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STATION BULLETIN 395 JULY 1952
Expansion Opportunities
for the
New Hampshire
Poultry Meat Industry
I. The Competitive Position
of the Industry
By
J. R. BOWRING
and
WILLIAM H. WALLACE
UNIVERSITY OF NEW HAMPSHIRE
AGRICULTURAL EXPERIMENT STATION
DURHAM, N. H.
Conclusions
In the sale of dressed poultry, an examination of New Hamp-
shire's relationship to its competitors indicates an advantage on
the Boston market which has not been exploited.
The state is more favorably situated with regard to feed prices
and transportation charges than Pennsylvania, Delaware, Maryland,
and the far western states, all of which ship to Boston. The greatest
competition is possible from the Middle West by shipments of
dressed poultry, but an expansion of the commercial poultry in-
dustry in these grain-growing states is governed by the profits from
alternative production, such as beef, hogs, or cash crops.
Given this advantage, an expansion of the poultry meat in-
dustry in New Hampshire by large and small growers is based
on firm ground and resolves into problems of management, quality
maintenance, and marketing practices.
Expansion Opportunities
for the
New Hampshire Poultry Meat Industry
1. The Competitive Position of the industry
by
J. R. BOWKING
Associate Professor of Agricultural Economics
and
William H. Wallace*
KEEN COMPETITION in the poultry industry in the United States necessi-
tates a continuous assessment of the current situation and examina-
tion of potential opportunities for expansion or change.
It is the purpose of this first study in a series to examine broadly
some basic factors of the New Hampshire poultry meat industry in rela-
tion to its competitors. The analysis is oriented to the Boston market be-
cause of its size, location, and potentialities for an expanded use of New
Hampshire poultry meat.
With this objective, the more important competitive factors will be
discussed in the following order: baby chick prices, farm wage rates, housing
costs, prices at the farm, transportation rates, and feed prices. Consider-
ation of these economic factors will provide a background for further dis-
cussion of production and marketing problems as they exist and as they
are likely to exist in the future, with the aim of providing guides and im-
proving information on the poultry meat industry of New Hampshire.
Poultry Meat Production in New Hampshire
At one time New Hampshire poultry men were among the largest pro-
ducers of winter broilers in the country. The majority of the broilers pro-
duced from 1919 to 1923 were shipped live to the New York market where
extraordinarily high prices were paid for them during the winter months.
This era was started with the discovery of vitamin "D" in fish oil which
made possible the rearing of broilers in confinement during the winter
months.
The sale of broilers now accounts for about 12 percent of the total
receipts from the poultry industry in the state. The sale of fowl accounts
for 18 percent, which means that approximately 30 percent of total re-
ceipts is from poultry meat. The remainder of the income is from market
*This study is based on a thesis by William H. Wallace presented in partial fulfillment of the
M.S. degree in Agricultural Economics from the University of New Hampshire.
and hatching eggs, amounting to 54 percent, and baby chicks amounting
to 16 percent of total pouUry income.
In 1949, .$18,250,000 was received from the sale of eggs, not counting
the money paid to hatching egg producers in the form of premiums. Poultry
meat, both fowl and broilers, netted a return of $9,641,000 in 1949, or a
total of $27,891,000. In addition, returns for baby chicks totalled approxi-
mately $6,000,000.
Table 1. Gross Income of New Hampshire Poultry Industry
by Categories and Percentages, 1944-49
Year
Meal
Egg
;s
Broilers
Chicks
Gross
% of
Gross
% of
Gross
% of
Gross
% of
Income
Total
Income
Total
Income
Total
Income
Total
$1000
$1000
$1000
$1000
1944
4437
21
12512
58
1123
5
3356
16
1945
5276
20
14123
55
1535
6
4913
18
1946
6493
23
14679
53
2519
9
4224
15
1947
6347
20
19344
60
2175
7
4406
13
1948
6649
19
19094
53
4068
11
5916
17
1949
6055
17
19300
53
3912
11
7446
19
1950*
8376
23
17098
48
4983
14
5270
15
*Pre!
liminary
The poultry industry in New Hampshire increased at a slow but steady
rate from 1880 until 1940. At the outbreak of World War II expansion
became very rapid with an increase from 2,700,000 birds in 1940 to 4,213,000
birds in 1943. From this peak the number has steadily declined to 2,664,000
layers in 1950.
