Processing 2035: Doing more with less [PODCAST]

O’Keefe: Hello and welcome to the Future of Poultry podcast series. My name is Terrence O'Keefe. I'm the content director for WAT Global Media. I moderated a panel discussion on the future of poultry processing at the 2024 Chicken Marketing Summit, and I want to share a recording of the discussion with you today.

Our panelists are Oliver Hahn, who is CEO of Badder Poultry USA, Sean Harris, who is executive director of bags and case ready product marketing in North America for Sealed Air Corporation, and Jay Russell, who is regional sales director for Marel. The focus of the discussion was on the changes we can expect to see in broiler processing over the next 10 years as we move towards 2035.

Specifically, when we talk about sustainability and where is the industry going, do you think that immersion chilling in water will still be the most common method used in broiler plants in the U.S. 10 years from now?

Hahn: One thing you need to know about me is that I love to make machines. That's why I’m still in the industry. It lets me live out my passion. I'm still with the same company that I started with. I have 30-years of experience in the poultry industry. I know the technology and the resources the technology is there and it has largely been there for a long a long time. There are advantages in immersion water chilling and there's advantages in air chill. If you just look at the consumption of water, it probably seems to be that the direction most likely will go into air chill. I believe that air chill will have a stronger foothold in the United States and elsewhere in the world as it has been implemented in Europe a long time ago and it just makes sense.

Russell: I'll add to that. I think there's a place for both (air chill and water chill). The biggest thing is wanting to take into consideration what do you want out of your chilling operation. Air chill is going to have benefits of crispier skin. You're going to end up, after you cook it, you’re not competing with pickup water, so prepared foods can get more efficiency out of the flavor profiles that they do.

You also look at shelf life. There are some attributes of air chilling that do bring some quality advantages. I think the biggest thing to look at, too, is singulation of product. Right now, you lose that going into immersion chilling. And as you come back out, you try to now redistribute that flock across the back end of the plant. You know, you can build some sales order volume before chilling. You have, say, three hours to prepare the backside to where you're really able to maximize the quality. It really just determines, what does the plant need to get out of the out of the process? And I think that's where we've gotten lost a little bit on the status quo of you roll a chiller in, you're able to dump all the product in, chill it, redistribute it, rehang it, and then get back into cut up. And I think there's an opportunity there now to own not only on the energy savings and water consumption, but to look at how do you have the transparency of the operation, the end product distribution to where you can have specific routings of that product coming out of air chill without human intervention and touching which adds some good qualities for the industry. And I think it's just taken a kind of a challenge on that status quo because the US is still the only market that water chills outside of a little bit in Brazil and a little bit in Australia.

There's a question there of why is that? You know, why have we not shifted on some of those opportunities to improve the overall quality of the operation? They both have advantages, and it also depends on kind of what do you need after the chiller. You know, what are you wanting to get after that? But again, at the end of the day, it's the responsibility of the plant to produce good quality product. And I think that's where we need to kind of go back and reevaluate the implementation of the technology on what is the best for the consumer, what's the best for the processor, and in the end, what's the best for the environment.

Harris: I thought that was a great answer. Having to follow that is going to be extremely difficult. But it was interesting yesterday as our keynote was talking, and he mentioned water was a big thing, and coming from the west, particularly out in southwest Texas, we have more and more people piling in and moving into places where water is going to be one of our largest hurdles to overcome. Maybe not in the next 10 years but the next 15 to 20 years. I think sooner or later when you get into places like that. He had mentioned desalination, well in Texas, I know it's close to the Gulf of Mexico but not so much in Arizona. So, moving water to places is going to be difficult. But the thing that you hit on that I agree with is there's going to be a place for both (air chill and water chill) and it's going to be how you market something.

I know this is not the marketing session, but how does a brand want to communicate with their customer? And that'll be one of the choices that you use on chilling. And I think here in the United States, it's one thing that we should not ever apologize for. We feed the world and we do it because we're more efficient. And efficiency to me coincides with sustainability. So, as we can move through our plants with less labor, less energy use. It may be that water chilling, it's an opportunity for you guys. How do you we recirculate that water? How do we clean that water? There'll be some large opportunities there. But water chilling is still there, water is the fastest way to for heat transfer. So if you're talking about speed, it's that. That's where we're going to stay.

