Agriculture Livestock Production
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Industry Overview
The US livestock and poultry industry includes over one million farms with combined annual revenue of about $125 billion. Major companies include Cargill, Smithfield Foods, Pilgrim's Pride, Tyson, and Dean Foods. Hog farming, poultry and egg production, and dairy operations are all concentrated industries: the top 10 percent of companies in each of these three industries holds 90 percent or more of the total market. Cattle ranching and feedlot operations are much more fragmented, with the top 10 percent of companies controlling only 30 percent of the market.
This industry includes feedlot farms that prepare livestock for slaughter, but doesn't include slaughter, processing, or packing operations. The industry includes farm fishing operations (aquaculture), but not commercial fishing.
Competitive Landscape
Demand for meat, poultry, and dairy products is driven by domestic food consumption trends. The profitability of individual farms depends on efficient operations. Large companies have advantages in vertically integrated operations and economies of scale. Small operations can compete effectively by supplying local markets, specializing in heritage breeds, or raising humanely treated or hormone-free animals. Average annual revenue per worker for all US livestock and poultry farmers is $100,000.
Products, Operations & Technology
Major products are live cattle and beef (40 percent of industry revenue); dairy products (30 percent); chicken (15 percent); and live hogs and pork (10 percent). Other products include sheep, eggs, turkey, and farmed fish.
Livestock and poultry operators breed animals, supply feed, maintain animal health, provide shelter, and dispose of animal wastes. Feed (typically corn or soybean meal) is the largest direct cost of raising animals. Farmers must balance the cost of feed against its nutritional value. The feed efficiency rate measures how many pounds of feed are needed to increase the weight of the animal by one pound. Typical rates are six pounds of feed for beef cattle, 2.5 for hogs, and two for chickens. Cattle and sheep farmers can use grassland as feed. Average monthly grazing fees on leased private land ranges from $8 per head in Oklahoma to $20 in Nebraska.
More than 750,000 cattle operations maintain 97 million head of cattle. Three-quarters of this inventory is intended for beef production and one-quarter for dairy. Beef is produced from cows (females that have borne at least one calf); steers (castrated males); heifers (females that have never given birth); and bulls under two years old. Major breeds include Angus, Hereford, and Limousine.
Cattle operations are divided into two main operations: cow-calf and livestock feedlots. Cow/calf operations are typically located on land unsuitable for crop production. Most cattle are maintained on pasture and subsist on grassland. Each cow requires two to five acres of land for sufficient grazing, although arid areas may require much more acreage per head. The average beef cow herd is 40 head. The 10 percent of cow/calf operations that manage 100 or more head account for half of the total beef cow inventory.
Feeder calves gain four or more pounds each day in livestock feedlots, with a typical finishing weight of 1,100 to 1,400 pounds. More than 30 million cattle are slaughtered annually, around one-third of total inventory. On average, 14 million head of cattle are "on feed" in preparation for marketing.
Around 75,000 milk cow farms manage a total of 9 million cows; 75 percent of farms have fewer than 100 cows. Only 3,000 farms have more than 500, but account for 40 percent of the industry's milk. The average cow produces over 20,000 pounds of milk, double the rate in the 1970s.
The number of hog operations has declined in recent years to 66,000 farms as large, highly efficient operations absorb or displace smaller farms. The national hog herd consists of about 65 million animals. The nation's hog kill totals 10 million head a year. Of US hog farms, 60 percent have fewer than 100 sows but represent just 20 percent of industry revenue. Farms are increasingly specializing in a specific stage of the hog life cycle.
Poultry is raised for egg production or as meat, on either traditional or commercial farms. The bulk of chickens are raised on specialized commercial farms that produce 9 billion broilers annually. Egg hatcheries produce 90 billion eggs annually.
Major inputs common to most livestock and poultry farms include feed, fencing, vaccines, animal branding and identification tools, and transport vehicles. Although larger producers have automated many processes, such as for milking cows or feeding animals, most farms still depend heavily on low-paid manual labor.
New advances in technology include improved genetics and breeding, radio frequency identification (RFID) tags that monitor and trace livestock, improved ultrasound monitoring in cows, and antibiotics to reduce illness and disease outbreaks.