2017 Chicken Marketing Summit The cost of broiler welfare ......©2017 Eli Lilly and Company, its...

©2017, Elanco Animal Health, a division of Eli Lilly and Company

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The cost of broiler welfare standards

2017 Chicken Marketing Summit

Matthew Salois, MA, PhD

Director of Global Scientific

Affairs and Policy

Elanco Animal Health

©2017 Eli Lilly and Company, its subsidiaries or affiliates©2017 Eli Lilly and Company, its subsidiaries or affiliates

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Animal Welfare & The Role of Standards

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Animal WelfareAnimal Welfare

Standards

Early Childhood Education

Education Standards

OUTCOMES GUIDANCE & BENCHMARKING


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33Source: OIE 2017

An Approach to Animal Welfare


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Costs = Consequences

4

Environment

Economic

Animal Health

4

Antibiotics

Battery Cages

Focus Areas

Growth Rates

©2017 Eli Lilly and Company, its subsidiaries or affiliates.©2017 Eli Lilly and Company, its subsidiaries or affiliates.

RAISED WITHOUT ANTIBIOTICS

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0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Percent of Broilers Raised Without Antibiotics

Broilers Raised Without Antibiotics Have Higher Mortality

Source: AgriStats

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

2013 2014 2015 2016 2017

Average Monthly Mortality by Antibiotic Use

RWA CNV ANO


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RWA Compromises Animal Welfare

7Source: Salois et al. 2016


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Impact of RWA on the U.S. Market

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Clock

Impact Consequence

Mortality+24-52%

Grow-out Time+3-4%

Bird Density+5-12%

Cycle Downtime+21-29%

Source: Salois et al. 2016

Between 680 – 880 million more birds

needed to meet demand


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RWA Compromises Sustainability

Source: Salois et al. 2016


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RWA Diminishes Economic

Affordability & Viability

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Requires between $2.9 to

$3.8 billion in added costs (Approximately equal to the

2017 GDP of Belize)

Source: AgriStats, Salois et al. 2016

0%

10%

20%

30%

40%

50%

2012 2013 2014 2015 2016 2017

Volume RWA/NAE Produced vs. Sold RWA/NAE

Volume Sold NAE Volume Produced NAE

0

20

40

60

80

100

120

2013 2014 2015 2016 2017C

en

ts p

er

Po

un

d

B/S Breast Unsized RWA vs. Conventional

©2017 Eli Lilly and Company, its subsidiaries or affiliates©2017 Eli Lilly and Company, its subsidiaries or affiliates.

BROILER GROWTH RATES

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45

50

55

60

65

70

Gra

ms

Pe

r D

ay

Average Daily Gain (ADG) by Bird Size

<5 lbs 5 < 7.5 lbs >7.5 lbs

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

10

20

30

40

50

60

70

Pe

rce

nt

Mo

rtal

ity

Gra

ms

Pe

r D

ay

Mortality & Average Daily Gain (ADG)

ADG Mortality

Source: National Chicken Council; AgriStats

Mortality declining at the same time as ADG increasing; Growth rate strongly associated with broiler size


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Rickets

Percent affected ± standard error and regressions line.

L-R2: 0.153Q-R2: 0.190Year: P<.01Month: P=.83

Tibial Dyschondroplasia

R2: 0.124Year: P<.01Month: P=.06

Percent affected ± standard error and regression line.

Source: HTSi, Watkins et al. (2017)

Prevalence of skeletal disease has not increased at the same time as growth rates


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Broiler type Age1 BW2 ADG3 FCR4 Yield5 Reference

Commercial 46 6.0 59 1.80 76.5 Agri-Stats

Slow Grow 58 6.0 47 2.28 65.0 Hubbard1Age=days of life; 2BW=pounds per bird; 3ADG=average daily gain per bird in grams; 4FCR=feed consumed relative to processing BW; 5Yield=carcass weight relative to processing BW (x 100).

