Anyone ever looked into, or know someone who has raised chickens on a large scale for Sanderson Farms, Pilgrims Pride, or other large scale contract poultry providers? How profitable do you think broiler chicken farms are/could be ? Thanks!

Do you already have the houses or are you talking about a scenario where they would float the note on start-up costs in return for you contracting with them?

Admittedly I am not familiar with it but I have heard some stories of people losing their land because they signed on thinking they would pay for themselves with minimal effort.

You generally get a contract for a set number of years, and are out the costs of building new houses on your own. You are paid on gain, and the buyer supplies feed. You are responsible for everything else like utilities and labor. If you get a bad batch of chickens, they are slow to supply you new flocks and/or have to heat them a lot in a cold winter to get them to gain weight, you can lose money.

The bigger companies are all going to the new-style houses where they have flow-through ventilation and can control the temps better. Unless you get a great deal on the houses, in the past the contract only is enough to pay the houses off if you take no profit out and pay them down. You risk not getting your contract renewed and stuck with a loan on chicken houses (happened to turkey growers here a couple of decades ago when Plantation pulled out). You're looking at hundreds of thousands of dollars to build a new location, these are big houses and you would normally have two or more to make it worthwhile.

You're going to need accessibility, good supply of water, probably three-phase electricity and natural gas line tie-ins wouldn't hurt, either. Most poultry operations are on sandy soils where they can dispose of the litter without dangerously building up the phosphorous levels.

If you really are interested, I could get you some people to talk to.

Some family friends were tied in with Pilgrims Pride and ultimately pulled out when all the cost for retrofitting new equipment became too much. Their contract was structured where they were paid very well for their chickens, but any upgrades the company required they had to comply with. The final straw was when they were told to get rid of the incinerator for disposing of dead chickens, and buy some specific deep freeze to put the dead ones, so the company could haul them to an incinerator. Go figure.

We have looked into purchasing an existing broiler farm (smaller scale operation) from an older guy who wants out. I'm wondering if it might be due to the high cost of upgrades, like you are saying. However, it seems like there are several farmers who seem to do quite well, but obviously by busting their butt.

Would their be any advantages/differences in doing free-range?

You make a living; that's about it. Not in it myself but several relative are or have been.

About the time your houses and equipment are about paid off; along comes another required upgrade and more debt. Sometimes costing as much as original construction.

Up side is flexibility to do other things on the side; cattle, whatever; as long as you're in short reaction distance when a feed auger starts squeeling or some other mechanical malfunction happens.

Then there's the guys who hire help and don't live on the place. Some companies don't allow that because production figures are seldom as good as owner operator.

It's a living. Nothing more

RR, free range might work for a niche market but not growing for a large producer. They want a very tightly controlled environment. Controlled light and temp, precise feed mixtures.

Free range chickens have appeal but little practicality today. I was in a broiler house for an hour or so last week helping a friend with a bad feed auger. Breathing that funk makes you wonder how much better chicken would taste if they were breathing clean air and weren't walking in their own crap. Not to be though. Not practical.

I own 6 500ft broiler houses and raise birds for Pilgrims Pride corp. If you have any questions feel free to Email me. AggielandPoultry @ Aol.com

Aggiepoultry
Do you raise your birds in east Texas? Or anywhere never Pat Pilgrams place? Just curious. Clayton and Pat use some of my ag products.

The most important thing is to read whatever contract you're thinking of signing. Talk to growers in your area.

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We have looked into purchasing an existing broiler farm (smaller scale operation) from an older guy who wants out. I'm wondering if it might be due to the high cost of upgrades, like you are saying. However, it seems like there are several farmers who seem to do quite well, but obviously by busting their butt.

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The condition of the houses is paramount. Is it curtain sided or solid walled?

Landscaping (or lack thereof) will tell you a whole lot about the quality of house management. A clean place usually means the houses have been taken care of.

Walk the attics and look for leaks and backed out joining plates on the trusses. Check the ceiling insulation. Check the wall insulation. Darkling beetles will thrash sidewall insulation. How worn are the belts on the fan? If they're running a fraction of an inch low in the pulley, they've likely not been maintained very well. How dirty are the shutters?