Markets for Poultry Meat
The size of the income from fowl is sufficient justification for an ex-
amination of this market as well as that for broilers. In general the ma-
jority of birds reaching the inarket from farms are either old birds being
replaced by pullets during the summer or early fall months, or cull birds
from the laying flocks. When the old
birds are dumped on the market at
the same time every year, the price
is forced down. Cull birds are usual-
ly in poor physical condition and
most poultry men do not try to im-
prove their appearance before selling
them, which again leads to a lower
price for the birds than the poultry-
man might receive if a little effort
Table 2. Receipts of Live Poultry on the
Boston Market by Origin, 1949*
Origin
Pounds
Connecticut
26,825
Maine
1,153,980
Massachusetts
3,608,278
New Hampshire
2,093,850
New York
350
Rhode Island
27,260
Vermont
49,345
Canada
14,500
Total
6,974,388
Total 1948
8,454,614
were
used
the birds'
consuming
*Compiled from information supplied voluntarily
by railroads and by principal wholesalers, jobbers,
chain store companies, and other first hand re-
ceivers (truck receipts). These figures indicate inter-
marlset shipment. Source — Dairy and Poultry Mar-
ket Statistics, Production and Marketing Adminis-
tration (P.M. A.), 1949.
to improve
appearance. The largesi
center for New Hampshire is Boston
which is capable of absorbing all
the poultry meat currently produced
in northern New England.
The shipping of live poultry is
limited to areas close to the Boston
market due to both the shrinkage in weight of live birds, and the higher
cost of transportation.
In 1949, Boston bought 6,974,388 pounds of live poultry which is
10.7 percent of the total poultry meat receipts in that market. New Hamp-
shire contributed 2,093,850 pounds or 30 percent of these receipts. In the
same year producers from this state shipped 8,086,715 pounds of dressed
poultry, making a total of 14.4 percent of all poultry meat received in Boston.
In addition, New Hampshire shipped 1,372,255 pounds of dressed
poultry to New York. Secondary markets such as Manchester and Con-
cord, N. H., and Haverhill and Lawrence, Mass., provided outlets for dress-
ing plants or direct sales by producers from the state.
Comparative Advantages of Regions
Competing on the Boston Market
Technological Developments in New Hampshire
New Hampshire's place in the poultry industry was initiated a number
of years ago with the development of the dual purpose New Hampshire
breed. This is a heavy bird, fast growing and feathering, with high hatch-
ability, making the bird ideal for the highly developed hatching egg and
baby chicks industry in the state. The high hatchability of the fertile eggs
is one of the most important aspects of the breed. While the egg producing
capabilities of the New Hampshire breed are not phenomenal, they are high
enough to encourage their use on farms which produce market eggs alone,
and the production level has risen through the years. Along with the develop-
ment of the New Hampshire breed, the Barred Rock cross was introduced
which gave broiler producers a fast growing broiler bird. The Barred Rock
cross results from matings of Barred Plymouth Rock males on New Hamp-
shire females. The hybird result gives a very superior broiler bird.
Table 3. Annual Egg Production in New Hampshire*
1925
1930
1935
1940
1945
1950t
*For all breeds, but 8 percent of birds over six jiionths are New Hampshires. Source — New Hamp-
shire Poultry Improvement Board Inc.
'\Farm Production, 1949-50, Bureau uf Agricultural Economics (B.A.E.), U.S.D.A.
Whether New Hampshire can maintain this superiority in technology
through the years is not known, for every year competition becames greater
from the different areas of the country which are producing their own
strains of broiler birds. It is a primary requirement that the poultrymen in
the state continue to improve their birds and to develop new strains to
meet changes in market demand. One possibility, for example, is the crossing
of a dominant white male with New Hampshires to obtain hybird vigor
and white broilers.
