The U.S. Government’s $40 Million Chicken Industry Bailout

The US Department of Agriculture recently announced plans to buy $40 million of chicken from poultry farmers in an effort to support sagging profits in the $45 billion industry, CNN reports.

Prices for chicken feed have risen in the past several years (along with other commodities prices). But at the same time, the sluggish economy has depressed consumer demand for meat, keeping retail prices low. These two factors have dealt a harsh blow to the poultry industry, 58.5% of which is controlled by four major producers: Pilgrim’s Pride, Tyson, Perdue and Sanderson.

The USDA has bought tens of millions of dollars worth of chicken each of the past several years; this year’s buy is the largest since 2008. The policy is part of the Department’s much-contested farm subsidies program, which was cut significantly in May. Subsidies were first instituted during the Great Depression as a way to support farmers even in periods of agricultural over-production.

The USDA will donate its $40 million of chicken to food banks around the country. The expenditure represents a tiny fraction of the Department’s total budget, which was expected to total $150 billion for the 2011 budget year.

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