bureau of Labor Statistics and a consumer tracker survey managed by the University of Florida’s Florida Agricultural Marketing Research Center (FAMRC).
[1] In our study, inflation perception is measured by the statement “I have noticed an increase in grocery prices at my grocery store recently” where survey participants answered on a 7-point Likert scale ranging from strongly disagree (1) to strongly agree (7). We focus on the “strongly agree” category in our discussion on inflation perception as it experienced most significant changes during the inflationary period.
There has been a lot of talk about trade and tariffs since the new presidential administration was elected last November. It seems like this administration will use tariffs as a negotiation strategy to push their agenda in the international arena. Most economists would agree that, in general, international trade brings positive overall effects and that the lower the tariffs the more products are traded. We have discussed in previous articles the Importance of Agricultural Trade and Why is Trade Freedom Important?. U.S. agriculture is highly dependent on foreign markets as about one-third of U.S. farm income comes from exports. In addition, U.S. consumers have benefited from low import tariffs on food as well as a very robust domestic food production to enjoy the most affordable food in the world. U.S. consumers spend around 6.8 % of their disposable income on food at home which makes it the lowest out of 104 countries.
Now, why would anyone want to disrupt something that seems to be working well for U.S. consumers? A favorite phrase for economists to use to answer complicated questions is “it depends.” This is a time to use those words as it depends on how you are looking at the issue. On the one hand, low tariffs have benefited U.S. consumers overall, on the other hand, other countries have higher import tariffs that may deter U.S. products to reach foreign markets or increase their share in those markets. The figure displays the weighted average Most Favorable Nations (MFN) tariff rates for fellow G20 countries for agricultural and non-agricultural products. This is the most commonly used aggregation method because it considers the relative importance of trade flows. The United States ranks towards the bottom of the list on tariff rates for both agricultural and non-agricultural products with 4.0% and 2.1%, respectively. Canada and Mexico, our largest trading partners have 14.4% and 7.3% respectively for ag products, while China has 13.1%. Our intention is not to justify the usage of tariffs as a strategy to push agendas but rather to present the issue from a different perspective. Regardless of your position on this issue, most would agree that lowering tariffs across the board would be the most beneficial outcome.
(Note: South Korea was left out of the figure as they have the highest weighted average tariff rates for ag products of all the WTO countries at 94.0% and distort the scale of the figure.)
Source
Valdes, Constanza, Jayson Beckman, Yacob Abrehe Zereyesus and Michael E. Johnson. Data on Expenditure on Food and Alcohol, 2023. January 2025. USDA Economic Research Service.
World Trade Organization. WTO Stats. https://stats.wto.org/. Online public database. Accessed January 2025.
Knowing the expected cost of production for a farmer is essential for developing effective risk management and marketing strategies. At an aggregate level, forecasts of costs provided by the USDA Economic Research Service (ERS) can offer a useful benchmark to help understand the gross revenue and cost of production for commodities at the national or regional level. These forecasts can be used to determine breakeven prices to inform a risk management and marketing plan.
The ERS’s 2025 national cost of production forecast for major southern row crops (cotton, peanuts, corn, and soybeans) indicates a decline in fertilizer and interest costs, contributing to lower total operating cost for most crops compared to 2024, except cotton. However, rising custom rates, other variable expenses, and allocated overhead costs offset some of these savings, resulting in an expected total cost of production that is effectively the same (within +/- 1%) as the estimated 2024 cost of production. As shown in Figure 1, peanuts has the highest forecasted total cost per acre ($1,181.84), followed by cotton ($899.96), corn ($871.09), and soybeans ($624.77), highlighting the significant investment in producing southern row crops. It is important to note that these forecasts were released by the ERS in November of 2024, before tariff threats were made, that if implemented may increase costs of some agricultural inputs, notably fertilizer.
At the currently forecasted cost of production, the negative returns experienced by row crop producers in 2024 are expected to remain a major concern for all four crops in 2025 if prices do not improve. Figure 1 shows the 2024/25 marketing year estimated gross revenue for each crop based on estimated yields and prices as of January 2025. The gap between the two bars on each graph illustrates the potential shortfall in revenue needed to cover 2025 production costs if yields and prices are maintained at current 2024/25 marketing year levels.
Whether yields can provide increased revenue is a question for the future, but given national corn yields in 2024/25 being estimated at record levels and soybean yields being estimated at about 2% below record levels, it is more likely that price is going to be the primary driver to increase revenue for these crops. Meanwhile, multiple weather events made a major impact on cotton yields that were about 12% below record levels and peanut yields that were about 11% below record levels. Therefore, some of the shortfall in revenue for cotton and peanuts could come from higher yields.
The other component of the revenue equation is price. Determining a breakeven price assists in making informed decisions about the price necessary to cover production costs. To determine a breakeven price, divide the forecasted cost of production by expected yield. To help adjust for record yields or significant shortfalls, Table 1 shows the five-year average yield for each crop along with the computed breakeven price. At the current national forecasted cost of production and average yield for the last five years, the breakeven price for corn and peanuts would have to increase 17% over the estimated 2024/25 price. For soybeans, the price would have to increase 21%, while cotton prices would have to rise 59%.
Ultimately, the actual cost of production varies among individual farms, as it depends on many factors such as economies of size and scope, relationships with input suppliers, and adopted management practices. Actual yields also vary, and thus, producers need to consider their own potential breakeven price. Repeating this exercise for a specific farm can be helpful in planning, making risk management and marketing decisions, and finding potential opportunities to make efficiency improvements to reduce costs for the upcoming crop year.
