chickenomics

Power in the poultry industry.

chickenomics
Chickens, Hattie Hyder

Today's topic: What can chicken carcasses tell us about power in the poultry industry? And what should consumers think about when they stand in front of a supermarket fridge full of chicken?


The other day, I interviewed the head of finance in a poultry factory. The factory operates as you might expect; birds from local farms are brought to the factory site, stunned, killed, plucked, gutted, chilled, processed, packed, and then shipped out to your local supermarket.

When the carcass arrives at the processing stage, there's a decision to be made: do you leave the carcass whole, or do you chop it up? This (I think) matters. And I’m going to spend the rest of this newsletter talking about this chop/not chop decision: seatbelts on!

Our man at the poultry factory had this to say:

"...in an ideal world - and I do accept that I can't live in this ideal world - you want full carcass balance utilisation. When you sell a whole bird, you sell the whole bird... every component part. The market - and the consumer market - doesn't work like that. They want fillets, they want thighs, they want portions as well. The minute you cut a bird up, then you've got component parts.

…Now, the logic is that the price of each component part, if you sold them all, should equal the same as it does for the whole bird. It doesn't quite work like that...The breast is sold, for example, at £16-17 a kilo; the thighs, I'd say, £9 a kilo; and the legs and drums at £3 a kilo; as opposed to probably a whole bird at, say, £5 a kilo. Normally, on an organic bird, £8.50 a bird we'd make. Cutting it up in its component parts, about £8 a bird, roughly speaking. We lose 50p every time cut a bird up. We do accept that is the nature of what we do.”

A poultry factory never feels good about a chopping up a chicken. It involves increased labour costs (workers chopping and packing bits of chicken) and capital costs (machines chopping and packing bits of chicken) that aren’t recovered by individually selling each component of the carcass – a whole chicken is worth more than the sum of its parts.

The factory feels even worse about cutting up birds when its sales team hasn’t achieved “carcass balance utilisation”. They want to sell as many breasts and fillets as legs and boned thighs. Achieving this wondrous harmony is a difficult sales job because people really don’t want legs or boned thighs. This is my understanding of what happens:

  1. The sales team sell lots of organic chicken breasts. Easy.
  2. The sales team can’t sell the organic legs and boned thighs at an “organic” price point. In fact, the clearing price of these parts is so low that selling any organic chicken at that price would harm the poultry factory’s organic brand – who wants to buy two organic breasts for £7, when they could buy over a dozen organic legs for that price?
  3. The factory doesn’t want to dirty its organic brand, so the sales team sell the organic boned thighs and legs as “free range” chicken (the tier below organic chicken). This downgrading is all above board because, in 99.9% of cases, organic birds are also free-range birds.
  4. The sales team can now shift these organic free-range chicken legs and thighs without hurting organic breast sales. Phew!
  5. But lo! In solving one problem, another is created: when you downgrade the organic thighs and legs, not only have you sold some high-cost meat on the cheap, but you’ve also increased the supply of free-range legs and thighs.
  6. Now your sales team is on the back foot. They’re faced with two problems when selling ordinary free-range legs and boned thighs: (i) again, no-one wants these cuts; and (ii) should the supermarkets want these cuts, you’ve already met a substantial amount of that demand by downgrading your organic chickens.
  7. So, the sales team must carry out another downgrading. This time it’s the free-range legs and thighs that are downgraded and put to work in the grubby side of meat processing: pies, ready meals, and the like.

This story tells us two things.


(1) supermarkets got the power


When supermarket and poultry factory meet, power lies with the supermarket. The factory knows its profits will suffer when it chops up a chicken without having achieved full carcass utilisation, but in a market where the buyers are so few and so big, what else is the factory to do? Jeopardise its relationship with one of <10 big buyers? Come on!

This is a bananas situation given present inflationary circumstances. Demand for poultry has sprung up. And supply can't keep up for various reasons (HGV issues / worker shortages / soya feed availability / there will always be a time lag as it takes time to rear these animals).

NB only magicians can make poultry appear instantly:

3x02_For_British_Eyes_Only_-62-

In an ordinary market then, you'd expect the factory to be able to sell produce on its terms: e.g., I will only sell you my breasts if you also buy my drumsticks.

I don't know enough about economics to know why the poultry market doesn't operate like this. A few quick thoughts:

  1. As above: this is probably a function of the supermarket oligopoly. To the factory, preserving its long-term relationships with the small no. of large buyers is more important than exploiting short-term shifts in bargaining positions.
  2. Perhaps the factory thinks that its changed bargaining position is temporary (or "transitory" in central banker speak). It's a bit like when a teacher leaves a room full of students. The students don't cause a ruckus because they know that the teacher (read: Asda) may be back at any moment, ready to punish those who took advantage.
  3. We should spare a thought for suppliers when mergers & acquisitions are mooted in the supermarket sector. Just think of how powerful a merged Sainsburys-Asda would have been in its dealings with farmers / factories.

