New Faunalytics Economic Analysis of the Chicken, Egg, and Fish Industries in USA, China, and Brazil

By JLRiedi @ 2023-09-27T16:33 (+18)

In our report released today, Faunalytics covers the historical consolidation of the chicken, egg, and fish industries, risks for these companies, and what factors determine the price of animal products. The report is helpful to journalists looking to understand the basics of how the animal agriculture industry profits from animal suffering, as well as advocates interested in decreasing the power of this industry.

The findings include graphics about the chicken industry consolidation, hotspot regions for these industries, and a term sheet.

https://faunalytics.org/industry-costs 

Key Findings

1. The fight against animal agriculture is an antitrust fight. Competition is low in the global animal agriculture industry, with a small number of giant companies that control most of it. Corporations like Tyson or JBS are highly “vertically integrated”: in addition to slaughtering billions of animals a year, they often own the mills that grind corn into feed, the genetics companies that breed fast-growing chickens, hatcheries where chicks are born, flocks comprising millions of birds, slaughterhouses, processing plants, and trucks that deliver products to stores. Integrating all of these stages under one giant corporation makes the production process cheaper and enables these companies to create staggering amounts of animal suffering. These megacorporations have also consolidated their markets by absorbing competitors or driving them out of business, producing a consumer landscape in which seemingly different brands—Jimmy Dean, Hillshire Farm, Ball Park, Sara Lee, and more—are actually all Tyson products. Other companies simply can’t compete, leaving global giants like Tyson and JBS to dictate the rules and giving farmers little choice over which companies they work with. 
2. The U.S., China, and Brazil are key to the chicken, fish, and egg industries. Not only are they global leaders in production, imports, and exports of animal products, they also literally feed the animal agriculture industry. As one example, Brazilian soybeans are used to feed Chinese fish that are ultimately eaten by U.S. consumers. An understanding of how the animal agriculture industry functions requires advocates to be familiar with the role these three countries play. 
3. The aquaculture industry hasn’t yet consolidated or standardized as much as the broiler chicken and egg industries have, but it will. Intensive aquaculture is relatively new and uses a wider variety of animals and production methods so it hasn’t yet achieved the same level of efficiency as some other animal agriculture industries. However, this advancement will almost certainly happen in the coming years if nothing is done to stop it. With this intensification comes bigger, more concentrated operations, leading to even more animal suffering. Around the world, many governments consider aquaculture the future and are creating programs and initiatives to support its continued rise. Without intervention, aquaculture companies will consolidate, vertically integrate, and intensify their operations. 
4. Governments have not only allowed but also encouraged animal agriculture to grow to this point. In the U.S., companies have benefited from indirect subsidies that lower the cost of animal feed, as well as a regulatory environment that has allowed megacorporations to emerge and have considerable influence over the policies that are supposed to regulate them. In Brazil and China, the governments have directly supported animal agriculture with money and programs to promote the growth of companies they favor. 
5. Animal agriculture corporations' profits are sensitive to many risks. Despite their power, these corporations are subject to a number of risks. In the U.S., current regulations require the ones that are publicly traded to disclose these risks as potential threats to their business so we have some insight into them. Those potential threats include consumer demands for better animal welfare, strengthened environmental policies, having to increase employee wages, and the loss of companies that are major customers.
6. The modern model of animal agriculture even hurts the farmers that work for it. Contract “grow-out” farmers (who raise the chickens that the megacorporations own) must often take out massive loans to meet those companies’ increasing demands. Even if they wanted to change industries, these farmers get trapped in debt and have little choice but to keep working for that industry. In the U.S. and Brazilian broiler chicken industries, a “tournament system” also pits these farmers against each other and lowers the pay for many. Some experts also fear that the rise of aquaculture could lead to further international exploitation of farmers.
7. Animal feed is the biggest cost the animal agriculture industry has to cover. While this always tends to be true, it has become more extreme over time: Feed now often makes up two-thirds of the money corporations spend to make animal products. Feeding the animals is a necessity, but because it is so costly for them, companies are looking for ways to make animals grow larger or produce more eggs with smaller amounts of food. They also benefit from government policies that make feed ingredients cheap. However, just because feed is the industry’s biggest expense doesn’t mean it’s the only thing advocates should focus on. These companies constantly look for cost-saving measures in every aspect of their business, from animal housing to labor costs to slaughter methods. Welfare-focused reforms like cage-free and slower slaughter line speeds aim to help animals but also reduce the industry’s profits. Higher wages for employees and tougher environmental regulations can do the same. 