Total Eggs
Num
ber Eggs
Percent
Produced
Produced
Production
(millions)
per
layer
133
112
31
119
117
32
156
141
39
245
145
40
399
161
44
414
161
53
Competing Areas
There are eight states outside the northeastern area which sent over
a million pounds of dressed poultry meat to Boston in 1949. Five of these
states, Nebraska, Minnesota, Iowa, Missouri, and Illinois, are midwestern;
the remainder, Oregon, Utah, and California, are located in the Far West.
There are also four states, Delaware, Maryland, South Carolina, and Georgia,
which either have large broiler enterprises shipping to Boston or are in
the process of developing a broiler industry that may very well ship to
Boston in the near future.
Measures of Camparative Advantage
In comparing any advantages or disadvantages New Hampshire may
have on the Boston market, it will be necessary to consider those factors
which make up the conditions and costs of production up to the point of
delivery on the market.
It is proposed to compare baby chick prices, farm wage rates, hous-
ing, farm prices, transportation rates, and feed prices.
Table 4. Average Price Per Hundred
Cross Breed Baby Chicks, Straight Run,
1947-1950
1. BABY CHICK PRICES
The range for cross breed baby chick prices from 1947 to 1950 is
from $13.54 per hundred in Missouri to $18.75 per hundred in California,
with New Hampshire prices at $16.62 per hundred. Comparisons between
cross breed chicks were used because they are the most common for broiler
production, and mature cross breed hens are usually good egg producers.
While the price range — - $5.21 —
is quite large, there is also a large
range in the quality of chicks sold.
Those chicks produced in the North-
east are usually from PuUorum Clean
flocks and hatched in approved hatch-
eries, while the chicks from the other
sections, notably the Midwest, are
usually from PuUorum Passed or
Tested flocks and hatcheries. PuU-
orum Clean flocks and hatcheries
have long been a selling point for
New Hampshire poultry producers.
This position is being achieved by
producers in other states, particular-
ly those trying to establish a foot-
hold in the broiler industry. Although
their costs of production are also
rising due to blood testing, the aver-
age price of chicks from these approved hatcheries is comparable to New
Hampshire.
PuUorum Clean flocks must pass two consecutive annual tests with no
reactors at either time. Hatcheries, to be titled as Approved, must hatch
eggs only from United States PuUorum Clean flocks. These blood tests cost
the producer five cents for every bird over five months of age on his farm
plus an additional cent per bird for approval by the state inspector. This
will cost the producer at least $60 per thousand birds tested every year
State
September 1
Maine
$16.30
New Hampshire
16.62
Massachusetts
17.95
New York
17.88
Delaware
15.12
Maryland
15.37
South Carolina
15.25
Georgia
15.50
Minnesota
14.27
Iowa
14.50
Illinois
15.37
Missouri
13.54
Nebraska
14.05
Oregon
18.62
Utah
18.25
California
18.75
which helps to explain the higher price received for hatching eggs and
baby chicks produced in the Northeast. There will be some variation of
these costs between states.
Any advantage of one state over another in the price of baby chicks
is hard to measure. Chicks coming from tested flocks, with good production
records behind them, low mortality, and freedom from disease, are more
expensive than those chicks which come from farm flocks. Chicks produced
in the Northeast and Pacific Coast states are more expensive, but tend to
have higher production, lower mortality, and a more uniform growth rate
than chicks selling much cheaper from the South and Midwest.
2. FARM WAGE RATES
Wages are a large item in flocks of more than 3,000 birds. Flocks
smaller than 3,000 birds can be handled by one man. There are two pri-
mary reasons for large differences in wage rates in different areas: the
standard of living of farmers and the alternatives for labor in other fields.
The rural South, in Georgia and South Carolina, has a lower standard of
living, exemplified by a large rural population and little industry to attract
the workers to factories. If industry continues to move South, southern
agriculture may in time have to increase wage rates in order to hold labor
on the farm. Cheap labor can also be substituted for machinery and ex-
pensive labor-saving devices which are more predominant in the North and
West.
In the midwestern states, while labor prices are higher, the flocks are
smaller and farm labor is used in other enterprises which have much greater
returns, such as grain and livestock production. Small flocks receive neither
the care nor special equipment given on commercial farms, so the initial
outlay and labor expense is much lower. A flock of 200 layers would require
only 20 or 30 minutes a day of the farmer's labor. The feed hoppers and
waterers may be anything suitable to hold the day's feed and water re-
quirements. Many of the farm flocks are raised by the women on the farm.