Broiler Performance Comparison

Increased feed,

land, and water

utilization

Increased

manure output

Increased

production cost

Elimination of technological “hybrid vigor selection” comprises environmental sustainability and food affordability

Source: Agri Stats; Hubbard; Kidd 2016


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Less Protein Availability

15Source: NCC, Salois et al. 2016

More Birds, More Deaths*=

* Same mortality rate applied to a bigger population results in more on-farm deaths


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Environmental Sustainability Compromised

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CAGE-FREE LAYERS

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Cage-Free small share of market but increasing fast

18Source: USDA-AMS, Egg Industry Center, AgriStats

72% Cage-Free

2025


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Flock Requirements and Needed Expansion

19Source: USDA-AMS

229M cage-free layers needed, minus current 26M = 203M birds need new housing*

At $40/bird, capital cost exceed $8 billion

Additional land, buildings, plus new equipment

* Assumes Cage-free = Conventional at 276 eggs/hen/year


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Reduced efficiency and increased costs

20Source: Coalition for Sustainable Egg Supply

330

335

340

345

350

355

360

365

Aviary Conventional

Eggs

/He

n

Average Eggs/Hen

1.39

1.40

1.41

1.42

1.43

1.44

1.45

1.46

1.47

Aviary Conventional

kg f

ee

d p

er

do

zen

egg

s

Average Feed Conversion Ratio 0.00

0.20

0.40

0.60

0.80

1.00

Aviary Conventional

$ /

do

zen

egg

s

Average Operating Costs


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Higher Mortality

Less Affordable Protein

Source: Agri Stats, USDA, Coalition for Sustainable Egg Supply

-3.5X-2.8X


WHAT NEXT?

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Clarity or Confusion?

What the consumer is What the consumer is

Obscurity Confusion

InaccuracyNegative

Differentiation

Transparency Clarity

Authenticity Positive

Story

asking getting

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Driving Positive Consumer Experience

Quality

Protein

Make YES the new NO

Good

Animal

Welfare

More

Sustainable

Better

Value

Give consumers all of what they

want and are asking for!

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HEALTHY

ANIMALS

HEALTHY

PEOPLE

HEALTHY

PLANET

One Health

Healthy animals have

a better life, are more

sustainable, and are

critical to healthy

people and a healthy

planet.

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Elevate the Dialogue

Innovation

Influence

Actions

Positive platforms bring more

credibility, connections.

Sustainability needs innovative solutions

to conquer challenges.

Working together collaboratively to drive outcomes

with an evidenced-based approach.


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REFERENCESKaravolias, J, MJ Salois, K Baker, and K Watkins. 2016. Working Paper. Presented at

Agricultural & Applied Economics Association 2016 Annual Meeting, Boston.

Salois, MJ, RA Cady, EA Heskett. Published Abstract. 2016. Journal of Food Distribution

Research, 47(1): p. 79-80.

Salois, MJ, RA Cady, EA Heskett. Published Abstract. 2016 International Poultry Scientific

Forum, Metabolism & Nutrition VII(T182): p.56.

USDA – NASS (February 2017) Chicken and Eggs 2016 Summary.

USDA – AMS (June 9th, 2017) National Retail Report - Shell Egg and Egg Products.

USDA – AMS (April 2017) Egg Markets Overview

Agri Stats (2016) Commercial Egg Industry Transition toward Cage-Free, EMI Fall Conference,

Rick Van Puffelen.

Kidd, M.T (2016) Slower growing broilers in the U.S. market. EMI Fall Conference

K Watkins, K Baker, K Opengart, M Salois, and S Bilgili (2017) The Incidence and Severity of

Skeletal Disease and Foot Pad Dermatitis in US Broiler Chickens Between 1995 and 2016.

AAAP Presentation, July 2017.

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2017 Chicken Marketing Summit The cost of broiler welfare ......©2017 Eli Lilly and Company, its...

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