Interesting article that definitely got me thinking! But I think you are significantly overestimating the cost of labor for the type of production that qualifies as GAP, Certified Humane, and Certified Organic. The three estimates you provide are targeting small scale farming. The NC link, for example, is for the cost of raising 90 chickens and doesn’t represent the scale and conditions needed to hit the scale you would need to make a notable impact on consumption.
Lets look at the scale of some of the farms under GAP, USDA Organic Certified, and Certified Humane. The USDA reported that in 2021, 62.3 million chickens were sold certified organic originating from California. These birds were from 13 farms, which is ~4.8 million head per operation annually on average or ~600k birds per 42-47 day grow out period. The same holds true with most production (by volume) for GAP and Certified Humane. Mary’s Free Range Chicken (owned by Pitman Farms), produces around 500k chickens per week, and is one of the only chickens brands that hits GAPs highest levels of certification for chicken meat and is also Certified Humane. Similarly, GAP certified Bell and Evans produces at least nearly 200 million chickens per year.
The labor costs in these types of operations are vastly different from the estimates you shared and I think reduce the significance of the labor-cost differential between the US and Mexico. In the USDA’s Technology, Organization, and Financial Performance in U.S. Broiler Production report (table 4, page 15), they estimate that in 2011 these types of operations saw .3 - 1 hour of unpaid family labor per 1000lb produced and, in addition, $2-5 of hired labor per 1000 lb. The price of wholesale broiler meat was 71.5 cents per pound in 2011 or $715 per 1000lb. This means that if we conservatively compensate the family for their unpaid time at $20 per hour, and add the maximum of $5 per 1000lb of hired labor we get $25 of labor costs per 1000lb which is only 3.5% of the wholesale price.
So the types of ‘humane’ production that can actually hit the amount of chicken needed to feed the American consumer at scale have labor costs that are around this amount rather than >20% of production. I think it’s probably the case that small-scale humane production would be cheaper if done in Mexico. But I don’t think it’s practical for the US market and certainly couldn’t hit the ~300 million extra humane chicken that the elasticity numbers imply.
I found the table you referenced and it appears to refer to conventional chicken not humane.
While the exact labor % might not be precise, I really do think it's quite high. The USDA report on pasture raised poultry (https://www.ams.usda.gov/mnreports/pymnprpoultry.pdf) reports an 80% premium for pasture-raised chicken breast. Some of premium may be profit, but in the long-run this premium should reflect production costs
Some of that might be non-labor differences (extra land, fencing, and so on) but the main input for chickens is feed. But if you think the difference in cost is due to land, this also is a good reason to import. But the high premiums are consistent with really big differences in labor input.
To clarify my point: I have no doubt that pasture raised and the most labor intensive forms of broiler production have increased labor share of total production value. But pasture broiler production is around .01 or .02% of total broiler production in the US, and the type of small scale production that your labor costs are describing is an even smaller percentage of that. The “Humane” meat that is certified by certified humane and GAP is not this type of production, but rather extremely similar to the type of intensive farming that the USDA is describing as “conventional.” The distinction between these farms and conventional farms is not large from the perspective of labor as % of total costs.
Even then, I wouldn’t be convinced that the pasture premium is significantly related to labor costs (in any type of actual scaled commercial operation like say Pasture Bird). One of the main reasons for the premium is related to the change in feed efficiency. Many of these farms, like Mary’s Free Range Chicken, which has a hefty premium, use broiler genetics that are slower growing and convert feed into meat less efficiently (you need about 30% more feed and 30% more time [i.e. fewer flocks per year so higher capex costs per flock] to reach the same weight). Given the substantial share of feed in total cost, this is likely the primary reason why you will see a premium with brands like this.
The different genetics and longer grow out times also add other types of costs. For example, these birds have final weights much lower than standard genetics and different distributions of breast/ thigh meat so the processing costs per lb go up because you need to process the same amount of birds to get the same amount of meat and the machinery needs to have its thresholds adjusted. For independent pasture production which accounts for minuscule % of consumption in the US, the slaughtering fees are also astronomical because you can’t take them to any of the highly efficient slaughterhouses because they are too small for the equipment and the processors have no interest in disrupting their hundreds of thousands of birds per day process to slaughter a tiny flock for an independent farmer. You also need to account for much higher SGA, marketing, and distribution costs per bird for smaller operations.