New Hampshire is among the higher wage rate areas.
Table 5. Farm Wage Rates Paid Per Hour And Per Day For 16 States in 1949 and 1950*
Per Hour Per Day
State 1949 1950 1949 1950
Maine
New Hampshire
Massachusetts
New York
Delaware
Maryland
Minnesota
South Carolina
Georgia
Iowa
Illinois
Missouri
Nebraska
Oregon
Utah
California
,79
$ .75
,87
.87
,86
.85
,86
.87
,67
.67
,70
.66
,93
.87
.36
.36
,41
.42
,94
.97
.86
.85
,97
.87
.92
.90
.90
.87
.95
.95
,91
.81
6.10
$ 5.90
6.50
6.60
6.70
6.60
6.70
6.30
6.15
5.60
5.50
5.70
7.20
7.20
3.00
3.00
3.20
3.05
7.40
7.60
6.30
6.40
5.00
5.00
7.40
7.40
7.90
7.30
6.50
6.80
8.10
6.90
♦Source — Labor Statistics, B.A.E., U.S.D.A., September, 1949-50
The daily wage rates for farm labor vary as much as S4.60 among the
areas competing on the Boston market. The southern states, including Mis-
souri, have a definite advantage over the rest of the country, but the pro-
duction returns per man unit are probably much lower in the cheap labor
area than in the rest of the country where labor rates are higher.
The Midwest has the highest farm labor rates of any section of the
country due to a scarcity of farm labor and competition for the existing
supply. With small farm flocks and the small amount of labor required to
maintain these flocks, other enterprises, such as grain or livestock, can
absorb the small labor costs necessary for the farm flock. Commercial
poultry enterprises, as distinct from farm flocks, would be at a disadvantage
because poultry would have to compete with other types of agriculture for
labor.
3. HOUSING
Housing facilities for poultry vary widely within New Hampshire.
Old barns, factories, or sheds are readily convertible into poultry houses,
usually with little added expense as long as the buildings can be made
weatherproof. The construction of a new building again has a wide latitude
in costs, depending on whether the producer builds his own or hires it
built, whether he uses old or new lumber, and how the building is finished.
The prices for typical new buildings may vary between 50 cents to over
$1.50 per square foot.
Old factories have some advantages. Usually they are weatherproof and
have some sort of heating arrangement which is useful, especially after the
need for brooder heat passes.
The heating equipment also depends upon the individual producer.
Large buildings may use a central heating unit with oil or automatic stoker
to cut down labor requirements. Small buildings require individual brooder
stoves in each pen which may be automatic if bottled gas, electricity, or oil
is used. The greater the labor costs
Table 6. Comparative Costs of Building
A Three-Story 36' x 36' Poultry House
In Different Sections of the United States*
Wholesale Prices December 1948
City
Aprox.
Total
Atlanta
Baltimore
Boston
Chicago
Cleveland
Dallas
Denver
Detroit
Kansas City
Los Angeles
Minneapolis
New York
Philadelphia
St. Louis
San Francisco
Seattle
$1189.
1566.
1430.
1466.
1290.
1207.
1763.
1397.
1822.
1571.
1879.
1544.
1688.
1585.
1263.
1268.
*Source
ber, 1948
Engineering News Record, Decem-
the more advantageous it is for an
autoinatic heating system.
All buildings used for poultry pro-
duction incur some costs, even if
only labor is involved in weather-
proofing or making more efficient
arrangement of pens and equipment.
Many farms have buildings that can
be converted into poultry houses or
at least there are buildings in the
neighborhood. New buildings are
bound to be expensive with the high
costs of building materials. The in-
itial construction costs of new poul-
try buildings, while varying a good
deal in different sections of the coun-
try, show small difference in cost
over the length of the life of the
building.
In the construction of a three-
story 36' x 36' poultry house*, the
*Poultry Housing Series No. 2, University of New Hampshire Agricultural Extension Service.