Background

As animal advocates know, mass torture and death are hallmarks of the animal agriculture industry. Such immense suffering would not exist without a market for animal products, requiring both buyers and sellers. A growing body of research explores the demand side of this market, with factors like price, taste, health, convenience, and social norms driving consumers’ purchases (see Faunalytics, 2021; Rethink Priorities, 2023; Good Food Institute, 2023). However, far less research has examined the supply side of the market. In order for customers to have animal products to purchase, there must be companies creating those products in the first place. 

The simplest way of understanding the horrors carried out in animal agriculture is through a consideration of the industry’s profit motive. Like all businesses operating under global capitalism, the goal of the companies involved in the chicken, egg, and fish industries is to make money. By investigating the factors that shape profit-seeking actions by these industries, particularly the factors affecting their production costs, advocates can gain crucial knowledge about the industry they seek to change. 

Research Team

The project’s lead author was Zach Wulderk. Dr. Jo Anderson reviewed and oversaw the work. We would like to thank the Food System Research Fund and an anonymous donor for their generous support of this research. We would also like to thank Bruno Link, who provided invaluable support. 

Conclusions

Animal Agriculture Is An International Industry

The economy is global. This is especially true of most aspects of animal agriculture. Rather than small family farms feeding local communities across the world, the reality is that a small number of multinational megacorporations now dominate nearly every aspect of the industry. U.S. corn is fed to farmed animals in Mexico. Brazilian meat processors own giant U.S. chicken companies. German animal genetics companies supply Chinese corporations modeled after those in the U.S. 

If animal advocates want to be strategic and effective, it is critical to have at least a foundational understanding of this complex web of money and animal suffering. This is not to say that domestic campaigns are no longer important aspects of the movement. Instead, it is a call to consider how actions in one country can shape the industry in another country. Advocates living in major producer countries like the U.S., Brazil, and China, or those living in regions with large amounts of purchasing power, like the E.U., can and should seek to change industry practices around the globe. 

The animal agriculture industry will need to make changes to its production practices as consumers grow more concerned about animal welfare. It’s likely that every reform aimed at improving conditions in animal agriculture would cost the industry more money, such as transitioning to cage-free housing for layer hens or requiring stunning for fish slaughter. As a result, advocates campaigning for welfare reforms can simultaneously increase costs for the meat industry while also marginally reducing the suffering of farmed animals.

In the globalized animal agriculture industry, producers in one country often have buyers in another. As a result, consumers in one part of the world can demand certain practices of their producers and, unless they are able to find another market, the producers will be obligated to meet these demands (European Commission, 2018; European Parliament, 2022). For example, consumers in the E.U. have demanded—and received—certain animal welfare standards for fishes coming from Vietnam (Little et al., 2018; Lines & Spence, 2014). Similarly, regulatory agencies that oversee imports could require that animal products must come from animals that are raised without antibiotics.

Consolidation And Vertical Integration Are Hallmarks Of The Industry

A small number of animal agriculture megacorporations control much of the industry. For example, about one out of every six chickens slaughtered in the U.S. comes from Pilgrim’s Pride. But in this industry, even a corporation as big as Pilgrim’s is owned by an even bigger corporation: Brazilian-owned JBS, the largest meat producer in the world. Similarly, recognizable U.S. brand names like Ball Park, Jimmy Dean, and Hillshire Farm are all owned by Tyson, which gives consumers the illusion of choice in a more limited market. 