The UCANR source in the which gives labor intensity for both conventional Cornish Cross and the slow-breeding version. But the labor intensity of the slow-breeding chickens is actually higher despite increased feed costs see UCANR tables. Labor and feed costs both go up but labor increases as percent.
Slaughter costs are estimated separately from UCANR (as noted in the post) but would improve the case for Mexico as slaughtering would be cheaper there due to slaughter costs.
"higher SGA, marketing, and distribution costs per bird for smaller operations." Sure, but that has nothing to do with the estimated labor intensity I provide. In fact, if lower labor costs allow Mexican producers to fall up and those costs per bird fall, humane costs would fall further.
Yes of course slower growing will have more labor and food. My point is that the UNCAR source is for 75 birds and the other source is for 90 birds and don't reflect labor costs for 99.98% of broiler production in the US.
The labor estimates you are providing are around an order of a magnitude higher than actual commercial broiler production for Certified Humane and GAP that you would see in a normal grocery store. This is done in barns of thousands and hundreds of thousands of chickens. Just because the labor as % of total value is more impacted in these small models for slower growing says nothing about what happens at scale. Increased feed per bird stays the same as the # of birds grown increases but labor decreases on a per bird level.
For production of poultry that actually has 20% labor costs I think your idea is great. But the reality is that this type of poultry production makes up basically none of the poultry people actually eat in the US.
Can you find a source that says that labor costs of humane chickens are only around 2% of chicken costs? All the sources I found via google think it's a lot higher, labor costs are a lot higher for humane farming in general across species, the LLMs I consulted said it was higher. We know that retail prices track production prices, so humane meat costs a lot more- and a good chunk of that is labor. If the only difference were increased feed, then humane chicken at the grocery store would be way cheaper than it is. The point is that when labor costs are high outsourcing can meaningfully cut retail prices and in long run grab market share.
I would point you back to the table we were discussing earlier as a reflection of what actually happens in practice:
In the USDA’s Technology, Organization, and Financial Performance in U.S. Broiler Production report (table 4, page 15), they estimate that in 2011 these types of operations saw .3 - 1 hour of unpaid family labor per 1000lb produced and, in addition, $2-5 of hired labor per 1000 lb. The price of wholesale broiler meat was 71.5 cents per pound in 2011 or $715 per 1000lb. This means that if we conservatively compensate the family for their unpaid time at $20 per hour, and add the maximum of $5 per 1000lb of hired labor we get $25 of labor costs per 1000lb which is only 3.5% of the wholesale price.
So note the 3.5% is implied by giving a $20 per hour "wage" to the unpaid labor in 2011. In reality that is probably too conservative so 3.5% would be the ceiling. I understand you take issue with the fact this table is for "conventional" broilers. But take a look again at the appendix of the UCANR report to look at the type of pen they made for the chickens. This is just not what actual broiler production looks like for Certified Humane and GAP certified facilities. Compare the UCANR example to an actual GAP certified facility like bell and evans [https://www.youtube.com/watch?v=JeudobLrfBY]
*edit another way to think about my claim is that even if the labor % is closer to 20%, the difference between "humane" as actually practiced (Certified Humane and GAP) and conventional production is very small in terms of labor share of costs. So really the ultimate question your essay makes me wonder is why don't ALL producers import chicken meat from Mexico?
Food prices keep rising. We will soon be compelled to eat grass as Nebuchadnezzar, king of Babylon, had to in the book of Daniel for disobeying God, as this generation does.
I'm not sure but there are a couple of risks- first if trade relations between the U.S. or Mexico worsen, chicken could get caught in the crossfire. Or if avian diseases spread into Sonoro/Sinaloa flocks, rules would get stricter there. My best guess is that the U.S. is so good at conventional poultry that it just sounds crazy to try to export to the U.S. even if there is a gap.
I read the title here as "Human Meat" and was very intrigued.
I'm not that libertarian!
