And Then There Were…?: Recent consolidation amongst top breeders challenges farmers, companies

The recent announcement from Cobb-Vantress and Hendrix Genetics of a
strategic alliance makes the world of poultry breeding smaller again.

FEWER AND FEWER All of the layer and turkey breeding stock (and most broiler stock) in the world now originates from only two companies.

The recent announcement from Cobb-Vantress and Hendrix Genetics of a strategic alliance makes the world of poultry breeding smaller again.  The poultry industry now faces a situation in which all of its turkey breeding and egg-laying, and most of its meat chicken stock, originates from two major corporations. The EW Group (named for Eric Wesjohann) in Germany owns Aviagen (Ross, Arbor-Acres, Lohmann-Indian River meat chicken brands, plus BUT and Nicholas Turkeys), Lohmann,  HyLine and H&N International layers.

Hendrix Genetics (named for its founder, Thijs Hendrix, who is still active in the business) based in the Netherlands, owns ISA, Shaver, Babcock, Warren, Bovans, Hisex and Dekalb brands of layer, plus Hybrid and Orlopp turkeys. Hendrix owns the Hybro and Pilch broiler brands and, with the newly announced alliance with Cobb-Vantress, vaults into the big league of meat chicken development and marketing. 

The only breeders “independent” of these two conglomerates are Hubbard broilers and Babolna-Tetra layers. Hubbard is owned by Grimaud Frères Sélection in France, which is also a major player in duck, guinea and rabbit breeding. Babolna-Tetra, a very small player in laying stock with limited distribution, is family owned and based in Hungary.

Most of these breeding companies began as relatively small, family-owned and -operated companies.  In Canada, Shaver began as a small operation in the 1930s but quickly developed after the Second World War into a major breeder. Donald McQ. Shaver built the business quickly in the 1950s and 1960s before selling a minority interest to Cargill Inc., a grain merchant from Minneapolis and one of the world's largest private companies.  Following Don's retirement in 1985, the Shaver company became 100 per cent owned by Cargill, but was quite quickly sold to the French company ISA. More recently, ISA became a part of Hendrix Genetics, along with the other brand names listed above.
Babcock was another family-owned business, started by the Babcock family as long ago as 1905. It was expanded by Munroe Babcock and his son, Bruce, in the 1950s and ’60s and distributed its stock, like Shaver, through joint ventures and franchise arrangements around the world. Babcock was eventually sold to the A.H. Robins pharmaceutical company, but this arrangement did not last long and Babcock became a part of ISA in the 1980s.

PHARMACEUTICAL INTEREST
The pharmaceutical industry in the 1980s seemed to believe that poultry breeding formed a useful adjunct to its main business. Over time, Pfizer owned H&N Inc. and Merck owned Hubbard and BUT; however, the synergies thought to exist did not materialize and all of the connections between pharmaceutical companies and breeders have now been terminated.

Dekalb and HyLine both started because of supposed applicability of corn breeding hybridization techniques to laying chickens. This primarily involved creation of inbred lines followed by multiple crossing to produce the commercial generation. While there may have been similarities in breeding techniques in the early years, these have not survived and most breeders today use a combination of pure line and cross-line testing to maintain continuous improvement of their commercial products.
Before many of these companies emerged, the Kimber family in California began to breed White Leghorns using genetic selection tools, and were the first to hire a professional geneticist, in 1943.  However, the Kimber name did not last long and the remnants of the company were bought by Dekalb in the 1970s. Even prior to Kimber, Mount Hope Farms developed its own strain of White Leghorn, which was highly productive in its own right. However, this was prior to the emergence of hybrids and crosses, and Mount Hope sold its birds as a pure line. It is probably true to say that no leghorn breeder ever got very far without some Mount Hope blood in its gene pool, and this was all acquired legally and above board! Subsequent acquisitions of one company's stock by another involved all kinds of subterfuge, bribery, outright theft, and any amount of skulduggery.

