Some current external but very important issues include environmental regulations, public perception, and grower-contractor relations. South Carolina just completed several months of public debate over residents versus the animal industries and the animal industries are generally not satisfied with the outcome. The basis for this action was a swine slaughtering plant and the legislation was initially aimed at pork producers. However, it is projected that any S.C. poultry processing growth will be most difficult if not impossible in the next five years or longer because of the spin-offs from this issue. Poultry production growth will also become much more difficult as planned or partially completed houses are already being stopped/ questioned by citizens.

Finally, some S.C. growers (and growers in other states) continue to discuss and analyze the contractor-grower relationship. In a state newspaper, there was a recent major article on this subject. Among the issues, growers want price increases, profit sharing arrangements, right of refusal on terminating growers, input into capital improvement, and better feed-back on service/company issues. In fairness to the contractor, there has not been a great deal of discussion in sharing losses along with profits, possibility of impacting other producers by not having the power of terminating those few cases of wrong-doing, etc. The bottom line seems to be that the long-term contractual relationship is very complex, difficult, and needs to be re-assessed across time. For the most part, growers in this state remain satisfied with their contractors.

BROILERS:
Production growth in 1996 was slowed by sharply higher feed prices. This along with continuing strength in export demand contributed to higher wholesale prices and kept the industry close to or slightly below breakeven. U.S. broiler production for 1997 is expected to return to the more traditional rapid expansion path and should increase about 6 percent. The 1996 monthly eggs in incubators were continuing to expand until late in the year and have recently been reduced to 1995 levels. This means that chicks hatched will slow in the first quarter of the year but, given feed costs, exports, etc. this will change during the rest of 1997. The last part of the year depends heavily on early-year feed prices. Based on current data, we could see quarterly increases for 1997 of: I, +4%; II, +7%; III, +7%; and IV, +5-6%. Cold storage holdings of chicken meat is well below last year.

Quarterly broiler prices for 1997 should average close to or slightly below last year primarily because of the higher 1996 prices for the first three quarters. Profits should be positive and much improved over 1996.

The three hottest issues in the broiler industry are exports, exports, and exports. This is logical since 1996 exports were estimated by USDA at 4.6 billion pounds, or 18 percent larger than the previous year. The industry has been and still remains very aggressive in exports. The tremendous expansion into Russia and FSU countries has been the major player in this arena. Exports to these countries are between one-third to one-half (depending how you define the FSU) more than in 1995 on a JAN-OCT basis. Other countries that have been increasing purchases include China, South Africa, and Mexico.

The impact of the world market also has a major impact on our domestic market. It has allowed this magnitude of expansion at acceptable price levels and has been important for our dark-meat cuts and especially leg quarters. As someone said, "American consumers strongly prefer the front-end of the bird and the rear-end of the pig/cow and it is impossible to change them." For poultry meat this is especially true as we have almost two separate markets for broiler/turkey breast meat and other cuts. There is nearly a domestic market for breast meat and a world market for other cuts. A recent USDA study on price impact reported that broiler exports were estimated to contribute about $800 million to the industry during 1996. This also goes to the producer level in that it helps keep houses full, new house coming on line, etc.

EGGS:
The egg industry experienced a great 1996, price wise. Production was profitable for the first three quarters of last year but the high cost of feed put many integrators into a loss position for the last part of 1996. This resulted in a year of weak but positive returns. Considering recent egg-type chicks hatched and placements, production for 1997 first quarter could be about 3 percent above the same period last year. Given the current feed costs and egg prices, first quarter profits will be close to break-even and could be slightly negative for some. Assuming that feed costs remain close to current levels for the rest of the year, the industry should remain profitable but at very low levels. This is also based on the USDA estimate of overall 1997 production being increased by 3 percent but this may be a high projection. If the industry increases by this magnitude and exports, feed costs, etc. remain close to current expectations, then there could be difficulty in remaining above break-even.

Exports of total eggs for 1996 were estimated at 260 mil. dz. which was well above the 209 mil. dz. in 1995. Total egg exports for 1997 are projected to be 280 mil. dz. and if this holds, this will greatly enhance profits. The big four world customers continue to dominate in this industry -- these are: Japan, Hong Kong, Mexico, and Canada. Mexico increased purchases several times over in 1996 as compared to the year before. This next year could be interesting for this industry. Several analysts peg the egg market by per capita consumption and have reported that when we get into a situation of over 240 eggs per capita then we start to have price problems. In 1995 the per capita consumption was 234.6 and in 1996 this figure was 237.6. It is projected that this will move to 242.4 in 1997.

TURKEYS:
South Carolina experienced another growth year in this industry. Turkey production keeps concentrating in and around North Carolina and this area will be the future of growth in turkeys.

This sector had a very tough 1996 and are glad to have this behind them. On a quarterly basis, 1996 turkey returns (cents per pound) were estimated to be: Qtr I, -3.0; Qtr II, -5.4; Qtr III, -9.7; and Qtr IV, +5.4. After a very profitable 1995, the industry expanded production from 5.1 bil. pounds in 1995 to almost 5.5 bil. pounds in 1996; it cannot stand another year like this. For this reason, turkey output will likely continue expansion in the early part of 1997 as those already in the pipeline are produced and profits remain low to negative. The latter part of the year will see small to no increases over 1996 and overall 1997 production should be only 1-2 percent higher than the year before. It is also not surprising that we are going into 1997 with large cold storage holdings of turkey meat.

Turkey exports continue to be the highlight of this industry. Turkey exports for 1996 have been estimated at 461 million pounds or 32 percent over 1995. For 1997, exports are forecast at some 510 million pounds. Successful companies are putting major effort into this market. Not only is this a good outlet but a difficult one. Changes in world turkey trade are probably the most for any U.S. agricultural commodity. As example, Mexico purchased 63 percent of all our turkey exports in 1994. Despite the peso devaluation, this market remains strong but is no longer the dominant buyer. Russia purchases have expanded almost at a wild pace to where they will take considerably more in 1996 than Mexico. Exports of whole birds, although less than 10 percent of total quantity, are growing at a very rapid pace. Mexico and Hong Kong account for most of this market and have a tremendous appetite for whole birds. In the parts market, Russia has been the big buyer and increased their purchases by some 53 mil. pounds during the first 8 months of 1996.

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