If you're looking at a safe, nutritious, high-quality product produced at a low cost, water's going to do that. And you're not going to replace it with something else because you have to have contact with the product. Poultry does it a lot more efficiently because they're completely immersed. And I don't think you're going to give up that advantage in terms of cost.

Russell: We had a customer of ours that ended up building an entire plant on air chill because they also run a very high profitability ingredients business. So they had a big marination program, make all their own ingredients, and they wanted to disrupt the market by putting in air chill because you also could produce a product that once it was injected with their own seasonings, there's also an advantage to buying other competitive products where you're still selling more seasonings because you're trying to emulate the taste and duplicate it. There are opportunities again from like what do you want the end product quality to be and overall take advantage of that. Just different, you know, and I think there's opportunities for both, for sure.

O’Keefe: We talked a little bit about water. What other areas of the processing plant do you think have the most opportunity for reducing water usage?

Russell: We've got a technology for aero scalding. We have some applications in North America and globally on aero scalding, where we use an atomized spray for the scalding function. There are opportunities to save water here. Obviously, as you look into air chilling, there are opportunities there. And really, when you go to Europe, and Oliver (Hahn) could probably, dive deeper into this for sure. There's zero water usage in the processing plants. They're not allowed to use spray water in the plants, so it's a very dry environment overall. In the U.S. we wash everything. When you're looking at underneath equipment, we're washing it down a drain. When we're cleaning off modules, you're washing. When you're trying to move product around, you're rinsing it to try to get it to move on the conveyor belt. Our utilization of water and as a moving medium and as a washing mechanism, then there's some opportunities there to kind of save some money and look at it differently, which in turn impacts your wastewater cost as well.

Hahn: From my point of view, if you ask me, where is there opportunities to save water within the poultry processing plant? Absolutely, there is, and yes. If you go to the factories in Europe, they are highly automated and the usage of water is significantly less than here in the United States, there's no doubt.

Yesterday I learned a lot and one of the things, you know, you have to say, speak the truth. From my point of view, as a consumer, I don't like water to be used that much. It depends on the application within the United States, regular poultry plant, you have cut up operation and further processing, maybe IQF freezing. You're talking about a million and a half gallons a day. You compute that and that would mean 3,700 households or four people, it's a lot of water.

And it is our job. And I'm not opposed to listening, especially to the young generation, Generation Z, and the millennials. And I'm a late, young baby boomer, I guess, I learned that yesterday. I cook a lot longer for half an hour than half an hour. I guarantee you that. To me, water savings is essential.

I think air chill will be taking it will take place here in the United States as well a much larger footprint than it currently is and if there's an opportunity to save water. We should do this it is not a millennial thing or Gen Z thing, it's for all of us. It's just better and I think the tipping point from my point of view is definitely once the plants can no longer use well water and tap into the aquifer and maybe use city water. That is also a commercial tipping point where air chill absolutely will outperform. Also, on the economical side of things, water chill, no doubt about it. From an energy point of view, they're pretty much the same. But if you have to use city water, you want to do air chill for sure.

O’Keefe: When it comes to stunning, I know on the turkey side, for tom deboning, controlled atmosphere stunning has some significant paybacks and in deboning yield. So, the industry here in the U.S. has shifted that way. It's still kind of a niche thing for controlled atmosphere stunning for broilers in the U.S.

My understanding is that Europe went heavily toward controlled atmosphere stunning but now because of using carbon dioxide in controlled atmosphere stunning, that's starting to fall out of favor. Which way do you think we'll go in the U.S. for broilers? Do you think we'll stay with electrical stunning or carbon dioxide stunning or is there something else out there that might take the place of both?

Hahn: Let's just say this, we all know that hanging a live chicken un-stunned in a shackle it is questionable from an animal welfare point of view.  Things are a little bit more complicated than that. Controlled atmosphere stunning can have a below ground application for the carbon dioxide. If you do that, then your carbon dioxide consumption over a year is going to be, let me just say it in English, less than that of a car. So less than one car if you go below ground. But if you go below ground, the animal welfare part of things, since you cannot really introduce oxygen into the mix, you see more adverse behavior.