8
cost may vary as much as a third in different parts of the country. If there
were a thousand dollars difference in the construction costs, this would amount
only to $66 a year over a period of 15 years. If the house were used for
laying hens that averaged 50 percent production through the year, the
thousand birds would lay 15,208 dozen eggs which would make the extra
cost of the building .004 cents per dozen eggs. If the house were used for
broilers, one could raise approximately 10,000 broilers or at least 25,000
pounds of meat. The house would then cost about .0022 cents per pound
of meat.
The difference between housing costs in different parts of the country
can be considered negligible if spread over a long period of time. The
initial outlay, however, will require more capital in some areas than others.
New England is one of the lower cost areas.
4. PRICES AT THE FARM
A comparison of prices paid at the farm between areas indicates the
basic prices of raw material to which must be added processing,. handling,
and transportation charges. The farm
prices for both eggs and poultry are
lower in the Midwest than in the
Northwest. The 1950 average prices
of 16.6 cents per pound in Minnesota
and 20.5 in Missouri compare with
24.3 in New Hampshire, 23.1 in
Maine, and 24.4 in Maryland. Prices
in California are higher than in New
England, although in 1949 prices
there were lower by 1.6 cents per
pound. More than three and a half
million pounds of poultry meat were
shipped to Boston from the Pacific
states.
If poultry can be bought at ten
cents per pound less in the Midwest,
the profitability of shipping to the
East will depend on transportation
Table 7. Egg and Poultry Meat Prices
In New Hampshire and Competing Areas,
1950*
(cents per pound and dozen)
State Price per lb.
Price per Doz.
Meat
Eggs
Maine
23.1
40.2
New Hampshire
24.3
40.0
Massachusetts
24.8
44.0
Delaware
24.4
35.2
Maryland
24.4
32.8
South Carolina
25.9
39.1
Georgia
24.0
38.8
Iowa
17.5
25.7
Minnesota
16.6
26.0
Illinois
22.4
25.9
Missouri
20.5
25.9
Nebraska
22.9
25.9
Oregon
22.9
37.4
Utah
19.5
35.0
California
26.8
35.8
♦Source
D.A., 1950
Agricultural Prices, B.A.E., U.S.
and handling costs.
5. TRANSPORTATION RATES
Transportation rates are one of the largest costs in the poultry industry,
from the standpoint of both commercial feed and the marketing of the
finished product. These charges are a part of the total production and mar-
keting costs. They are important because they add to the retail prices for
consumers, establish regions for production within the industry, and lessen
the net returns of producers.
A. Rail Shipments
Approximately 70 percent of the poultrymen's production costs are
for feed and about 15 percent of the feed cost in New England is for trans-
portation. Rail rates for grain vary quite widely in shipment to different
areas of the country. The rates are set up according to zones on long dis-
tance hauls. Competition between the various railroads also tends to keep
the price a little lower on shipments West to East because historically, most
of the manufactured goods have moved West, and in order to save empty
cars from coming back without loads, grain is hauled at low rates. All
points in New England are subject to the same railroad rates per 100 pounds
of grain for shipments from the Midwest as are points West of the Rocky
Mountains, Shipments to Boston or Bangor, Maine, for example, are sent
at the same cost even though there is about 300 miles difference. The same
is true on the West coast. Chicago is about 1,240 miles from Salt Lake City
and 1,835 miles from San Francisco, but the transportation charges are
the same.
Table 8. Freight Rates on Grain (Corn, Oats, and Wheat)
Minimum Weight 40,000 pounds
September 29, 1950*
From
From
From
To
Chicago, III.
Mankato, Minn.
Des Moines, Iowa
Bangor, Me.
57.5
80.5
75.5
Boston, Mass.
57.5
80.5
75.5
Lawrence, Mass.
57.5
80.5
75.5
Concord, N. H.
57.5
80.5
75.5
Buffalo, N. Y.
45.5
70.5
61.5
Ithaca, N. Y.
50.0
73.0
68.0
Portland, Ore.
125.5
101.0
125.5
Snow Hill, Md.
57.5
80.5
75.5
Gainesville, Ga.
74.5
97.5
83.0
San Francisco, Calif.
125.5
101.0
125.5
Salt Lake City, Utah
125.5
101.0
125.5
Omaha, Nebr.
