Markets and Pricing
The three largest customer markets in the fresh and frozen chicken industry are food service customers that purchase fresh, bulk-packed products produced from a relatively big bird, retail grocery store customers that purchase fresh, tray- packed products produced from a medium-sized bird, and quick-serve food service customers that purchase products produced from relatively small birds.
The following table sets forth, for each of the Company’s poultry processing plants, the general customer market to which the plant is devoted, the weekly capacity of each plant at full capacity expressed in number of head processed, and the industry's average size of birds processed in the relevant market.
Our big bird plants process a relatively large bird. The chicken products produced at these plants is generally sold as fresh, bulk-packed chicken cut into a variety of products, including boneless breast meat, chicken tenders, whole and cut wings and boneless thigh meat, and is sold primarily to restaurants, food service customers and further processors at negotiated spreads from quoted commodity market prices for those products. We have long-term contracts with many of our customers for these products produced at our big bird plants, but prices for products sold pursuant to those contracts fluctuate based on quoted commodity market prices. The contracts do not require the customers to purchase, or the Company to sell, any specific quantity of product. The dark meat from these birds that is not deboned is sold primarily as frozen leg quarters in the export market or as fresh whole legs to further processors. While we have long-standing relationships with many of our export partners, virtually all of our export sales are at negotiated or spot commodity prices, which prices exhibit fluctuations typical of commodity markets. We have few long-term contracts for this product.
As of October 31, 2019, the Company had the capacity to process 7.1 million head per week in its big bird plants, and its results are materially affected by fluctuations in the commodity market prices for boneless breast meat, chicken tenders, wings, leg quarters and boneless thigh meat as quoted by Urner Barry.
Urner Barry is an independent company specializing in the timely, accurate and independent reporting on market news and market price quotations to its customers in various food and protein industries, including poultry. The Urner Barry spot market prices for boneless breast meat, chicken tenders, leg quarters, whole wings and boneless thighs for the past five calendar years are set forth below and are published with Urner Barry's permission. Realized prices will not necessarily equal quoted market prices since most contracts offer negotiated discounts to quoted market prices, which discounts are negotiated on a customer by customer basis and are influenced by many factors. Selection of a particular market price benchmark is largely customer driven:
Our chill-pack plants process medium sized birds and cut and package the product in various sized individual trays to customers’ specifications. The trays are weighed and pre-priced primarily for customers to resell through retail grocery outlets. While the Company sells some of its chill-pack product under store brand names, most of its chill-pack production is sold under the Company’s Sanderson Farms® brand name. The Company has long-term contracts with most of its chill-pack customers. These agreements typically provide for the pricing of product based on agreed upon, flat prices or on negotiated formulas that use an agreed upon, regularly quoted market price as the base, as well as various other guidelines for the relationship between the parties. All of our contracts with retail grocery store customers also provide for the sale of negotiated quantities of product at periodically negotiated prices, rather than the flat and formula-driven prices discussed above. None of our contracts with retail grocery store customers require the customers to purchase, or the Company to sell, any specific quantity of product. As of October 31, 2019, the Company had the capacity to process 6.5 million head per week at its chill-pack plants, and its results are materially affected by fluctuations in Urner Barry prices and other market benchmarks.
As with products produced at our big bird plants, selection of the desired methodology for pricing chill-pack products is largely customer driven. Prior to the discontinuation in November 2016 of the Georgia Dock index, which had been published by the Georgia Department of Agriculture, many of our chill-pack customers used that index as the base for pricing formulas. As new and renewing contracts have been negotiated, many of our chill-pack customers chose to negotiate flat prices for the life of the contracts, while some of our customers have chosen to use an index published by Express Markets, Inc. ("EMI").
Almost all of our products sold by our prepared chicken plant are sold under long-term contracts at fixed prices related to the spot commodity price of chicken at the time the contract is negotiated, plus a premium for additional processing.
Table:
Plant Location | Market | Capacity Per Week   | Industry Bird Size
Laurel, Mississippi | Big Bird | 650,000 | 8.95
Hammond, Louisiana | Big Bird | 650,000 | 8.95
Hazlehurst, Mississippi | Big Bird | 650,000 | 8.95
Collins, Mississippi | Big Bird | 1,300,000 | 8.95
Waco, Texas | Big Bird | 1,300,000 | 8.95
Palestine, Texas | Big Bird | 1,300,000 | 8.95
St. Pauls, North Carolina | Big Bird | 1,300,000 | 8.95
McComb, Mississippi | Chill-Pack Retail | 1,300,000 | 6.52
Bryan, Texas | Chill-Pack Retail | 1,300,000 | 6.52
Moultrie, Georgia | Chill-Pack Retail | 1,300,000 | 6.52
Kinston, North Carolina | Chill-Pack Retail | 1,300,000 | 6.52
Tyler, Texas | Chill-Pack Retail | 1,300,000 | 6.52


Question: What is the difference in the industry bird size processed at Palestine, Texas compared to those at Bryan, Texas?
Answer: 2.43
Calculation: 8.95-6.52