Besides buying other meat-producing companies, one of the main ways that Tyson, JBS, and other giants were able to reach their current “megacorporation” status is through vertical integration. By not only controlling other meat processors, but also controlling the suppliers of feed and day-old chicks, as well as everything from distribution networks to marketing teams, these companies are able to  be much more efficient with their operations than their competitors. This ultimately saves them considerable amounts of money and solidifies their standing atop the industry. 

Although governments sometimes move to block acquisitions that would further increase the power of these companies, they often do little to limit their growth or break up their strangleholds over markets. Strengthened antitrust regulations, which are intended to promote competition in markets by preventing things like monopolies, are a potential tool for governments to use to curb the power of these megacorporations. Advocates could lobby government officials to shift or strengthen current policies in order to limit the industry’s reach. More often, however, governments around the world provide both direct and indirect support to the animal agriculture industry. In some countries, like Brazil and China, governments have even actively facilitated the consolidation of the industry. 

It is important to note that different sections of government play different roles in this dynamic. For example, in the U.S., the Department of Justice and the Securities and Exchange Commission are two of the main bodies tasked with overseeing the legality of business dealings, while the USDA is one of the main agencies involved in promoting the animal agriculture industry, though it also has a regulatory role. Advocates may need to focus their efforts on specific agencies depending on the change they are demanding. For instance, petitioning the USDA for limits on corporate mergers would have little effect because the Department of Justice oversees this type of action. Because there are a number of regulatory bodies overseeing different parts of the industry, advocates have several routes available to them and can investigate which avenues may be the most fruitful.

Will Aquaculture Become The Chicken Of The Sea?

Of all the industries covered in this report, the U.S. broiler industry provides the most extreme example of intensification. Over nearly a century, it has grown into a highly consolidated industry dominated by just a small number of fully vertically integrated corporations. Through careful breeding and management of genetics, chickens used by these companies now grow faster and larger, better endure horrific farming conditions, and cost less to raise. Moreover, the industry is standardized to a great degree, with automated equipment churning out billions of chicken-derived products each year. In addition to standard pieces of chicken meat like breasts and thighs, the industry has pioneered many value-added products. For example, there are chicken tenders and nuggets, which are made with specialized equipment and use more parts of the chicken, thereby decreasing waste and costs while making the broiler processors more money. There is precedent for other animal agriculture industries trying to copy these money-making aspects of broiler chicken production as well: many other industries, especially pork, have sought to replicate them. 

By contrast, the modern aquaculture industry is quite young and unstandardized, which means it lacks many of the cost-saving efficiencies of the broiler industry. It uses a wide range of fishes and other aquatic animals, many of which are still raised in earthen ponds. Though many large companies are involved, they are often significantly smaller than the companies dominating the U.S. and global broiler chicken industries. Specialized equipment and agricultural knowledge exist in the aquaculture industry, but are rarely as effective or extensive as in industries that exploit chickens. Few value-added products come out of the aquaculture industry, and more standard products are also less consistent in size and other characteristics compared to the broiler and egg industries. 

However, all of this is changing. As the industry consolidates further, grows increasingly vertically integrated, and breeds more “efficient” fishes, the aquaculture industry as a whole will likely grow to resemble the broiler industry more and more. Larger companies will spend more money on capital investments, such as land-based recirculating tanks, allowing them to reap the rewards of economies of scale. Research and development will improve feed conversion ratios and create additional automated machinery. New value-added products will be introduced.  

This replication isn’t inevitable. Advocates can see where the aquaculture industry is headed. As a result, they have a unique opportunity to affect its trajectory and prevent the expansion of an already massive system based on animal suffering. 

Costlier Animal Products Require More Accessible Alternatives

There are many opportunities for advocates to increase the costs of animal products. This would both limit the profitability of animal exploitation and, by raising prices, make animal products less appealing to consumers. However, advocates taking this approach must also be aware of the need to increase access to plant-based alternatives. Many animal products have fairly inelastic demand, meaning that price increases won’t greatly decrease the amount of that product people buy. This is not because the price isn’t a concern, but rather because these products are staples for many people: they see them as irreplaceable. Often the first people who are priced out of these products are those who are already subsisting on low incomes, so advocates need to ensure that increased prices for animal products are met with decreased prices for plant-based products (Kenton, 2023). Without improved access to plant-based products of all types, creating costlier animal products would compound the harms marginalized people are already subjected to.