40.0
30.0
22.0
Minneapolis, Minn.
37.0
16.0
28.0
Des Moines, Iowa
31.5
28.0
Chicago, III.
37.0
32.0
Harrisburg, Pa.
52.5
75.5
70.5
Wichita, Kans.
56.0
65.5
46.0
Austin, Texas
66.0
82.0
69.5
*Source — Transportation and Warehousing Branch, P.M. A.
In the Boston area New England has an advantage over the Pacific
coast, Georgia, and Utah, but is less advantageously placed than the Mid-
west areas.
In terms of the Boston market, the Midwest has an advantage over the
rest of the country, especially if they ever entered into broiler production
on a large scale and used a maximum of home-grown or locally-produced
feeds. It takes about three carloads of grain to produce one carload of
broiler meat, assuming a three-pound broiler was raised on 12 pounds of
feed. This means that it would cost a broiler producer in Maine about $690
to receive three carloads of grain at 40,000 pounds a carload. Each car-
load would produce about 10,000 pounds of dressed broiler meat. A
broiler producer in California would be at a much greater disadvantage
since it would cost him $1,506 for three carloads of grain, plus $1,053 to
ship 30,000 pounds of broiler meat to Boston. A broiler producer in the
Midwest would have to pay the transportation charges on 30,000 pounds
of broiler meat to Boston which would be $318, half as expensive as the
Maine producer and a fifth as expensive as the California producer.
10
It is safe to assume that if the Midwest entered the broiler industry,
it could do so at a great advantage over the rest of the country. But as long
as the present alternatives in the Midwest offer higher returns than poultry,
then broilers will not be produced on a large scale. How long this condition
will exist depends on the marginal returns from these other enterprises
and if poultry meat prices remain favorable. Operators on poorer land in
midwestern states may prefer to substitute capital for land and the poultry
industry offers this opportunity as it has in New England.
LIVE POULTRY
For live poultry shipments railroad cars are privately owned by an
operating company and the rental charge is about $75 from the Midwest
to Boston and SlOO per car from the Southwest to Boston in addition to
the railroad charge for transporting the cars. Live birds shipped to market
from local areas by truck can be delivered in a number of hours. While
shrinkage occurs, the birds do not have to be fed enroute and can be crowded
closer together. The advantage lies with local producers.
DRESSED POULTRY
Dressed or eviscerated birds shipped to market in refrigerator cars
constitute a large saving in money and weight because of the number
(usually thirty to forty thousand pounds) shipped in one car and the elimi-
nation of shipping waste materials.
With a saving of up to 38 percent
Table 9. Freight Rates on Dressed Poultry in transportation COStS on dressed
Minimum Weight 30,000 lbs. and eviscerated birds, poultry meat
Cents per 100 lbs. comifig to Bostoii from outside the
o oston, Mass.* ^^^^ England area can compete on a
price basis with live New Hamp-
shire birds. It also allows the Mid-
west to ship eviscerated birds by rail
at a lower cost than for grain needed
to produce an equal amount of meat
in the East.
In 1949, Oregon, California, Utah,
Nebraska, Minnesota, Iowa, Illinois,
and Maryland each sent over a mil-
lion pounds of dressed poultry to
Boston. This means that of the areas
producing enough for export, the
states with the higher transportation
costs must either produce more effi-
*Source — Transportation and Warehonsing ciently OT Sell 3 SUpCrior produCt, iu
tMinimum weight 20,000 pounds. o^dcr to compcusate for the differ-
ences in transportation rates.
The Midwest, with lower transportation rates to Boston and New York
than the Far West, sells more cheaply and has a less specialized investment
in poultry. Under the present situation with the high prices for grain,
beef, and hogs, it is more advantageous for the midwestern farmers to pro-
duce these, rather than poultry, thus giving the far western producers less
competition. The Far West could not compete on the eastern markets with
11
From
Rate
Portland, Ore.
351
San Francisco, Calif.
351
Los Angeles, Calif.
351
Salt Lake City, Utah
308
Omaha, Nebr.
154
Minneapolis, Minn.
145
Des Moines, Iowa
140
Chicago, 111.
106
New York, N. Y.
