Estimating Economic Losses by Contract Growers in the Poultry Sector due to COVID-19

Feb 15, 2021

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By Dorfman and Jeffrey H
Research was performed in a multi-university team to assist contract poultry growers in obtaining federal assistance to compensate them for pandemic-related economic losses. That research helped support these farmers in receiving assistance as part of a subsequent federal program (the Coronavirus Food Assistance Program 2 or CFAP2). Nationwide, growers appear to have received around $280 million in compensation so far.
The COVID-19 pandemic had two impacts on the poultry industry. Illnesses forced some poultry processing plants to shut down or slow production, but this effect was much smaller than the impact from the shutdown of much of the food service sector. Disruption in the food service sector (shutdowns of restaurants, school lunch programs, and cafeterias) sharply reduced demand for some poultry products while increased working from home and consumption of food prepared at home increased demand for other poultry products. This caused some plants to shut down or slow production because they had few or no customers for their (food service-oriented) products.
A team of agricultural economists from seven different land grant universities in the Southeast combined to estimate the losses to contract poultry growers from this situation. These estimates included losses from abandoned flocks, increased down time between flock placements, smaller flocks, and lower weight targets for completed birds. The estimates arrived at suggested that losses for chicken and turkey contract growers were about $175 million. The estimates arrived at were used by the poultry industry to request assistance from the federal government as part of emergency relief legislation or programs.
Broiler growers who are not under contract with a processor were included in the Coronavirus Food Assistance Program 2 (CFAP2) program of federal assistance to farmers. While final payment data is not available yet, based on USDA updates, broiler growers have received about $280 million is compensation from losses associated with the coronavirus. For contract growers to receive compensation they will need to be included in a future relief bill. Thus, the final impact of this research is still to be determined.
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