MEAT BREEDERS
The meat breeding business was largely separate from the layer industry, as they have little in common from a genetic standpoint. At one point, cockerels from some dual purpose or brown-egg strains were grown for meat, but they were quickly supplanted by specialist strains. Early breeders of meat chickens had only to place large numbers of birds from an existing meat strain, and select the heaviest at market age for reproduction. Male line breeders such as Vantress, LedBreast, Hubbard, Peterson and Indian River based their selections on descendants of the White Cornish breed, while breeders of female lines used White, along with Barred Rocks, New Hampshire, and several other breeds and synthetic strains, as the basis for their work. Arbor-Acres, Pilch, Cobb, Hubbard and Nichols are examples. Many of the original meat varieties started development in North America, but soon were exported to Western Europe and elsewhere. Most originated as family farms and businesses. As late as the 1960s, Hubbard, Cobb, Peterson, and Pilch were still operated by family members of the same name. The Saglio family, who started the Arbor Acres company (and later, Avian Farms, and currently, Pure Line Genetics) are one of the longest-standing families in the breeding business. Ross, now one of the largest names in meat breeding, came into the game relatively late, and in fact the name originates from a fishing company in Grimsby, England. Ross Foods purchased a company called Chunky Chicks (Nichols) Ltd., who had imported a range of breeding stock including Nichols’ New Hampshires, and set up a large breeding and selection programme in Scotland in the mid-1960s. At that time, they also bred layers, turkeys and pigs. This com-pany, like some of its North American competitors, also had a large meat chicken production business and was its own largest customer for many years. Eventually, after a series of corporate manoeuvres, the production and breeding businesses became separate entities with different (and frequently changing) ownership.

What are the consequences of this consolidation of ownership for farmers and companies in the egg and meat production sectors?

Although there are a number of brands available, egg and turkey farmers now buy breeding stock and/or commercial chicks from one of only two companies – EW Group or Hendrix Genetics. The likelihood of a new entrant to this industry is virtually nil.  The egg industry is not expanding significantly.  Any growth in population or consumption is taken care of by annual increases in production at the commercial level. Prices for breeding stock have remained almost constant for many years and are not highly profitable, when one considers the investment necessary for research and development to accomplish regular and consistent performance improvements. Some econo-mies of scale have been achieved by merging of different companies; the presence of fewer geneticists and consolidation of research facilities have made this possible. But the companies still have to provide service and deliver breeding stock all over the world, even to markets that are too small to justify it. 

Diseases such as avian influenza can cause serious disruption of supply. While both companies maintain stocks, and often research facilities,  in different areas of the world, and claim to be “immune” to interference from disease, they are extremely vulnerable when political responses to disease outbreaks come into play.  Although moves have been made to limit such responses they can play havoc with companies’ distribution systems. When avian influenza was reported in 2004, in British Columbia,  Hybrid Turkeys and Shaver, both based in Ontario, were essentially shut out of several of their worldwide markets for many months. However, because of political and industry action, the recent outbreak of AI in Saskatchewan did not have such dire outcomes for the breeders.

Meat chicken producers have a slightly wider choice: they can get stock from EW Group, Hendrix Genetics (via the new arrangement with Cobb-Vantress) or Hubbard. Again, a handful of brand and varietal names give the impression of wider choice, but the fact is that only three suppliers exist.  They are highly competitive. Companies that failed to keep up have been ruthlessly weeded out and even some relatively sound breeding companies have left the field. Contemporary breeding programs are a far cry from the early days of placing enormous numbers of chicks and selecting the heaviest at market age. In some respects, the meat breeding businesses of today are more complex than those involved with layers. Not only must production traits be considered, but also the ability to reproduce efficiently, and to flourish in many climates and management systems. Welfare advocates have also made it necessary to breed specialist varieties for the various niche markets and welfare-friendly production systems that are now commonplace.

Vulnerability to catastrophic disease is the same for meat breeders as it is for layers; an outbreak near to a grandparent or great-grandparent facility could have huge repercussions in terms of disrupted supplies of parent stock and/or commercial chicks. The fact that there is only one, or at most, two,
alternative suppliers of breeding stock is a challenge we hope commercial hatcheries don't have to face, but it remains a possibility.