58
Philadelphia, Pa.
63
Baltimore, Md.
72
Wichita, Kans.
180
Austin, Texas
358t
Gainesville, Ga.
186
Percent of
Total percent
total receipts
of Boston
Source
by truck
receipts
New England
98.37
34.67
North Atlantic
82.43
8.21
Midwest
and Southern
7.89
37.92
Far West
3.31
19.18
the Midwest and would be forced to find new markets for their poultry
products.
B. Truck Shipments Table 10. Percent Truck Receipts
rrri -D . 1 . • u ^ O^ Total Poultry Receipts at Boston, 1949*
Ine Doston market receives about
43 percent of the dressed poultry
and all of the live poultry by truck.
Table 10 shows a breakdown between
the various sections of the country
and the percentage sent to the Bos-
ton market by truck.
6. FEED PRICES
Commercial poultry feed prices *^""'> "'"' ''""'"^ siatisncs, p.m..\., 1950
varied as much as a dollar a hundred
pounds over the United States in June, 1950. Wisconsin had the lowest
price for laying mash, $4.30 per hundredweight, while Florida and Alabama
had the highest price of $5.30 per hundredweight. Differences in the price
of poultry mash are not due to erratic elements in the marketing system.
The prices paid farmers in the various states are directly associated with
the transportation charge from the grain supply areas, the grade and mix
of the mash purchased, and the efficiency of the distributing agency. There-
fore, there is a strong tendency for the price differentials between states
to remain fixed.
The price of scratch feeds varies in the same manner as the mash
feeds. In 1949, Kansas had a price of $3.65 per hundredweight, while the
price in Montana was $4.80. New Hampshire in both cases was pretty much
in the middle, with mash selling at $4.40 and scratch grain at $4.10. Many
of the poultry producers in the grain belt can produce their own scratch
feed at a rate much lower than the commercial price, charging themselves
only the going price for grain at the farm. Assuming poultry producers in
both Kansas and Montana produced their own scratch feed at a three-part
corn to one-part oats, Kansas producers in 1950 would charge themselves
$2.48 per hundred pounds and Montana producers $2.68. If poultrymen in
both these states were feeding a one-to-one ratio of mash and scratch and
were buying all their feed commercially, it would cost $4.00 per hundred
pounds in Kansas and $4.85 in Montana. But if they raised their own scratch
feed, the costs would drop to $3.43 and $3.81 respectively, about a 14
percent saving in Kansas and more than a 25 percent saving in Montana.
In most farm flocks throughout the Midwest, producers feed about
one-fourth commercial feeds and concentrates. The rest of the feed require-
ments are either home- or locally-grown grains. Prices in the Midwest tend
to run 10 to 15 cents per hundred pounds lower than New Hampshire with
most of the prices elsewhere equal or greater.
The Northeast and Far West both raise very little grain and must
import from the grain producing areas. Quoted prices for commercial feeds
show that these areas are at a disadvantage in the largest item in the cost
of production of poultry products.
There is one advantage of the Northeast which the relative prices of
feeds do not disclose. Even though the midwestern farms do produce
much of their feed, their poultry production and growth rates are lower.
This may be due to an unbalanced diet. Commercial feeds, while costing
12
much
more,
give
the hens a good Table 11.
diet so that production is higher.
Most feed companies produce several
types of feed for different types of
jobs, such as chick starter, growing
mash, high energy feeds, laying
mash, and breeding mash. Each of
these types is made for a specific
job and sells at different prices. The
high energy mash is usually the most
expensive because of the supplements
added to it, but it produces excep-
tionally rapid broiler growth. If
broilers can be produced in less time,
at heavier weights, and at less cost
per pound with this type of mash, it
is more economic to use the higher
priced feed. Likewise breeder mash
is more expensive, but when the pro-
ducer can get higher fertility and h
also may be economically justified
Commercial Poultry Feed
Per 100 Pounds, 1950*
Prices
State
Mash
Scratch
Maine
$ 4.65
$ 4.25
New Hampshire
4.45
4.15
Massachusetts
4.50
4.15
New York
4.45
3.95
Delaware
4.45
4.20
Maryland
4.65
4.10
South Carolina
5.15
4.55
Georgia
5.10
4.50
Iowa
4.60
4.15
Minnesota
4.35
3.95
Illinois
4.70
4.25
Missouri
4.30
3.75
Nebraska
4.35
3.85
Oregon
4.75
4.15
Utah
4.25
3.70
California
4.75
4.20
♦Source — Agricultural Prices, B.A.E., U.S.D.A.
