BALTIMORE -- After five years of high profits fueled by ever-increasing demand, the chicken industry is hitting a slump nationally and on the Delmarva Peninsula, according to industry officials.

"The industry is gearing down," said Gerald Truitt, executive director of the Delmarva Poultry Industry in Georgetown, Del.

Poultry companies are eliminating growers and increasing the amount of time between flocks they farm out to the growers, farmers and industry officials said.

Demand continues to be high, partly because of America's diet and health consciousness and the fast-food industry's use of chicken, but supply is greater than demand, industry officials say.

As a result, chicken should be a bargain for consumers as wholesale prices drop to break-even and losing levels, industry officials say.

"Chicken should be a deal," said Mark Weimar, U.S. Department of Agriculture economist, who said supply is expected to increase 5 percent in 1988, outpacing demand and forcing prices down.

The slump comes after several years of strong, steady growth for chicken producers. "We've been fortunate in that we haven't had a real downturn in prices in five or six years," said DPI President Keith E. Rinehart, a vice president at Perdue Inc., based in Salisbury, Md.

Truitt estimates that the slump will last about six months, but Rinehart said some industry officials fear it could extend for two years.

In October, for the first time in years, U.S. Department of Agriculture figures showed wholesale chicken prices roughly equivalent to the cost of production.

USDA reports the average wholesale price per pound for broilers was 61.6 cents in October 1986, falling in October 1987 to 43.2 cents.

In some areas that plummeted to a low of 30 cents a pound, Truitt said, well below the 43-cent cost of production.

However, chicken houses are still being constructed by some companies, including Perdue, as poultry companies attempt to increase productivity and remain competitive, Rinehart said.

"The tricky thing in a slump in the broiler industry is no one wants to be the first one to cut back, because you're giving up market share," said Bill Roenigk, National Broiler Council economist.

Company officials and industry observers are not willing to predict exactly when the highly competitive market, where 50 companies, located primarily in the South, Southeast and West, sold nearly $17 billion wholesale in 1986, will even out. However, those farmers who were cut as companies tightened their operations last summer have already felt the pinch on the Delmarva Peninsula.

Many chicken farmers operate on a tight margin, living almost from flock to flock and depending on that income to pay the mortgage on the poultry houses as well as to bring in steady income to compensate for less reliable grain and vegetable crops, said Maryland Del. Lewis R. Riley (R-Eastern Shore). Two years of drought on the peninsula means many farmers have been relying almost solely on raising chickens to pay their bills, he said. "Everyone's out there struggling, hoping they're going to be picked up {by a poultry company}," Riley said.

In 1986 during the height of the chicken boom, Perdue Inc. ran testimonial ads in Delmarva newspapers to find new growers, saying "Give yourself a raise, rais'n for Perdue." Now, Perdue, a large East Coast and Southern chicken producer, is among those dropping less efficient growers, said Rinehart. Perdue is also increasing the amount of time broiler houses are kept empty.

In one of Perdue's testimonials, top producers Lonald Watson of Lincoln, Del., and his wife Maggie, said they were sorry they hadn't set up broiler houses earlier. "Now we're looking forward to adding a fourth chicken house," he said at the time.

Watson said he is still satisfied with Perdue, even with Perdue's recent decision to allow three weeks between flocks instead of the 4 to 5 days of last year's frantic production, but he's less willing to gamble on the future.

Watson said he's glad he and his wife never did put up that fourth chicken house with its attendant new mortgage. And, he said, "I'm not putting up any more for awhile. I may not put up any at all."