by Marsha Laux, content specialist, AgMRC, Iowa State University, mlaux@iastate.edu.

Revised May 2008 by Diane Huntrods, AgMRC, Iowa State University.

Background
Raising turkeys in the early twentieth century was largely a seasonal endeavor. In the mid-1920s, development of poultry feeds allowed for large-scale, year-round production in protective environments. The 1950s and 1960s saw vertical integration commonplace in the poultry industry. The 1980s and 1990s saw improved production practices involving nutrition, disease eradication, genetics, and meat processing.
 

Production
Turkey production is scattered around the United States. The top five turkey-producing states in 2006 were (in order) Minnesota, North Carolina, Arkansas, Virginia and Missouri. Minnesota ranked first in the number of turkeys raised with 45.0 million, followed by North Carolina with 37.5 million, Arkansas with 30.0 million, Virginia with 21.5 million and Missouri with 20.0 million.
 

As of 2007, the United States continued to lead the world in turkey production with 2.7 million metric tons (MT), while the European Union-27 produced 1.8 million MT, Brazil produced 380 thousand MT and Canada produced 164 thousand MT.

U.S. turkey meat production in 2008 is expected to increase 3.5 percent from the previous year.  

Demand

Distribution for turkey products is as follows: 41.4 percent sold to grocery stores and other retail outlets; 21.6 percent sold to foodservice outlets; 23.1 percent sold in commodity outlets; and 10 percent exported.

Prices received for turkey products averaged 47.9 cents per pound in 2006, up from 44.9 cents per pound in 2005. The whole turkey continues to be the most popular turkey product, and in 2006, the average retail price for whole frozen turkeys in the United States was $1.03 per pound.  

Drivers of Demand

Nutritional concern about fat and cholesterol has encouraged the production of leaner animals (beginning in the late 1950s), the closer trimming of outside fat on retail cuts of meat (beginning in 1986), the marketing of a host of lower fat ground and processed meat products, and consumer substitution of poultry for red meats since the late 1970s, significantly lowering the meat, poultry and fish group’s contribution to total fat and saturated fat in the food supply.
 

Turkey consumption has been increasing for the last decade. During that time, the largest growth of turkey product sales has been ground turkey. This is due to increased use of ground turkey as a lower fat substitute for ground beef. In addition to health concerns, taste and convenience are also factors that are driving the changes in consumption patterns of protein foods. 

The poultry industry has responded to the consumer demand for taste and convenience by pre-cooking poultry items and selling into the convenience market. Examples of convenience marketing are turkey strips that are pre-seasoned and pre-cooked, and ready to eat in sandwiches. Additionally, pre-cooked turkey products such as deli breast, turkey bacon and turkey ham have all experienced substantial segment growth.

Food safety and environmental concerns are also factors in the increased consumption of poultry products, because consumers perceive these products to be more wholesome. Turkey companies are marketing more natural and “air-chilled” products in response to these concerns. 

U.S. Exports
The United States is the largest exporter of turkey products. According to the USDA, 554 million pounds of turkey, valued at $359.1 million, were exported in 2007. While there was strong growth in shipments to China (up 36 percent) and Russia (up 22 percent), it was partially offset by a decline in exports to Mexico.

In 2006 Mexico was the dominant market for U.S. turkey meat, importing 310.9 million pounds of meat. The same year China imported 35.4 million pounds of turkey meat, Russia imported 25.2 million pounds and Canada imported 21.9 million pounds. Competition from exporters, especially Brazil, will slow the growth rate of poultry exports, with major export markets in Asia, Russia, Eastern Europe and Mexico. For instance, growth in U.S. poultry exports to Russia is not expected to return to the pace of the last decade, reflecting slower import growth and greater trade competition.

The majority of turkey products ship as lower valued turkey parts or ground or mechanically deboned meat. Many importers use the turkey products with other meats in sausage production.

U.S. Imports 

The United States imports only a small amount of turkey products (4 thousand metric tons in 2007), mostly from Canada.

Concentration  

Vertically integrated companies dominate the turkey industry. Those companies control the turkey from production through processing. The industry is concentrated; the top five companies represent over 66 percent of the market. The National Turkey Federation estimates that the 2007 leaders in the turkey industry are as follows:

Industry Life Cycle

Turkey producers have benefited from economies of scale associated with the industry’s horizontal and vertical integration. However, projected gains in efficiency over the next decade are smaller than in the past 25 years.    

The U.S. consumer will continue to buy more meat but will use a smaller proportion of their disposable incomes for meat purchases. Poultry purchases will continue to rise as a share of consumer spending on meats, while beef and pork expenditures are expected to decline. 

Emerging Developments and Issues to Follow

Livestock operations are facing greater restrictions. The Environmental Protection Agency (EPA) is actively monitoring livestock feeding operations. Concentrated Animal Feeding Operations (CAFOs) are considered point sources (specific, identifiable pollutant sources), and manure management and water quality issues are factors requiring specific monitoring and licensure. Many states and locales have regulations on size of CAFOs, odor, waste disposal, and water quality as they relate to agriculture.

Air pollution emissions have also been a concern for livestock producers. The Meating Place reported in April 2003 that hundreds of California farmers, including poultry farmers, will be forced to comply with federal government requirements to obtain operating permits for agricultural facilities that are considered “major air pollution sources.”  The new requirement is part of EPA’s May 2002 settlement with various environment groups to begin holding farms accountable for pollution from diesel irrigation pumps and animal waste (Meating Place Daily News Story 2003).

Disease outbreaks and related trade restrictions have slowed previously expected high growth in many U.S. animal product exports. Concerns in the poultry industry with avian influenza and Exotic Newcastle Disease are issues of concern for the poultry trade outlook.

Emerging markets to consider relate to demographics and convenience. Demographic changes in the United States will continue to see the growth of the Hispanic market. Poultry products are a staple of the Hispanic diet, with dark meat more readily accepted than in the general population. Due to continued growth of two-income households, products that offer additional convenience (ease of preparation) will also have greater acceptance in the food market.

Prepared September 2004 and revised May 2008.