A difficult, mixed year for Delaware’s poultry industry is closing out with new cause for concern as the region’s poultry giants quietly wrestle with rising costs, unsettled markets and a disease outbreak that can decimate flocks if left uncontrolled.
Placements of poultry chicks on grower farms were down by about 5 percent in Delaware, to 247.9 million, while rising 2.6 percent on Delmarva as a whole to 664.5 million for the 12 months ending Nov. 27, according to U.S. Department of Agriculture data updated last week.
Although producers say that 2011 should be a better year for the state and region’s most important agricultural industry, some hardships are expected to continue.
Feed prices remain dramatically higher, partly due to upward pressure created by use of corn-based ethanol for motor-vehicle fuel, according to Richard Lobb, spokesman for the National Chicken Council. Export markets continue to be disappointing, particularly in Russian and Chinese markets long seen as a huge opportunity.
“I think the biggest wild card is just the general economic situation and where unemployment is going to go,” Lobb said. “Hopefully, it will go down. When people are out of work, they don’t go out to eat so much. the real pressure over the last couple of years has been on the food-service side, particularly casual dining.”
Over the shorter term, local farmers and industry officials are watching bird health closely.
State officials and representatives of two major poultry processors have confirmed detections of “infectious laryngotracheitis” in Delaware and Delmarva Peninsula flocks.
The outbreak — harmless to humans and unrelated to more deadly avian flu — was confirmed by company officials with Mountaire in Millsboro and Tyson Foods in Temperanceville, Va., as well as state Department of Agriculture officials and individual growers.
“We don’t know why it cycles like it does or it appears to, but some years, you have to deal with it,” said bill Ricken, plant manager for Tyson.
Laryngotracheitis, sometimes called “trake” or LTD, is a fast-spreading respiratory disease in chickens caused by a herpes virus, last seen at serious levels on Delmarva in 2007. Symptoms vary, but when severe, it can cause raspy, violent sneezing and coughing among birds.
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A worldwide problem for decades, poultry death rates from LTD can reach 50 percent to 70 percent in the worst cases, although mortality is often far less severe.
Spinoff costs can be high even for minor outbreaks, after accounting for losses of bird weights in infected houses and expenses for prevention and medication. in Canada, one poultry industry consultant’s online briefing on the disease cites an outbreak on Delmarva in 1998 that led to $1 million in losses for only 200 cases.
Ricken and bill Massey, a senior manager with Mountaire, confirmed that all of the region’s large companies are vaccinating flocks against the disease through poultry house watering systems.
V. George Carey, a retired state lawmaker and one of Perdue’s larger producers in Delaware, said that always-tight “bio-security” precautions have stepped up in recent weeks to prevent the spread of LTD by trucks and people traveling among farms.
Although chicken prices have been up, improving farm income, Carey said expenses have tagged along.
“I’ve noticed that corn has hit $5 a bushel, and I hear that next year’s nitrogen [fertilizer] is going up 20 or 30 percent and potash 40 percent,” Carey said. “Gasoline is up, and it’s going to be a tougher year all the way around. It’s a vicious cycle.”
Sussex County has long ranked as the top poultry producer among all counties nationwide, and Delmarva chicken accounts for a big share of the nation’s poultry production. the 3.46 billion pounds of chicken produced on Delmarva in 2009 represented about 7.3 percent of the total output for the country, or nearly 1 of every 14 pounds sold, with a wholesale value topping $2 billion.
Delaware’s position in the market has plateaued and tapered off more recently, however.
If confirmed in final estimates, total bird production could fall below last year’s 20-year low, although the state’s partial specialization in larger and more meaty birds has offset some of the decline.
Edward Kee, Delaware’s secretary of agriculture, sees positive signs as well.
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Mountaire recently announced plans to spend more than $30 million on a rendering plant for managing processing factory leftovers and dead birds from farms. Mortality often runs about 4 percent for poultry house flocks — a number that adds up quickly in a region that handles nearly 700 million birds a year.
“My impression, anecdotally, is that right now demand has improved since this time last year. Placement of chicks has been increasing, which means the industry is reacting to the market,” Kee said.
Kee said recent company calls for more entrants into the poultry-growing ranks in Virginia’s part of the peninsula also shows promise.
Both Tyson and Perdue said they would encourage development of more broiler houses in the South to better support processing plants in Temperanceville and Accomac, Va.
Ricken said that Tyson’s interest is partly in efficient use of available capacity in the company’s Virginia plant and partly in avoiding extra costs of new broiler farms in Maryland, where more acreage per house is required, and environmental regulation costs are higher.