For a bonus example of poultry suppliers' supplication to supermarkets, look at the length of time that the supermarkets give factories to turn orders around. Some supermarkets give Day 1 for Day 2 orders:

"...what that means is that give us an order at six o'clock in the morning on a Monday and it has to be in the depot by by the Tuesday...The day one to day two is a big problem for us."

This is an astonishing example of how tight our supply chains are. Don't forget it takes months to rear the birds (c.5 months for a chicken. c.6 months for a turkey).

I should mention that the factory I visited is using the present supply squeeze to push back on this: it's asking those supermarkets to stretch to - wait for it - Day 1 for Day 3 orders. Gasp!


(2) consumers need to grow up


Aside from supermarket dominance, our story about how a factory sells drumsticks shows us something else: the British consumer is such a baby when it comes to meat.

Don't want to think about how grim butchery is? Don't know how to cook anything but chicken breasts? "Oh darling, don't worry!", says consumer capitalism, "we won't make you do either of those things."

Consumers get to pretend to be the good guys

Bad things happen when we buy portioned poultry: workers are asked to do an unpleasant job; and doing that job causes some workers to abuse animals.

Consumers leave it to the low-paid factory worker to butcher the chicken. This is unpleasant work in every sense: it is repetitive, hard on the body (repetitive strain injuries and carpal tunnel syndrome are very common), and often coupled with a shoddy package of poor working conditions & insufficient workers’ rights.[1]

And to do their job without feeling guilty, poultry workers must mentally separate the animal (i.e. a creature with emotions / that feels suffering) from the meat product. Just as a good soldier mentally separates the human from the enemy.

Both poultry worker and soldier do this dissociation in difficult working conditions. And, for both, this mental separation may go too far. The poultry worker becomes so convinced that a chicken/turkey is not a feeling animal that he thinks it's okay to start abusing it (See e.g.this story of workers playing baseball with live turkeys). The soldier, meanwhile, becomes so convinced that his enemy is not human that he thinks it's okay to abuse prisoners of war.

This means that the abuse of animals in the meat processing industry is not some wild perversion, but an excess of the very thing which makes the industry bearable for those working in it – seeing animals as un-animal.

And then we have the chutzpah to pile in with outrage when we hear about this abuse. We put the workers in that situation! Let him who is without sin cast the first stone!

And if you'll let me stay on this high horse a little longer, here's another thing: is there really that much of a moral difference between the abuse of animals in poultry factories and the poultry factory’s ordinary business of killing and processing chickens and turkeys?

Take the above example of workers playing baseball with like turkeys: we can all agree that this is a bad thing. It is a bad thing because those workers are causing a feeling animal to suffer and die for their pleasure.

In the case of the poultry factory’s ordinary business (something that we don't consider abuse), the poultry workers don't kill the animals for pleasure. Instead, consumers cause the animals to die for their pleasure. And we seem pretty okay with that.

So, killing turkeys is bad when poultry workers do it for pleasure. Killing turkeys is good when it is done for the pleasure of consumers.

Why the inconsistency?

Let’s say I want to eat some turkey. There are two big reasons why I want turkey: first, it provides calories and lots of other stuff that my body needs; second, I like turkey. Given that you can get all that nutritional stuff elsewhere, I’ve got to admit to myself that the real reason I want turkey is because I take pleasure in eating it. I am also willing to spend money to feel this pleasure.

This willingness to pay allows the modern economy to turn my desire for pleasure into an array of other incentives that appear to be far-removed from my pleasure (e.g., profit-making, earning a living). The poultry factory and its workers can then clothe themselves in these non-pleasure incentives: “I am not killing these animals for pleasure. I am killing them to earn a living / grow the business”.

And don’t we all feel better for this! I get to eat animals guilt-free (for the most part) because I didn’t kill for pleasure. And the poultry industry, rightly, can say that it didn’t kill those animals for pleasure either. It’s very clever. If only the turkeys could appreciate our brilliance!

This diffusion of moral responsibility is probably a feature of capitalism, or any economic system that tends towards the ever-greater division of labour. Two things often happen when such systems increase in size: first, the outputs of these systems increase in size, complexity, and inter-connectedness; and, second, the economic actors that cause such outputs become smaller (relative to the size of the output) and more numerous.

This combo (bigger outputs, smaller actors) makes it difficult to assess who caused a given bad output and who should be held morally responsible for it. A good example of this is the construction industry and the cladding scandal. I’ll leave that discussion for another day, but the short rule is: the more actors involved in the construction or refurbishment of a tower block, the easier it is for any one of those actors to disclaim responsibility by emphasising the partial nature of their work and/or the partial nature of their knowledge of the overall project.

Back to chicken.

The consumers get cheap or convenient food

When a factory chops up the chicken, consumers don’t just benefit from outsourcing the mucky stuff, they also benefit from either cheap or convenient cuts of meat. Those on a budget can buy cheap cuts (e.g. legs) that – as we have seen – are subsidised by the expensive cuts. Those who value convenience buy breasts / fillets.

The price of chicken breasts and other data show that British people are in love with this convenience. More than half of us want to spend less than 30 minutes cooking a meal each night, which is even worse than the US.

