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Resource Material
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Title: Structure and Ownership of the Meat Chicken Industry
Last Updated: 25 May 2006
Author: Dr Vivien Kite
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The chicken meat industry now operates largely through vertical integration, with company ownership of breeding farms, multiplication farms, hatcheries, feed mills, some broiler growing farms and processing plants.
Three large integrated companies supply about 80% of broiler chickens marketed in Australia. The biggest of these three companies is Inghams Enterprises, followed by Bartter Enterprises and Baiada. All three of these companies are privately owned and each has farming and processing operations in at least three states. The balance of output is shared among seven medium-sized companies (each supplying between 1-3% of the market nationally), and a myriad of smaller processors.
Processing companies generally contract out the growing of their broiler chickens to contract chicken growers. These growers own the farm and provide the management, shedding, equipment, labour bedding and other inputs for the rearing of the chickens. The processing company provides and at all times owns the chickens and provides the feed, medication and technical advice. Contract growers are paid a growing fee which currently varies from 49-64 cents per bird. The terms and conditions of the grower contracts, as well as the growing fees, are established by state government constituted committees in some states, or by negotiation between growers or groups of growers (under authorisation by ACCC) and companies in other states.
The payment generally includes a performance-based component.Approximately 800 growers produce about 80% of Australia’s meat chickens under contract to processing companies. The balance of meat chickens are produced on large company farms, or on farms owned and managed by ‘intermediary’ companies which own a number of farms, each managed by a farm manager, and who enter into contracts with the processing companies to grow out chickens on a larger scale.
The three major poultry producing companies also own their own breeding farms, supplemented by some contract operators, and supply eggs to their company’s hatchery. These companies also own their own feed mills in at least some of the areas in which they operate and have their own laboratories to test samples for common poultry pathogens and other bacteria. Several companies have their own research farms. A number of the medium sized companies also own their own parent breeding farms and, in some cases, hatcheries.
Each of the larger companies operating in the industry also has a product research and development facility.
Chicken is marketed throughout Australia by the large and medium sized integrated companies under various brand names through numerous outlets. Brands range from nationally recognised names to state recognised names and house brands. Numerous smaller processors also market chicken either under their own particular brand or in some cases without any brand identification, other than their name and address on the original packaging.
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