Why Did the Chicken Cross the Border?

I’m going to share a secret with you that not many people know about me. When I was in high school, I was a champion poultry judge. That’s right, while most kids were playing sports and hanging out at the mall, my friends (whose names have been omitted to protect the innocent) and I were grading broiler carcasses and candling eggs. So, as you may imagine, I have long considered myself quite knowledgeable about the US poultry industry. But it wasn’t until I was recently reviewing some trade data that I developed an appreciation for the dominant export position that chicken from the United States holds in world markets, and Latin America in particular.

 

America’s Fowl Love Affair

For American consumers, chicken has become a ubiquitous part of our plates. In fact, according to the USDA, Americans will consume an estimated 92.1 pounds of chicken in 2016. This is much more than either beef or pork, of which 54.3 pounds and 50.4 pounds will be consumed this year, respectively. Furthermore, chicken consumption has been steadily growing since the 1960s, while demand for beef has been falling over the same time period. Shifting dietary demand toward low fat options has largely been responsible for this change in center of the plate protein. 

The National Chicken Council estimates that the annual consumer expenditure for chicken is about $90 billion USD. The industry is also a major employer and has a tremendous economic impact, particularly in the Southeastern United States. The bottom line is that chickens are an important part of the agriculture economy in America…but what about abroad?

 

Long Distance Relationship

While the US chicken industry has had to grow by leaps and bounds just to satisfy domestic demand, another suitor has also been knocking at the door. American chicken has become a highly sought commodity in export markets, and the United States now dedicates a significant percentage of its broiler production to overseas markets. (Note: The term broiler refers to chickens that are raised for their meat.)

 

Of course, it wasn’t always that way. During most of the 20th century, the chicken industry was focused on developing domestically. Entrepreneurs were hustling to meet emerging demand and shape what would become one of American agriculture’s most efficient industries, introducing vertically integrated business models that still persist today. It wasn’t until the 1990’s that poultry exports to the newly liberated Russian Federation would spearhead a dramatic increase in chicken exports from the United States.

 

The percentage of US chicken production bound for international markets grew from 6.3% in 1990 to a whopping 19.9% in 2012. This year, the National Chicken Association estimates that 6.8 million pounds of chicken will be exported, representing about 16.7% of production. The three top export destinations in dollar terms are Canada, Mexico, and Hong Kong.

 

 

Get Me Some of that Pollo!

By now we’ve seen that the US poultry industry has successfully developed a robust export market with Mexico as a key importer, but what really got me interested in writing this post was the important role that US chicken plays for US agricultural exports to the rest of Latin America.

 

US chicken meat exports to Latin America and the Caribbean in 2013 totaled $1.4 billion USD, or about 4.1% of all agricultural exports by value. But even more interesting than the absolute number is the broad importance of chicken in various countries’ import portfolios. I recently performed an analysis using FAO data from 2013 (the most recent year available) to create lists of the top ten exports from the US to countries in Central and South America. Surprisingly, chicken meat (not including canned) showed up on the top ten lists for each of the following countries: 

  • Chile
  • El Salvador
  • Guatemala
  • Mexico
  • Nicaragua

 

Furthermore, over the last decade it has been one of the fastest growing commodities imported from the United States in Argentina, Chile, Costa Rica, El Salvador, Panama, Peru, and Uruguay.

What strikes me about this list of countries, in addition to its diversity and breadth, is the extent to which trade with these countries is supported by trade agreements. Between NAFTA, CAFTA, and individual FTAs nearly every one of the countries mentioned above has been covered. This is a testament, from the perspective of the broiler industry at least, to the critical role that trade agreements play in industry development.

 

Summary

The US chicken industry has given American agriculture perhaps one of its best success stories. What started off as a less popular protein in the shadow of beef, has grown into a thriving domestic industry while demonstrating unrivaled leadership abroad. The industry has systematically pursued efficiency at every step of the process and has greatly benefited from improved market access around the world, and especially in Latin America. Other industries would be wise to look to the chicken industry of the United States for inspiration while plotting their own road to success.