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Chicken Proof: Why U.S. Farmers cannot Farm Chicken

      There is no reason that chicken farming should not be a profitable venture for Oklahomans and everyone else nationwide. As an economist, I have derived this proof to illustrate how legislation can break down the existing barriers to offer economic opportunity to smaller farmers, but once done, will raise chicken prices to fair market equilibrium.

      I first wanted to illustrate the current chicken market. Most chicken farming is done in large cities to cut on transportation costs from rural areas. The manure produced is an unwanted by-product that farmers could otherwise use. The unused chicken manure is actually an environmental concern and must be mitigated, by allowing the farmers to enter the market and make use of the nutrient rich chicken by-product. Also, large farms have the risk of disease spreading uncontrollably, like the bird flu. Enabling smaller farms to produce collectively significantly enhances disease control.

      There are 9 billion chickens slaughtered each year in the United States and 90 billion eggs are produced. According to the USDA’s publications for U.S red meat and poultry, 7.12 billion chickens will be exported in 2019 and the amount of eggs was not given. Industries are continuing to consolidate and currently the top 20 chicken producers control 96% of the market. With that being said, 90% of the production is by contract from integrated chicken production and processing companies, 9% are company-owned farms and less than 1% of chickens are from individuals. The chicken legislation must separate exported chicken production from consumption production and place controls on the chicken exportation industry, requiring packaging and marketing of the manure to prevent environmental waste.

      After the legislation is passed, the chicken industry farmers can arrive at new market prices suitable for their chicken exportation business. But they must design new processes for slaughtering as there is an unacceptable rate of workplace injuries; Wikipedia said there are two amputations a week in slaughter houses and some enhanced risk aversion methods absolutely must be created and enforced or the operation will be closed.

      As for opening the market to new participants, receiving the price for domestic chicken consumption, they will have to produce the domestic consumption requirements. For Oklahomans, this is around 25 million chickens that we will need to produce. Essentially for every hog there needs to be five chickens. The chicken plant in Ponca City can handle about three times our state consumption and we should encourage our neighbors along our highways and railroads to allow us to handle their domestic chicken production processing needs.

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     The table above is the entire 9 billion chickens produced annually. Red is the amount of chicken production exported and the blue is domestic consumption. The economic term I am coining for the ensuing market distortion is a transopoly, or market control by transposing domestic and global markets. Essentially, when global production transposes domestic consumption, the market price reflects the American population consuming the global production. We do not consume 9 billion chickens, we only consume 1.88 billion, but the market price reflects consumption of 9 billion. Here is a link for the USDA document for United States consumption, production, and exportation:US Poultry Consumption

    The market distortion for chicken is the result of contracting farmers for global production based on global consumption. By writing legislation that separated the two enterprises, and allowing rural farmers across the U.S. to produce chicken for domestic consumption, nearly two billion broilers, the price of chicken should theoretically rise proportionately by a factor equating to the global production contracts, or 9 billion broilers. This leads to the transopoly formula for correction:

(Global Production / Domestic Consumption) X Current Market Price = Market Balanced Price

     The Production/Consumption quotient is called the transoposition coefficient and for the United States the figure is roughly 4.5. This can be applied across the board and the $5 prepared chicken at Walmart should actually cost $22.50 based on United Stated production and domestic consumption.

     The legislation that stabilizes the nation’s chicken industry will have enormous economic impacts nationwide and as a United States Senator, this is exactly the type of legislation I will be bringing to Washington D.C.

Committee to Elect Bevon Rogers
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