atchability with its use, the extra cost
13
Summary
New Hampshire provides about 15 percent of poultry meat receipts on the
Boston market. The proximity of this market allows producers an advantage
in shipping live poultry, but the marketing of dressed birds runs into com-
petition from areas all over the United States.
In examining the major costs of production and marketing in these
competitive supply areas, the following characteristics were revealed:
1. Baby chick prices are highest in the northeastern and western
states and lowest in the Midwest. Price disadvantages for New Hampshire
chicks, however, may be modified by quality considerations, and the PuU-
orum Clean flocks of the Northeast have higher production rates, lower
mortality, and more uniform growth rates than lower priced chicks from
the Midwest and South.
2. Farm wage rates are lowest in the South and highest in the Mid-
west. The influence of farm wage rates must depend on the degree to which
labor is hired. Laying flocks of more than 3000 birds usually require addi-
tional help and New Hampshire specialized poultry farms are commonly in
this category, placing them at a disadvantage. The farm flocks of the Mid-
west are operated as part of the total farm operation and generally make
little use of hired labor. The lower wage rates in the South would place
them at an advantage, if labor productivity were the same as in other areas.
3. There is great variation in housing construction costs, with the
Midwest being high in comparison with other areas. If the cost of building
is amortized over its life period, the difference between areas is negligible
per pound of meat or per dozen eggs produced.
4. The farm price at which birds can be bought by processors is a
reflection of costs of production. Farm prices per pound of poultry meat
are generally higher in the Northeast, California, and the South than in
the Midwest and Northwest by as much as 10 cents per pound.
5. Producers located close to the Boston market have an advantage
in shipping live poultry to Boston because of transportation charges and
shrinkage. The Midwest can ship eviscerated birds to Boston at a lower cost
than the cost to ship the grain equivalent for production in New England.
The alternative production opportunities in the Midwest, however, are
retarding an immediate expansion of the poultry industry to specialized
commercial flocks, thus reducing the competition for the eastern markets.
6. The prices of commercial feed are relatively uniform through the
country. The use of these feeds, however, is more predominant in the grain-
deficit areas than in the grain-producing areas. In the latter, much of the
poultry feed is grown on the owner's farm or purchased locally and mixed
by the producer. This gives them an apparent price advantage. The com-
mercial feeds and specialized feeding methods available in the deficit areas
enable producers to feed to heavier weight in less time at reduced cost per
pound and also maintain higher fertility and hatchability. This tends to
counteract some of the advantages obtained by the proximity of grain
supplies.
14
7. An index of the relative advantages of states shipping poultry to
the Boston market is given in Fig. 1. The states with the highest numbers,
Nebraska, Illinois, Indiana, and Ohio, have the greatest advantage followed
by other states in decreasing order.
Those states which produce most of their own feed are assumed to
use corn, oats, and wheat in a 1:1:1 ratio to arrive at the average cost of
a hundred pounds of this mixture at farm prices paid in September, 1950.
In those states which do not raise their own feed. New York, Pennsylvania,
Maryland, and Delaware, the average price of commercial feed and com-
mercial scratch was averaged.
The Midwest presents a solid block of states with advantages in the
production of poultry meat for delivery to Boston. This is followed by New
Hampshire and the southern states of South Carolina and Georgia which
have an advantage not yet fully developed. The Del-Mar-Va area has less
advantage than New Hampshire on this market.
Figurei- ESTIMATED RATINGS (R) OF COMPARATIVE ADVANTAGES OF SELECTED
STATES COMPETING ON THE BOSTON MARKET
SEPTEMBER 1950 PRICE LEVELS
Pj,* Price of 25 pounds of poultry meotin Boston
T • Tronsportotion charges of poultry meat from point of origin to Boston
Pg" Price of grain per hundred pounds in individuol stotes
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