headshot of a chicken

Why do chicken coops have to be large?

Competition for market share is a powerful force with many outcomes. Some are essential to feed everyone well; some generate great risk.

When I was a kid, roast chicken was a Sunday treat. As an adult, chicken has become a staple. It is delicious, cheap and readily available in every form imaginable. 

I was born in 1961, a fine vintage. Growth in demand for chicken since the days my Mom would bundle the bird into the oven before galloping off to church has seen production grow from 6.58 billion chickens slaughtered in 1961 to 68.8 billion in 2018. 

People like to eat chicken. And why not?

Along with the myriad tasty ways to prepare the meat, chicken is a lean, nutrient-dense protein. Nutritionists tell us that it should be on the menu.

As more people can afford a healthy diet, demand will be there for the production curve to keep its upward trajectory. If the farmers can produce chickens at affordable prices, then there are people to buy them.

Before we get carried away to the nearest KFC, let’s look into that ‘if’ to see whether production can continue to grow. 

Graph of the steady rise in the number of chickens produced for meat comapred to the numbers of other livestock

Comparisons in the number of animals produced for meat show the global desire for chicken. Source: Our World in Data


Market for chickens

In a perfect market, processing should converge on the most efficient way to get a commodity to customers. Efficiency equates to profitability and modern markets are a paragon of this powerful force. 

There is plenty of money sloshing around looking for an opportunity and plenty of consumers who make decisions based on price. Add this to technology and smart people with ideas to improve efficiency and food production systems have the reason and the means to become more and more efficient. 

When the market is food, more specifically chicken, economies of scale become essential to efficiency. 

Battery hens in a cage
Photo by Artem Beliaikin on Unsplash

The executive officer of the Australian Chicken Growers Council, Michael Moore, explains that over the last 20 years, smaller processors have been absorbed by larger ones, leading to decreasing levels of competition at the processing level and eventually,  monopsony conditions (a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services).

Such consolidation is the market rationalising towards efficiency.

In 2020, Inghams Enterprises and Baiada Poultry supplied 70% of Australia’s chicken meat. Meanwhile, 90% of the products from this raw material is supplied by just six processors.

Here is how one farmer sees the market…

“The biggest problem with the industry is the only way they can save money in growing chicken is by putting 100 sheds in one row – makes it a lot cheaper to transport out of that spot. “But what will happen is if we get avian influenza or Newcastle disease? It’s going to wipe out not just three farms that are separated by kilometres like it usually does, it’s going to take the whole operation out.”

Intensive farming is described as a high input system. And it is. Fossil fuel energy in engines, fertilisers and infrastructure is added to the natural ecology to supercharge production. But efficiency is also about economies of scale that drive consolidation and a simplification of the market.

Obviously, as the number of players in the market decline, so does the level of competition. At the extreme, there is no competition and a single entity sets and takes the price.

In this case, this single entity is not the grower.

And this is a massive risk to the resilience of supply.


What sustainably FED suggests

High demand is always a business opportunity that ignites powerful market forces. It brings competition to drive efficiency that captures consumers with low prices for the commodities they want.

The problem is the logical endpoint of super efficiency. One or a few highly effective players corner the market by absorbing the less efficient competition, as happened in Australia with chicken production. This is good for the consumer until the efficiency confronts the risk of failure. Should the single producer fail, there is no cheap chicken.

We already know that efficiency gains have downsides when they do not cover the total production costs. It is always tempting to gain efficiency by accepting externalities through the supply chain and by squeezing suppliers on price. Growers are forced into production decisions that are not in the animals’ best interest or the environment.

We also know that exponential growth in the production of anything is impossible when the resource it relies on is finite. Chickens can breed indefinitely only with sufficient food, water, space and lack of disease. 

Efficiency is the reason chicken coups have to be large. 

Humanity is locked into a dependency on efficient food production. Intensification has created efficient food production and continues to feed everyone well, especially those in urban areas without the means to grow their own food. 

But this powerful market force for efficient food production also increases production risk and reduces the resilience of the food supply.

To be clear, the green line on the graph cannot rise forever.


Hero image from photo by JOHN TOWNER on Unsplash

Mark

Mark is an ecology nerd who was cursed with an entrepreneurial gene and a big picture view making him a rare beast, uncomfortable in the ivory towers and the disconnected silos of the public service. Despite this he has made it through a 40+ year career as a scientist and for some unknown reason still likes to read scientific papers.

Add comment

Follow us

Don't be shy, get in touch. We love meeting interesting people and making new friends.

Most discussed