If you go above ground for carbon dioxide stunning, you're talking about 400 cars a year. And then you think, OK, so what's 400 cars a year in the bigger scheme of things? I think it does make a difference. If you can reduce it, you should reduce it. Both technologies are available. And you know the way the U.S. is doing stunning right now, there is really no legislation here in the U.S. that controls this.

If animal welfare is the driving force, then me personally, I think that carbon dioxide stunning is probably the way to go, simply because you are no longer hanging a live chicken. And yes, that is kind of questionable to me as well.

Russell: Adding to that, OK, here's another spin on electrical stunning. If you look at the challenge of labor after COVID in these plants, we run into a situation that the highest turnover area of a processing plant is live hang. So, if you do implement some gas stunning you're able to have a lighted environment with very minimal animal movement in live hang. It’s encouraged low turnover in the area once you go to gas stunning. Going back to the quality discussion, how do you pay back air chill? So okay, or how do you pay back gas stunning? It's mainly on blood spots and trim loss that you've seen in the turkey industry. You've got wing breakage when you hang them in the shackle, they're trying to pull themselves up in the shackle. You have some dark meat blood spots, you then then when you hit it with electricality stun, you're going to sit there and have potential for blowing out of keel on the smaller products. With that, you have opportunities to yield higher in your plant if you take the necessary protocols of managing your gas consumption and the gas gradients during the stunning process because faster is not better when gas stunning. What you do know is your plant is going to run slower if it goes to gas stunning because you cannot process as fast as electrically stunned. But the end result is higher quality, less labor, less trim, less turnover, all of those attributes that add up into a different ROI when you look at the overall payback model.

Harris: Jay (Russell), I'm going to start answering before you because that was extremely articulate. I will just say that economics are going to decide where it goes. And again, it's going to be speaking from brand owners out of it again. What do you want to communicate with your consumer? You know, you listened to everything from yesterday and how particularly Gen Z, we're looking at those being the next ones with purchasing power. They want the transparency, they want the communication. So, if they feel like you do Oliver, that that's cruel hanging a live bird, they may turn to another place. And so even with all the economic benefits you're talking about, you are going to lose that perception. You'll end up losing the battle, and labor being such an important factor right now, particularly in these high turnover positions. But with carbon dioxide, it does have the bad branding, so when you're talking about greenhouse gas, et cetera, that doesn't necessarily mean that you can't look at other things, you know, with nitrous, you'd mentioned argon, but there's going to have to be something else out there that would be lower cost that would not cause the dysphoria, et cetera, that you can move things through faster. And that's what we have universities for, to be on the leading and cutting edge of that. I would tell you, we're probably not even doing what we're going to be doing 10 years from now.

Russell: Yeah, and it's hard to make it attractive, too. We try to make this cartoon of gas stunning, and it's very difficult to make any slaughtering attractive, even though it's a necessary part of the process to get the end result.

Hahn: Maybe one more thing I can say. Technology and resource utilization will always be advancing, and it has the implementation or the pace of the implementation of this technology. That is not up to an equipment manufacturer or just the poultry processor or just the consumer. It is up to all of us to make that happen. The one thing that I believe is that the pace of these implementations will be significantly faster going forward than looking backwards. I'm quite sure about that.

O’Keefe: I know one of the challenges for existing facilities is that both gas stunning and air chilling take more square footage. And so that becomes sometimes the primary reason someone can't make the switch because it means building a bigger building and shifting lines and all that.

Russell: When it goes back to even in that, are we are the plants that have, you know, majority of 1960, 70 assets, are they configured the right way? You now need a rectangle because the technology needs a rectangle. Your building's a square, and then guess what? The city's not going to give you any more land. So how do you navigate some of those as we move forward? So again, I think that what we're going to see in the next 10 years is a shift completely in assets and how they're designed and what they look like and what's needed for the future. Because what we've been struggling with from an equipment standpoint is we're trying to shove all of this automation into a space of this square footage and you need four times this amount of square footage and then then you worry about the welfare of employees and egress and OSHA and all the other fun things that come with it. You want it all but we've got to make some sacrifices too, this is the challenge and somebody has to pay for it.

