TAILIEUCHUNG - Vertical Integration and Contracting in the U.S. Poultry Sector

With outside runs, bury the wire along the pen border at least 12" deep, and toe the fence outward about 6 inches. This stops most predators from digging under the fence. Animals always dig at the base of a fence. By toeing the fence outward and burying it, the predator digs down right into more fencing. Some people run electric fencing around the outside of their pens 4" off the ground about one foot from the main fence to discourage predators. If your outside runs are not predator-proof, you need to lock up your poultry before dark. To. | Vertical Integration and Contracting in the . Poultry Sector Tomislav Vukina This paper provides an economic explanation of the existing market organization of the poultry industry. The vertical integration and the emergence of contracts with independent farmers is explained by risk sharing technological progress and innovation dissemination consumer demand for product reputation and uniform quality and access to capital. In addition the sources of growers discontent with existing contracts are analyzed and the potential need for government regulation is discussed. The poultry industry in general and particularly the broiler industry is often considered a role model for the industrialization of agriculture. The poultry industry is a vertically integrated production processing and distribution system where the physical production of birds is handled almost entirely by contract growers. This industry has dominated the competitive scene in the meat complex over the last 30 years expanding its market share dramatically as it improved efficiency maintained lower prices than its competitors and improved its product offerings and variety. The poultry industry s vertical integration and reliance on production contracts with independent farmers undoubtedly facilitated the industry s efficiency and responsiveness to consumers making it a more formidable competitor in the global meat market. Judged by their prevalence poultry contracts have proven to be very popular among American farmers. They have benefited farmers by providing diversified opportunities to earn income and by alleviating cash flow problems that typically plague small farms. However contracts also have their critics largely within the growers own ranks. Growers complain that the gains from contract arrangements accrue largely to integrators while growers receive small or even negative returns. Federal legislation to provide uniform contract regulations for all growers engaged in agricultural production .

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