Do a static pressure test on the building. Close all the vents and doors, then turn on the biggest size fan in the house. The static pressure should be at least 0.10" w.c. A pressure of 0.15" w.c. is ideal for a 40 x 500 house with one large (48") fan running. Anything less than 0.10" w.c. means there are big air leaks. Get some smoke bombs and have a friend smoke the outside while doing a leak test.

If the house has evaporative pads (cool cells), check for scale and algae problems. If you can get your hands on a static pressure gauge, test across the pads. It should be no higher than 0.07" w.c. Anything higher suggests blocked up pads.

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Would their be any advantages/differences in doing free-range?

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This is an entirely different discussion. Much lower volume, but can command a higher price. Unless you have processing and distribution lined up, might be really tough. And not many folks willing to pay what it's worth to make money.

There are plenty of resources for growers and prospective growers across the broiler belt. Both Auburn (www.poultryhouse.com) and UGA (www.poultryventilation.com) have excellent extension outreach programs geared towards housing management. I work with both of the guys that run those programs and their information and perspective is spot-on.

Auburn has the National Poultry Technology Center. They have an extension economist who focuses solely on poultry on staff (Gene Simpson). Gene knows more about how to make a broiler house operation cash flow than anyone in the western hemisphere. His extension pubs will break down costs pretty well.

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You generally get a contract for a set number of years, and are out the costs of building new houses on your own. You are paid on gain, and the buyer supplies feed.

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Gain is certainly part of the equation, but efficiency of feed usage is probably as important.

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You are responsible for everything else like utilities and labor.

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This depends on the contract and the integrator. Some integrators pay part of the fuel (or all of the fuel in some cases), and other expenses, such as litter material. You will be responsible for all the labor. The integrator will supply birds, feed, technical support, veterinary care, and harvesting.

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If you get a bad batch of chickens, they are slow to supply you new flocks and/or have to heat them a lot in a cold winter to get them to gain weight, you can lose money.

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You typically only have to use heat through the 3rd or 4th week. After that the birds provide enough heat to keep the house to temperature. Chickens produce roughly 5 BTU/lb/h. Not hard to do a heat balance to figure out how much heat you should expect to add if you know the R-value of the building. And typically, it's keeping them cool so that they'll gain weight - yes, even in winter.

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The bigger companies are all going to the new-style houses where they have flow-through ventilation and can control the temps better.

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Housing design is dictated by the type of bird grown and tunnel ventilation is not "new". It has been used for 30 years in broiler production. Cross-ventilated (or conventional housing) has persisted in areas with small bird operations (fast food bird ~ 4 lb). And those houses can't compete on operation costs - not even close. If it's a heavy bird (6 lb or bigger) the house will be tunnel ventilated for sure. No other way to keep the birds cool.

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You're looking at hundreds of thousands of dollars to build a new location, these are big houses and you would normally have two or more to make it worthwhile.

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For a four house farm, you're looking at at least $1M or better. A new house up to class A specs will run roughly $200k (per house) plus stack shed, mortality handling system, tractor, de-caking machine.

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You're going to need accessibility, good supply of water, probably three-phase electricity and natural gas line tie-ins wouldn't hurt, either.

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Three phase isn't necessary at all. None of the commercial ventilation, feeding, or controls equipment is 3ph. It's all single phase. I'm sure you could order 3ph for the fans, but for integrators that require variable speed fans (VERY rare, and unnecessary), they use a VFD capable of converting single phase to 3ph.

Natural gas tends to be a better buy than propane and is less volatile than propane. We've been fortunate to have mild winters the last couple of years, and oil prices have been relatively cheap. 2008-2010 were cold winters and propane was $2+ in some areas.

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Most poultry operations are on sandy soils where they can dispose of the litter without dangerously building up the phosphorous levels.

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This depends entirely on where you are. There are plenty of poultry operations on non-sandy soil. I'd wager that most growers in the broiler belt without row crop or pasture operations of their own sell their litter for fertilizer. At least that's the case in my travels. Talk to Craig Coufal on campus regarding litter disposal. Craig's the expert i the state, and a good guy. He can tell you what you can expect for waste handling issues in your area.