O’Keefe: Sean, I've got one for you in your wheelhouse. Packaging options for retail chicken products have improved over the years to minimize or eliminate leaks and improve shelf life. Recently, I've been starting to see some materials come across our desks where they say the packaging's compostable or recyclable. How do you think packaging's going to change over the next decade?

Harris: One of the things that we do at the Cryovac brand is we do a national meat case study on the fresh side about every three years. We've been doing it since 2002 and we'll do it again in 2025 in the first quarter. We can break it out by the total fresh case or by individual species and we can track and how that's gone over the past 20 years. You can look at that and extrapolate forward. One of the big things is the way people get their food. And you look at how you can acquire your food. And there's three channels now. It's food service, it's retail, and it's home delivery.

With COVID, home delivery really jumped. One of the things that went along that was more leak proof packaging. And we've talked a lot about water chilling and things like that that, you know, make more purge in the product. And so that leak proof packaging and poultry is paramount because no one wants something delivered to their home with their fresh vegetables with chicken juice on it. So, one of the big things we've seen over the last few years is the influx of more roll stock packaging or vacuum packaging. And, you know, vacuum in the early 2000s was about 5 or 10% of the case. It is now the predominant package in the case on all species. On poultry, it still trails behind tray pack considerably, but it's made-up ground considerably. If you keep going on that pace in 10 years, I do think you'll see the vacuum package product outpace tray pack.

And you ask, and you go back to you guys area, why is that tray pack win? Over and over and over. One, our customers, our processing customers are capitalized that way. It takes, you know, you're talking about $30 to $50 million to recapitalize the plant to change packaging. If you're selling it now, why would you really need to look at doing it unless the consumer demanded it? And on top of that, it's the throughput. Particularly people are used to having styled product and with the tray, you can offline load annd take that product to an OSID machine, which is the machine that's used out there. Now your throughput is so much faster and you can produce multiple products at the same time without sacrificing your throughput. When you go on to any type of vacuum package, styling product,the way consumers are used to seeing it changes. The eating quality changes because when you're in that vacuum package product, particularly things that are water chilled, you have it sitting in its juice for up to 21 days. So, it has a different flavor profile. We're actually having North Carolina State take a look at that for us, what the difference is there. Are there real differences in eating quality besides just perception?

But the biggest thing that's happened in the last couple years that'll change going forward is the banning of expanded polystyrene foam on the coast. And so actually people have come through and the solutions that are out there, and we're part of that as well, is to replace that with some type of polyester tray or solid PET (polyethylene terephthalate) tray. It's actually a less sustainable solution because you're using more material. It's a harder product to package, and so you're creating more leakers or more leaky packages. At the end of the day, you're going, wow, we're doing this because a municipality has banned something that's working. So, one of the things that we're doing, we have come out with a compostable product, particularly as an expanded polystyrene foam replacement. But I will tell you, that's going to over the next 10 years penetrate the coast heavily. Middle America, what we would tend to call flyover country, it's not going to change. It will not change because the cost is 3x. And so, are you really getting a benefit? Yes, it uses recycled content resin. And yes, it completely disappears in three to six months. And so, the end of life story is great. But you're still putting or linear low-density polyethylene around that to get it to be leak proof.

One of the things we've done with packaging over the years, we've ended up tremendously. So the amount of product you're using is less than we're using in in the early 2000s and in even less before that. So it's the total pounds of packaging per pounds of product is half of what it was 20 years ago. It'll probably be half of that again in 10 years. And that's where we'll make inroads on the sustainability. You had mentioned recyclability. You have a lot of pledges out there now to use recycled content or have everything completely recyclable. Problem is you can have something designed to be recycled ready, but once it has food contact on it, it's no longer recyclable.