Disappointing.
same :(
Interesting article that definitely got me thinking! But I think you are significantly overestimating the cost of labor for the type of production that qualifies as GAP, Certified Humane, and Certified Organic. The three estimates you provide are targeting small scale farming. The NC link, for example, is for the cost of raising 90 chickens and doesn’t represent the scale and conditions needed to hit the scale you would need to make a notable impact on consumption.
Lets look at the scale of some of the farms under GAP, USDA Organic Certified, and Certified Humane. The USDA reported that in 2021, 62.3 million chickens were sold certified organic originating from California. These birds were from 13 farms, which is ~4.8 million head per operation annually on average or ~600k birds per 42-47 day grow out period. The same holds true with most production (by volume) for GAP and Certified Humane. Mary’s Free Range Chicken (owned by Pitman Farms), produces around 500k chickens per week, and is one of the only chickens brands that hits GAPs highest levels of certification for chicken meat and is also Certified Humane. Similarly, GAP certified Bell and Evans produces at least nearly 200 million chickens per year.
The labor costs in these types of operations are vastly different from the estimates you shared and I think reduce the significance of the labor-cost differential between the US and Mexico. In the USDA’s Technology, Organization, and Financial Performance in U.S. Broiler Production report (table 4, page 15), they estimate that in 2011 these types of operations saw .3 - 1 hour of unpaid family labor per 1000lb produced and, in addition, $2-5 of hired labor per 1000 lb. The price of wholesale broiler meat was 71.5 cents per pound in 2011 or $715 per 1000lb. This means that if we conservatively compensate the family for their unpaid time at $20 per hour, and add the maximum of $5 per 1000lb of hired labor we get $25 of labor costs per 1000lb which is only 3.5% of the wholesale price.
So the types of ‘humane’ production that can actually hit the amount of chicken needed to feed the American consumer at scale have labor costs that are around this amount rather than >20% of production. I think it’s probably the case that small-scale humane production would be cheaper if done in Mexico. But I don’t think it’s practical for the US market and certainly couldn’t hit the ~300 million extra humane chicken that the elasticity numbers imply.
I found the table you referenced and it appears to refer to conventional chicken not humane.
While the exact labor % might not be precise, I really do think it's quite high. The USDA report on pasture raised poultry (https://www.ams.usda.gov/mnreports/pymnprpoultry.pdf) reports an 80% premium for pasture-raised chicken breast. Some of premium may be profit, but in the long-run this premium should reflect production costs
Some of that might be non-labor differences (extra land, fencing, and so on) but the main input for chickens is feed. But if you think the difference in cost is due to land, this also is a good reason to import. But the high premiums are consistent with really big differences in labor input.
To clarify my point: I have no doubt that pasture raised and the most labor intensive forms of broiler production have increased labor share of total production value. But pasture broiler production is around .01 or .02% of total broiler production in the US, and the type of small scale production that your labor costs are describing is an even smaller percentage of that. The “Humane” meat that is certified by certified humane and GAP is not this type of production, but rather extremely similar to the type of intensive farming that the USDA is describing as “conventional.” The distinction between these farms and conventional farms is not large from the perspective of labor as % of total costs.
Even then, I wouldn’t be convinced that the pasture premium is significantly related to labor costs (in any type of actual scaled commercial operation like say Pasture Bird). One of the main reasons for the premium is related to the change in feed efficiency. Many of these farms, like Mary’s Free Range Chicken, which has a hefty premium, use broiler genetics that are slower growing and convert feed into meat less efficiently (you need about 30% more feed and 30% more time [i.e. fewer flocks per year so higher capex costs per flock] to reach the same weight). Given the substantial share of feed in total cost, this is likely the primary reason why you will see a premium with brands like this.
The different genetics and longer grow out times also add other types of costs. For example, these birds have final weights much lower than standard genetics and different distributions of breast/ thigh meat so the processing costs per lb go up because you need to process the same amount of birds to get the same amount of meat and the machinery needs to have its thresholds adjusted. For independent pasture production which accounts for minuscule % of consumption in the US, the slaughtering fees are also astronomical because you can’t take them to any of the highly efficient slaughterhouses because they are too small for the equipment and the processors have no interest in disrupting their hundreds of thousands of birds per day process to slaughter a tiny flock for an independent farmer. You also need to account for much higher SGA, marketing, and distribution costs per bird for smaller operations.
