Perdue's next frontier: organic
While the labeling on some of the packages in the poultry section of your local supermarket might leave you wondering, there is probably one you can understand — organic.
Perdue, like most companies, is expanding its offerings to meet growing customer interests. Because of that, organic chicken is currently the chicken producer's biggest growth area.
"Words like 'organic' have meaning," said Jim Perdue, chairman of Perdue Farms Inc., "because there are stringent regulations."
According to Perdue, organic chicken accounts for about 5 percent of the poultry the company sells today. It might not sound like much, but that makes Perdue the largest organic young chicken processor in the nation, according to Michael Sheats, director of the Agricultural Analytics Division at the United States Department of Agriculture. Perdue Farms has the ability to process more than 100,000 birds a day at its Milford plant.
As recently as 2011, though, the Salisbury-based company didn't even offer organic chicken. A few successful years of selling its Harvestland No-Antibiotics-Ever chicken, however, prompted the company to take the even bigger step toward organic.
Harvestland prepares Perdue for move to organic chicken
Perdue explained that after a dozen years of research, in 2007, with the Harvestland brand, the company was able to offer consumers poultry that did not receive daily antibiotics. In the past, he said, chickens were administered growth-promoting antibiotics regularly.
Creating a way to raise chickens without the use of antibiotics, according to Joe Forsthoffer, director of corporate communications for Perdue, took some time.
"It's not just not using antibiotics," Forsthoffer explained. "It's developing a growing program where you create an environment where you don't need antibiotics."
Perdue Farms did that though, and with the release of the Harvestland brand, began offering No-Antibiotics-Ever chicken. That now accounts for 35 percent of the chicken the company sells.
"It's now nationwide, with $200 million in sales," Perdue said. "It's done very well. That gave us a clue as to what the consumer is interested in."
Perdue purchases Coleman Natural
The Harvestland brand success pushed Perdue Farms to purchase Coleman Natural, the country's largest producer of organic chicken, in 2011.
The organic chicken produced by Coleman Natural — much of it in Pennsylvania — is raised without antibiotics on a diet of organic corn- and soybean-based feed in an environment free of pesticides and herbicides. The birds look just like the chickens raised at the traditional chicken farms here on Delmarva but take a little longer to reach maturity.
"They're a little slower growing," Perdue explained.
The birds are kept in chicken houses but are given the freedom to move into outdoor enclosures and have access to "enhancements" such as roosts or hay bales, according to Perdue.
Because antibiotics aren't an option, growers have found other ways to ensure the birds stay healthy, according to Forsthoffer. He said natural remedies such as herbs — particularly oregano — and probiotics are used instead.
"It's more of a homeopathic approach," he said.
Perdue today
With the addition of Coleman Natural, Perdue Farms now offers three categories of chicken:organic, No-Antibiotics-Ever and chicken that was not treated with growth-promoting antibiotics. All of the birds are raised on an all-vegetarian feed that does not include animal byproducts such as blood and bone meal, according to Forsthoffer.
"We found it produced a better tasting Perdue chicken," he said.
Although the organic and the No-Antibiotics-Ever chickens are the only birds verified to have been given no antibiotics, Forsthoffer said Perdue tries to limit as best it can the antibiotics all of the company's birds receive.
Human antibiotics are only used when a flock comes down with an illness, something that happens with about 5 percent of Perdue's chickens. Aside from that, Ionophores — used to prevent intestinal parasites — are the only antibiotics the chickens are given, according to Forsthoffer.
Ionophores are classified by the Food and Drug Administration as an antibiotic and are therefore not given to Perdue's organic and No-Antibiotics-Ever flocks, Forsthoffer said. He added the parasite preventative is not used in human medications and is not associated with antibiotic resistant infections in humans.
Certified organic
While organic chicken only accounts for about 5 percent of Perdue's poultry sales, it's the fastest growing portion of the company's business.
"It's growing at 30 to 40 percent," Perdue said.
The increase in demand for organic chicken is being seen nationwide, according to Bill Roenigk, chief economist with the National Chicken Council.
"It is growing, and it's growing more quickly than the overall industry," Roenigk said, adding a strong indicator of that is the fact that large chain stores, particularly Wal-Mart, are pushing the product.
He said consumers are more willing to buy organic poultry now that the USDA is regulating it. Years ago, when organic chicken first began showing up on shelves, the USDA hadn't yet created standards for it, so shoppers had no federal guarantee that what they were buying was really organic.
The USDA began certifying poultry as organic in 2000.
"If they saw the USDA organic label, they were pretty sure of what they were getting," Roenigk said.
Perdue Farms is working to keep up with the increased interest.
"As long as it's growing, we want to continue to produce to that demand," Perdue said.
The company, however, cannot just begin turning all of its poultry farms into organic operations. According to Forsthoffer, getting a farm certified as organic is a lengthy process, as it has to go three years with no herbicides or pesticides before it can qualify.
Another drawback to producing organic chicken is the price. Perdue said the rules and regulations — such as the farm certification process — associated with growing organic birds made the cost to the company double what it was for non-organic chicken. Even the feed for the birds costs twice as much as it does for a traditional chicken operation, as chicken certified as organic has to be fed organic corn grown from non-genetically modified seeds.
"When corn was $8 a bushel, organic corn was $16 a bushel," Perdue said. "The organic feed component is a limiting factor in growing the business."
The future
The agribusiness division of Perdue Farms, however, is working to interest more farmers in growing organic corn and soybeans so grain procurement will be easier. In the meantime, the higher cost of producing organic poultry is passed on to the consumer. Much of the Coleman Natural poultry ends up in higher-end grocery stores.
"Because it's higher priced, it's going to be in areas where people are willing to pay," Perdue said.
According to Roenigk, organic chicken costs consumers two to three times as much as conventionally raised chicken does. The weak economy of recent years has limited the number of people able to afford it, which is why Roenigk believes the demand for products such as antibiotic-free chicken — which costs less than organic — has grown.
"A lot of consumers seem to find that a good compromise from a cost standpoint," he said.
Roenigk said the growth of the organic market will depend on the economy.
"It's going to depend on people's disposable income," he said, adding he feels the market for the slightly cheaper specialty products such as antibiotic-free chicken will continue to grow.
He called Perdue's move to offer organic, specialty and conventional chicken is smart strategy, adding, "What you want to do is give consumers options."
Both Roenigk and Perdue agree organic chicken is becoming more popular among consumers, as evidenced by the number of organic poultry products featured weekly by supermarkets.
Forsthoffer believes social media has helped with that. He said organic products are attractive to younger consumers who are active online.
"With the organic and the antibiotic-free, it's very much word of mouth," he said. "They're a community and they share ideas."
As Perdue Farms continues to produce organic chicken, its researchers, too, will be sharing ideas. Perdue said the move to organic is a learning process, and researchers are still busy studying its advantages.
"We want to be a learning organization," Perdue said. "There's a lot of work going on behind the scenes."
cxsharpe@dmg.gannett.com
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Breakdown of chicken sold by Perdue
5 percent organic
35 percent no antibiotics ever
60 percent no growth promoting antibiotics