There is not a stream in this country that can take product that has food contact on it. So, you know I would suggest going to a material recycling facility in your community. They'll gladly give you a tour. The only thing that they're really recycling out of there is water bottles, corrugated, aluminum, and newsprint, which we don't even have that anymore. I mean, you can have a clamshell of a strawberry package that's 100% PET, same as a water bottle, that'll go to landfill because they don't have the sorting capability. It's eye-opening. We're doing all these things to feel good, but we're actually not making a difference with it. And so, before we can move to that heavily in the next 10 years, there'll have to be investment in infrastructure to actually collect the material, clean the material, densify it and get it back to a place where you can reuse it. And to be sustainable all along that chain, it has to be profitable, or it'll have to be subsidized by the government. I don't think we're willing to do that at this point in time.

O’Keefe: The recyclable packaging, I always find interesting just from the standpoint of I'm old enough that when I was a kid, we had milk delivered to the house in the glass bottles that got returned. We used to make our money for a candy bar by going around and picking up soda pop bottles and bringing them back to the store. What killed all that? Is it just so much cheaper to make a glass bottle than it is to bring it back and wash it?

Harris: I bring you back to the material recycling facility again. You go into a material recycling facility, and you put your glass bottle into your bin. That all goes to landfill because it's cheaper to make new glass than it is to recycle used glass. And again, if there's not money into it, people aren't going to do it.

Systems have been developed now for automatically sexing chicks in the hatchery. And that allows for sex separate rearing. In the case of Wayne Sanderson in North Carolina, now they have two complexes that, one's males and one's females, completely different product lines and all that. How big of an opportunity from a processing standpoint, do you think that is? You're going to have greater uniformity because you aren't going to have males and females, but I guess if you have two, like if you had two cutout lines now, you can separate them.

Hahn: You know Is there going to be some significant payback? So yes, the answer is simply yes. So as an equipment manufacturer, we love that. I do think that what Targan has done is very disruptive. I admire that. It's a technology that is now available. And you know there's no doubt that if you have a more controlled flock size, your yield numbers will go up, your maintenance will go down, things like that. It just simply makes sense from all aspects. So, yeah, for us it's it's great. It's great in cut-up. It's going to be phenomenal on automatically boning. We're still trying and working hard. We have really made great progress. But if you have a more controlled flock size, you're automatic deboner will probably get very close to your skilled hand deboning line and you no longer have yield disadvantages if you go to automation. So controlled size of the birds in the factory is definitely beneficial.

Russel: Yeah, 100%. So it's on length, you know, size, you know, that I think once you're able to sex birds, and we've seen it because in these plants that that are running sex bird programs, you're the uniformity is there, the production is consistent, you know, every, every, the machines don't self-adjust per bird, we can get them to self-adjust per flock.

But you can't do it in the production volume that they're running at the rate that that is going. So, there is some tolerance. Obviously, there's thresholds depending on what machine it is on tops and bottoms of what that weight limit can be across. And it's not like the machine explodes if it's over the weight limit or under. You just get rework. You get issues coming off it. So again, it's how do you dial in a process and you're able to utilize that process in its highest efficiency rate, and with that is managing inbound product. You manage inbound product, that plant will run like a dream. With the variability of product, grow out issues, but wait, you the plant can't fix that. You're bringing in all that. You need to sort it, size it, arrange it going into the line, or you're going to have to deal with an army of rework or potential product loss across the units just because of the lack of effort put into to ensuring that the quality coming into the plant as well. It's like the crap in, crap out out type discussion. So, yeah, obviously the automation works like a dream once you're able to size correctly and you know, you could do certain things in the backside of the plant to overcome non-sex. But really running in a pure program to where you're able to earmark what your yields are going to be. If you know your inbound weights and it's all males or all females, you're able to do it. And turkey industry does a good job with this. It's just something that's now coming more to the broiler side of things.

Harris: I agree with everything you guys say, and I'm just sitting there thinking, okay, let's take it one step further after you guys get through with it, and then it gets to the end user. The consistency that you have all the way, and that's one thing that poultry has an advantage over the other proteins in the space, is that it's a consistent product every time. But imagine if you went to market on the end use, particularly as people are getting their products in different ways, that you go to a net weight with a single price package for tenders or different things like that that were fresh. And so is it on the marketing side of it, if you're controlling and poultry being vertically integrated from the hatchery through the through the final package, if you could have it so tight that you get all the yield advantages, throughput advantages you're talking about, now you put it in a net weight package that it's just one price out the door and consistent, that would be a game changer.