Our world-beating dislike of cooking is understandable: long working hours, small kitchens, US-style ultra-processed calories that are cheap and plentiful, the rise of two-working-parent households, and the absence of a vibrant culinary culture in the home (our grandparents and great-grandparents grew up in a culinary desert).[2] Can you imagine how bad these stats would be without immigrant communities?


Conclusion: tell me what to think!


Next time you’re in the supermarket check to see if there’s more chopped chicken than whole chickens. If there is, give a quick fist pump and bask in your power.

Factories don’t want to chop chickens up, workers don’t want to chop chickens up, but they do, because you want your chicken chopped up.

For the discerning shopper, here's a ranking of chicken cuts by everything but taste:

Bottom tier: chicken breasts

You’re being taken for a ride here - breasts are twice the price of thighs and 5 x the price of the legs. Learn how to cook some kind of casserole, or how to butcher a chicken.

Mid-tier: chicken legs and thighs

A decent option. Let the breast buyers subsidise your dinner. And if you buy free-range but not organic, there’s a chance that you’ll be getting organic chicken anyway.

Top tier: whole chicken

Why not confront the reality of your choices by chopping up something that looks like a chicken? Why not let the poultry factory and the farmers make a bit more money? Why not let the poultry workers do less of the worst task on the production line? Yes, factory workers may be let go, but this isn’t a bad time for that to happen given the tightness of the labour market.

Finally: a fun consequence of you buying chickens whole and butchering them at home is that this work doesn’t count towards GDP, which in turn makes the government look bad. That's proper activism that.


This week's reading


I’ve been reading the New Testament this week (just Matthew, Mark, and Luke so far). Three brief points:

First: John the Baptist is a superb warm-up act. He fires Judea up until it's roiling with Millenarian fervour. If you put Jesus into pre-John Judea, does he do as well? I’m not sure that he does. Every messianic figure needs an enthusiastic precursor (see e.g.: Nigel Adkins and Mauricio Pochettino at Southampton).

Second: what’s with all the spitting? In Mark (7:31-35 and 8:22:-25) Jesus spits on two different people in order to cure them of blindness and dumbness, spitting in the first man's eyes and the second man's mouth. This apparently wasn't that weird. Vespasian did it when touring Egypt. This article is an interesting history of saliva as cure.

Third: I hadn’t realised quite how repetitious Matthew, Mark and Luke are. Many of the stories about Jesus are identical, in substance and wording. Google led me here. These are called the synoptic gospels because of their similarity (syn = together, optic = seen). Explaining the authorship of these gospels and the similarity between them is a thorny problem ("the Synoptic Problem"). From my brief googling, the debate seems to be as follows:

Matthew

a. The Church argues: the gospel of Matthew was written by Matthew, the tax collector, who as one of the 12 apostles would have had first hand experience of Jesus's 3.5 year public ministry.

b. The majority of scholars argue: it was written or compiled by someone else between AD70 and AD110.

Mark

The Church argues: it was written by someone called John/Mark. He probably knew St. Paul and he may have known Peter. If he knew Peter, he had 2nd hand experience of Jesus's ministry. If he only knew Paul, he had 3rd hand experience of Jesus's ministry (although Paul claimed to have seen/heard the resurrected Christ on the road to Damascus, but this was after Jesus's ascension so I'm not sure that counts).

b. The majority of scholars argue: it was written by someone that knew Greek between 66 and 74 AD. Too late for John/Mark.

Luke

a. The Church argues: Luke was a doctor and a gentile. He never met Jesus, but was a great mate of St. Paul. Luke also talked to lots of eye-witnesses of Jesus's ministry.

b. The majority of scholars argue: it was written between 80-110AD (too late for Luke to be Paul's companion).

What explains the similarity between the gospels?

Either (i) the experience of each eye-witness to Jesus's ministry was so shocking and profound that those eye-witnesses were able to recall their experience to the authors (or to people who knew the authors) in great detail; (ii) God caused the recollections of eye-witnesses to be identical; or (iii) there’s a bit of copying going on.

As for (i): this feels unlikely. Humans are bad at remembering stuff. This is particularly the case when one is undergoing a traumatic/profound emotional experience. The newsreader Brian Williams’s unintentionally false story about being on a helicopter in Iraq comes to mind. Malcolm Gladwell’s podcast on this is a fun listen.

As for (ii): Maybe?

As for (iii): This is probably what happened. Most people think:

  1. Mark is written first.
  2. Luke is written second, borrowing from Mark.
  3. Matthew is written third, by 2nd generation Christians, borrowing from both Luke and Mark.

That's all from me. I hope you all have an excellent week, dear readers.

Charlie

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  1. see. e.g. this. By way of further (and rather pathetic) example: I once had to de-bone c.200 chicken thighs. The cold chicken and fiddly knife-work makes your hand seize up like a claw. It’s not nice! NB I have no idea what the working conditions were like in the factory I visited. The finance guy was very kind though. ↩︎

  2. U-boats and rationing in the First World War + balance of payments crises in the 1920s (less foreign currency for buying food imports) + great depression + U-boats and rationing in WW2 + post-war balance of payments crises = scarcity, bland ingredients, and liver and onions. ↩︎