The UCANR source in the which gives labor intensity for both conventional Cornish Cross and the slow-breeding version. But the labor intensity of the slow-breeding chickens is actually higher despite increased feed costs see UCANR tables. Labor and feed costs both go up but labor increases as percent.
Slaughter costs are estimated separately from UCANR (as noted in the post) but would improve the case for Mexico as slaughtering would be cheaper there due to slaughter costs.
"higher SGA, marketing, and distribution costs per bird for smaller operations." Sure, but that has nothing to do with the estimated labor intensity I provide. In fact, if lower labor costs allow Mexican producers to fall up and those costs per bird fall, humane costs would fall further.
Yes of course slower growing will have more labor and food. My point is that the UNCAR source is for 75 birds and the other source is for 90 birds and don't reflect labor costs for 99.98% of broiler production in the US.
The labor estimates you are providing are around an order of a magnitude higher than actual commercial broiler production for Certified Humane and GAP that you would see in a normal grocery store. This is done in barns of thousands and hundreds of thousands of chickens. Just because the labor as % of total value is more impacted in these small models for slower growing says nothing about what happens at scale. Increased feed per bird stays the same as the # of birds grown increases but labor decreases on a per bird level.
For production of poultry that actually has 20% labor costs I think your idea is great. But the reality is that this type of poultry production makes up basically none of the poultry people actually eat in the US.
Can you find a source that says that labor costs of humane chickens are only around 2% of chicken costs? All the sources I found via google think it's a lot higher, labor costs are a lot higher for humane farming in general across species, the LLMs I consulted said it was higher. We know that retail prices track production prices, so humane meat costs a lot more- and a good chunk of that is labor. If the only difference were increased feed, then humane chicken at the grocery store would be way cheaper than it is. The point is that when labor costs are high outsourcing can meaningfully cut retail prices and in long run grab market share.
I would point you back to the table we were discussing earlier as a reflection of what actually happens in practice:
In the USDA’s Technology, Organization, and Financial Performance in U.S. Broiler Production report (table 4, page 15), they estimate that in 2011 these types of operations saw .3 - 1 hour of unpaid family labor per 1000lb produced and, in addition, $2-5 of hired labor per 1000 lb. The price of wholesale broiler meat was 71.5 cents per pound in 2011 or $715 per 1000lb. This means that if we conservatively compensate the family for their unpaid time at $20 per hour, and add the maximum of $5 per 1000lb of hired labor we get $25 of labor costs per 1000lb which is only 3.5% of the wholesale price.
So note the 3.5% is implied by giving a $20 per hour "wage" to the unpaid labor in 2011. In reality that is probably too conservative so 3.5% would be the ceiling. I understand you take issue with the fact this table is for "conventional" broilers. But take a look again at the appendix of the UCANR report to look at the type of pen they made for the chickens. This is just not what actual broiler production looks like for Certified Humane and GAP certified facilities. Compare the UCANR example to an actual GAP certified facility like bell and evans [https://www.youtube.com/watch?v=JeudobLrfBY]
*edit another way to think about my claim is that even if the labor % is closer to 20%, the difference between "humane" as actually practiced (Certified Humane and GAP) and conventional production is very small in terms of labor share of costs. So really the ultimate question your essay makes me wonder is why don't ALL producers import chicken meat from Mexico?
Food prices keep rising. We will soon be compelled to eat grass as Nebuchadnezzar, king of Babylon, had to in the book of Daniel for disobeying God, as this generation does.
Why is no one doing this already? Just no one thought of it?
I'm not sure but there are a couple of risks- first if trade relations between the U.S. or Mexico worsen, chicken could get caught in the crossfire. Or if avian diseases spread into Sonoro/Sinaloa flocks, rules would get stricter there. My best guess is that the U.S. is so good at conventional poultry that it just sounds crazy to try to export to the U.S. even if there is a gap.
Hmm, I only skimmed the post and have no expertise, but sounds potentially interesting.