O’Keefe: If you look in your crystal ball 10 years out, is second processing going to be as automated as first processing is today?

Russell: The technology is there. I think the application, and it has to do with allowable square footage in some of these plants. Robots have been packing poultry and everything on the packaging side of automatically getting into thermal form packages. All of that's there. It exists in some form of function and in the majority of the plants here. But to have a full processing line that's fully automated, it's doable. It has been. The pathway that the US has taken has been different. It's like I'm going to automate de-bone.

Okay, well that's, do you know, realistically you could automate it after debone and keep your hand portion lines and maximize yield and manage it that way differently than I'm going to now put a machine in and expect it to be a silver bullet. Because there's not a silver bullet, there's all everything touches each process to contribute to what happens next. I think with that being said is, there are gaps in skill sets of plants. There are opportunities to partner with trade schools to be bring a higher level of education around PLC technology around just robotics in general. It's not hiring the kid who you know or the individual who has an aptitude for mechanical. It's now evolving into what are we going to do with AI. If you look at trim functions and you look at the efficiency of people putting pieces here, well, why is that person putting a piece here when they should be doing this? So again, some of that technology also exists. And we're also rolling out to where we're implementing it to where you look at the overall efficiency of the backside. That's where all the people are. There's tremendous opportunity in capitalizing on that.

The challenge of it is cost. It's square footage, it's cost, and then it's the skill set gap at the plant level and in order to put in some of this automation and really run with it.

Hahn: I said it before, technology is largely available. They're doing it in Europe and elsewhere in the world, highly automated factories. It is definitely possible. And again, it has been at a slower pace in the past. It will be a much, much faster pace in the future. Sheer labor availability will force that issue. It's just as simple as that. So if you ask me what it's going to look like in 2035, a lot more automation and definitely in the back end of the plant, there is a lot of labor there for sure. Evisceration and first processing. If you go through a plant that is already largely automated, even though there's opportunities,but the majority of the opportunity is in further processing, automatically deboning, cut up, and so on. We’re going to see that.

Harris: I think what you were talking about with the size of the birds being more consistent is going to enable those things. And it's going to get to be a point where it's not just going to be a cost advantage for you. It's going to be table stakes to do business. You're not going to be able to not do it. And some of the biggest hurdles, like you say, are the ageof our plants, the size of our plants. I think that you'll start you know having reinvestment. It may be that there's more regionalized specifically designed to do this.

And then you can take what you have now and make it distribution centers or do something else, not just completely do away with the real estate. But everything that we've kind of talked about this morning is going to come into that. So it's going to be the water use, et cetera.

Russell: The thing to add to that, the production process, as is designed today in the majority of the plants, is what I call management by piles. You'll singulate, create a pile, redistribute, create another pile. Then I create a combo. Then I'm moving this combo over here, and I'm dumping this combo up. And then I'm bringing this combo in, and I'll reprocess it. It's just management by first in, first out, and getting into a one-piece flow is where the opportunity is at, to where whatever mechanism is used upfront, to where as soon as that product comes off the bone and then you're able to now run it through a processing line to where you singulate and keep the uniformity of belt separation and then have an opportunity also to go back, heaven forbid there's a product recall, but you have traceability of that product going through each stage so that when you're looking at case counts, you're not all of a sudden putting seven million pounds on hold. You end up extrapolating that down and deducing it down to 250,000 because now you know exactly where that product was at what time. And that technology exists. It's just we have to adapt a method to where once you're running it through the process, you're not all of a sudden reintroducing a pile of product that came from a tote or dumping a combo up without tagging it, scanning that tag, knowing where it came from, then redistribute it. But right now, it's a little more chaotic than that, you know, in the backside of the plant, for lack of better terms.

O’Keefe: I would like to thank our panelists for joining us for this discussion. I hope you enjoyed it. We invite you to join us at the 2025 Chicken Marketing Summit, which will be held July 28th through the 30th at the DeSoto Hotel in Savannah, Georgia. We will launch registration for the 2025 Chicken Marketing Summit in March of 2025. Thanks for joining us for this episode of the Future of Poultry podcast series and be sure to subscribe.