Among the positive indicators are slow and managed growth in output, less volatile feed costs, good export markets and a strengthening domestic economy, which is helping bolster demand at home, said Mr Brandenberger. There are warning signs, however. These include an increase in the volumes in cold storage, a softening of the ground turkey and parts market, long-term instability in production costs and a highly uncertain regulatory position.

Figure 1. US turkey production

Interesting to note from Figure 1 is that 2008 produced a peak in both turkey numbers and meat output, which led to a jump in the volume of turkey meat in cold storage and a slump in profitabilty the following year. Bird numbers and turkey meat production have since been stable, said Mr Brandenberger, and the volumes in cold storage have declined again to steady levels. There has been gradual growth in exports since 2009, approaching 600 million pounds for 2011, he indicated.

In the US, chicken consumption overtook that of beef in the 1990s to become the nation's favourite meat and the figures for last year indicate average annual per–capita chicken consumption at between 80 and 90lbs, which compares with between 16 and 16.5lbs for turkey meat. This is a good sustainable level for the turkey industry, explained Mr Brandenberger, and one which is profitable. Interestingly, years in which per–capita consumption has reached or exceeded 17lbs have not generated good returns for the industry.

Furthermore, the US regulatory environment is changing, said Mr Brandenberger, both on farm and in the processing plant. The biggest changes are being seen in food safety, driven by three main factors: recalls of ground turkey last year; the USDA’s desire to continue modernising the inspection systems and a shrinking federal budget.

2011 Turkey Meat Recalls

There were three major recalls of turkey meat in the US in 2011:

• frozen turkey burgers for Salmonella Hadar in March
• fresh ground turkey for Salmonella Heidelberg in August, which became the biggest turkey meat recall in US history (36 million pounds), and
• fresh ground turkey for Salmonella Heidelberg in September.

Mr Brandenberger explained that National Turkey Federation members convened a ‘Turkey and Salmonella Summit’ three weeks after the biggest recall, during which the participants developed a comprehensive action plan to enhance Salmonella control in turkey.

The key components of the plan, he explained, were: reassessment of HACCP/Salmonella control plans; a comprehensive survey of ground turkey; clarification of MST definition; review of Salmonella performance standards, and identification of pre–harvest research needs.

The Government response came from the US Department of Agriculture (USDA), which developed a comprehensive response, covering both turkey only and all ground meats.

The biggest issue, explained Mr Brandenberger, was the USDA setting very strict criteria for the plant where the recall had occurred before it could resume grinding. This followed the Department’s finding that the plant’s initial response was inadequate. The government tried to set standards that would effectively have declared Salmonella Heidelberg an adulterant in raw ground turkey meat but the lack of a rapid serotyping test prevented what would have been a zero–tolerance policy for Salmonella.

USDA followed this with the first steps towards pre–harvest testing.

Current Situation

Ultimately, USDA settled for a plan that was more stringent but did not fundamentally change the regulatory structure, said Mr Brandenberger. In the meantime, the government continues to increase its scrutiny of grinding operations but it is struggling to address the issue of certain Salmonella strains. A meeting is planned for later this year on pre–harvest controls.

The turkey industry continues with its action plan and is beginning to focus on the Centers for Disease Control (CDC) in foodborne illness investigations and recalls.

Other Regulatory Issues

USDA is moving forward with a major modernisation of poultry meat inspection, said Mr Brandenberger, and it is focusing more and more on Campylobacter. The Food and Drug Administration (FDA), meanwhile, is on the verge of initiating a process to eliminate sub-therapeutic label claims for antibiotics in farm animals.

Environmental regulations remain a major issue, he added, as do non–tariff trade barriers. He mentioned that the issues with the EU remain unresolved.

Feed Costs

Starting with some background, Mr Brandenberger explained that Congress created the Renewable Fuel Standard (RFS) in 2005, which took effect the following year and was further expanded in 2007. At the beginning of 2006, corn (maize) sold for US$3 per bushel in the US. Now, it is around $6.00, he said.

According to Mr Brandenbeger, the diversion of maize from food/feed to fuel has led to the most fundamental restructuring of production costs and resulting food costs in a generation. In 2011, the volume of maize used for ethanol exceeded that for animal feed. Citing data from Thomas E. Elam, Mr Brandenberger showed that the ending stocks/use ratio in the US is forecast to be just seven per cent for the 2011/2012 year, adding that levels below 10 per cent have been critical historically.

From the same source, he showed how the average farm price from maize has risen alongside the proportion used for ethanol from around $2 per bushel in 2005/2006 to a projected $6 for 2011/2012. Over this period, the percentage of maize going to ethanol has increased from around 12 per cent to 40 per cent of the total harvest.

Figure 2. Major US feed ingredients
(Data from Thomas E. Elam)

Another impact of the ethanol policy has been that the byproduct, distillers dried grains with solubles (DDGS), has overtaken soybean meal as the number two feed ingredient in the US behind maize.

However, the backlash has begun, Mr Brandenberger said, as Congress last year allowed two key ethanol supports to expire, while some in Congress are expected to begin pushing for additional ethanol reforms and action could start this year.

Finally, Mr Brandenberger turned his attention to other government issues. He highlighted the struggle between Congress and the USDA over the latter's efforts to regulate production poultry and livestock contracts. Furthermore, the Obama Administration and Congress will continue to wrestle over human nutrition issues, including obesity, which will likely have implications for the turkey industry in future, he said.

Further Reading

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