Successful efforts to improve welfare standards are one way to increase animal agriculture companies’ production costs. These changes would also likely result in higher retail prices. Although higher prices alone may not be enough to shift consumer preferences toward plant-based options, it is important that advocates work to make plant-based products more affordable and widely available (Rethink Priorities, 2023). Improved accessibility is a primary requirement for a plant-based future and must happen at the same time as animal products become less financially appealing to the general public. 

Aquaculture Is A Collection Of Industries

The broiler and egg industries use only a handful of varieties of chickens, most of which come from a small number of chicken genetics companies. Aquaculture, by contrast, involves hundreds of types of fishes and other aquatic animals, as well as dozens of different rearing techniques. Aquaculture includes everything from salmon to tilapia, sea cages to recirculating tanks, freshwater to saltwater. Although monocultures (i.e., the production of only one species in a system) are becoming increasingly popular, there is a huge amount of diversity in the industry, as well as in consumer preferences. 

One possibility is that the industry will further consolidate around the most commonly farmed fish species: salmon, tilapia, carp, and catfish. However, even those fishes are considerably more different from one another than the different breeds of broiler chicken in use. It may be useful for animal advocates to begin thinking less about the aquaculture industry and more about the salmon industry, the tilapia industry, and so on. Advocates can learn more about these industries through the research conducted by groups like the Fish Welfare Initiative.

Advocates Lack Resources For Understanding The Animal Agriculture Industry

Much of the animal advocacy movement’s research that has focused on the animal agriculture industry has looked at its animal welfare practices. This work is unquestionably crucial. But to supplement this body of knowledge, the movement needs more advocate-led explorations of other aspects of the animal agriculture industry, like the complexities of the production process. Regardless of advocates’ ultimate goals as they relate to the industry, understanding how it operates is necessary in order to change it. 

This lack of information is especially noticeable as it relates to large producer countries other than the United States. While the scope of this research was limited to English—as noted in the Caveats & Limitations section below—we suspect that few resources exist in languages like Portuguese and Chinese as well. The animal advocacy movement can greatly benefit from sharing research and resources across languages, especially because of the global nature of the animal agriculture industry. For instance, advocates working in Brazil need access to information about what is happening in the U.S. and in China. 

Advocates need to know more about the ins and outs of these industries, as well as the interdependent feed industry, but this is difficult when there is such little information compiled for advocates by fellow advocates. Funders and multilingual advocates can support the movement by translating resources or publishing an overview of the information available in other languages.

Detailed information on aquaculture is particularly lacking, likely because the industry is so new and diverse. In order for advocates to get out in front of the consolidation, standardization, and expansion of aquaculture, more resources exploring the practices of the industry are necessary. In other words, it’s important for advocates to expand their knowledge of aquaculture before it’s too late. 

Opportunities For Advocate Intervention And Collaboration Abound

As this report aims to show, the animal agriculture industry has potential points of intervention at every stage of the supply chain. From working to reallocate crop subsidies to improving slaughter conditions, advocates can take steps to reduce and even reverse the industry’s ability to exploit animals. An understanding of the industry’s economics reveals even more pressure points. However, because there are so many places to intervene, advocates would benefit from further analysis of which of these points are most promising. 

There are also countless opportunities for collaboration across movements. For instance, animal advocates’ goals share significant overlap with those of groups focused on climate change and the environment: not just greenhouse gas emissions from animal agriculture, but also several other less-often discussed issues such as single-use plastics and environmentally-unfriendly packaging, as well as pollution from feed crops or the global transportation of animal products. To this end, forthcoming Faunalytics research will highlight opportunities for collaborations between the animal protection movement and the climate and environmental movement.

Because workers are often exploited in the animal agriculture industry and are a main cost for corporations, there may similarly be opportunities to work with labor groups such as unions. Grow-out farmers, especially those who would like to exit the industry but are too indebted, may be another group of laborers to seek out as partners in working to fight against the big animal agriculture companies. Some people who have historically been viewed as advocates’ enemies may be trapped in the system by debt or their limited alternatives for making a living.

Feed and Genetics Are At The Center Of These Industries

Feed is usually the main factor affecting the cost of production of animal products, including chicken meat, eggs, and fish products. This often indicates that the industries are highly advanced and have become very efficient in other aspects of their operations, aided by innovations like automated machinery to limit labor costs. A huge share of the world’s supply of two crops, corn and soybeans, is used to feed confined animals, and much of these crops’ global trade takes place among the U.S., Brazil, and China. Especially in the U.S., government policies make these inputs cheaper for the animal agriculture industry, thereby supporting animal suffering. 

Because feed is so costly for the industry, companies have focused on improving feed conversion ratios so that animals grow larger or produce more eggs with less feed. In addition to specially formulated feed blends, advances in feed conversion efficiency has come from genetic management, including with selective breeding. Other focuses of selective breeding and the genetics companies that carry it out include faster growth and tolerance for poor conditions. In both the highly efficient chicken industries and the growing aquaculture industry, genetic advantages such as these will likely remain at the forefront of efforts to become increasingly profitable. Increased efficiency often often means increased suffering for animals. Limiting genetic manipulation and cutting subsidies for animal feed crops could both help prevent the expansion of the industry. 

Room For More Research

There are many directions for future research to take when considering the factors affecting the cost of production for chicken, fish, and egg products. The following are some of the directions we see as most useful, but it is not a definitive list.

One option for research is to map out the production process in other high-production countries. The U.S., Brazil, and China are three of the largest players in global animal agriculture, but far from the only ones. Other major producers of chickens, eggs, and fishes include countries like India, Indonesia, and Russia. Because supply and demand are inextricably linked, research could also focus on the biggest consumers of animal products even if they aren’t major producers. 

In general, there seems to be a divide in terms of both economic and industrial development between the large producer countries and countries that produce fewer animal products. In the U.S., Brazil, and China, many of their animal agriculture industries are highly sophisticated and dominated by megacorporations. Other countries that produce massive quantities of animal products are often similarly industrialized. In countries with fewer large-scale producers, the production process is likely quite different and the amount of animal suffering may be much less as well. However, like the broiler industry in Brazil or the aquaculture industry in China, rapid animal agriculture expansion and intensification could occur in any of these countries. Understanding the local context could enable advocates to prevent the industry’s growth in these countries.

Advocates would also benefit from deeper individual analyses of the industries we cover in this report. This report provides an introduction to many aspects of the chicken, fish, and egg industries around the world, but there is still a lot of information we did not cover about their specific processes and the regulations that govern them. Such resources would provide advocates with a more thorough map of the animal agriculture industry, revealing new points of intervention in the process. 

Future research could also map other industries, such as the pork, beef, and dairy industries. In many ways, these industries resemble those covered in this report. For example, many of the practices used in the modern pork industry were directly modeled off of the broiler industry. China, the U.S., and Brazil are also the three leading slaughterers of cows and all three are among the five largest slaughterers of pigs. However, each industry has its own unique factors that are important for advocates to understand. Moreover, Pakistan is one of the largest slaughterers of cows and is especially under-discussed in research on this topic. Additionally, the E.U. is an important player in the global meat trade, and is home to two of the largest pork-producing countries, Spain and Germany. As a result, explorations of other industries would also provide important background for advocates operating in parts of the world other than North America, South America, and East Asia. 

Finally, researchers could also investigate countries that support animal agriculture by importing products rather than producing them. Global animal agriculture couldn’t exist without customers who buy its products. As a result, future research should examine the countries that import the most animal products. For example, Japan is among the top importers of chicken and fish products, while Germany is one of the biggest importers of chicken, fish, and egg products. With a stronger understanding of the context in countries like these, advocates can work to shift consumer preferences to prioritize animal welfare. Advocates in these countries can also call for regulations that require better animal welfare practices in the production of imported products. If customers in these countries demand better treatment of animals, their suppliers in other countries must comply or else risk losing business.