And to clarify - I work in a research/outreach capacity out of state and not for an integrator. I'd be happy to answer any questions you have about housing design and operation; that's my particular area of expertise.

[This message has been edited by AgEng98 (edited 3/19/2013 11:35p).]

[This message has been edited by AgEng98 (edited 3/19/2013 11:52p).]

Man, you gotta love texags. That was one helluva response!

My in-laws have 4 500 ft houses and grow for Georges in SW MO. Agree with most of the responses. A lot of work. Allows them to run cattle too. They do ok as long as they rank in the top half. My FIL is a type A hard-worker and has figured out ways to be good at this. However, it stinks when you get a bad flock of birds..... Also had to do mandatory improvements to houses.....

Good luck!

Aggiewes '87

Don't count them (before they hatch)

AgEng98 doesn't post much, but when he does.....

Hey AgEng98...did you know Dr. Willie Krueger?

The traditional answer is "don't be a chicken farmer" in my family of farmers.

Obviously, there are folks here who know far more about it, but, from a pure business perspective, you're assuming quite a bit of debt, and providing lots of labor, to be put in a situation where you are locked in to buy your inputs and sell your outputs to the same entity...

If there is money to be made in it, it would be getting out of that situation where you are buying from, and selling to, the same entity.

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did you know Dr. Willie Krueger?

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I wasn't a POSC or ANSC student, so I never did. I do know of him, but didn't start working almost exclusively with poultry until my current position. I know some of the current faculty in POSC.

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Obviously, there are folks here who know far more about it, but, from a pure business perspective, you're assuming quite a bit of debt, and providing lots of labor

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This is very true. The debt can be substantial, and the effort to be a successful grower is substantial as well.

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to be put in a situation where you are locked in to buy your inputs and sell your outputs to the same entity...

If there is money to be made in it, it would be getting out of that situation where you are buying from, and selling to, the same entity.

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For clarity's sake, the contract grower doesn't "buy" anything from the integrator. The integrator assumes the vast majority of the economic risk. Their investment in a complex is infrastructure (processing plants, feed mills, hatcheries, genetics, etc.), and those expenses are significant. The integrator owns the birds they provide to the grower. The integrator buys the grain from which the feed is produced (at their expense) and distributed (also at the integrator's expense).

The grower assumes economic risk associated with live production with the exception of feed, veterinary care, and catching/transportation to the plant. Unless the integrator has a power plant or fuel refinery/processing plant, or ag chemical company, then the grower's inputs are purchased on the open market like any other business.

The problem with "sell it to somebody else" is processing and distribution. Not many independent processing plants that can handle that volume of birds. A typical four house farm will hold between 80-100,000 birds per flock. At 5 flocks a year (fairly typical for large birds), that's 4-500k. Poultry has to be inspected to be sold to the public as well. "Sell to somebody else" doesn't work at this scale. Getting a contract with another integrator is not uncommon, but outright going it alone isn't really workable.

OK - I wasn't aware that the grower wasn't buying the feed. But, I still have qualms about how the numbers are supposed to work.

I guess my issue is that I cannot see why, given the level of control the integrator has, why it is not completely done by the integrator's corporation.

Given the schedule mentioned of frequent improvements, etc, it seems like a house should be treated the same as a piece of machinery - how long does it take to recover the cost? What is the projected life?







[This message has been edited by Bradley.Kohr.II (edited 3/20/2013 10:58p).]

I can't really speak to the former - again, I'm not an economist. As for the latter:

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Given the schedule mentioned of frequent improvements, etc, it seems like a house should be treated the same as a piece of machinery - how long does it take to recover the cost? What is the projected life?

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Service life of the structure is actually a long time. There are many broiler houses which are 30-40 years old and are structurally sound and fit for use. There are many that are in terrible condition after 10. It's maintenance, just like on any piece of equipment.

Equipment service life is all about maintenance and repair. Take fans for example... The vast majority of fans out there have worn belts. Belts worn just an 1/8" cause a 10-15% drop in output. If fans aren't routinely cleaned, they suffer another 10% drop in efficiency. By the time it's all over with, fans can run at 70% capacity while using 100% of rated power. Bearings and motors wear out and capacity is further de-rated. Doesn't take long to get a house out of spec when the ventilation system is neglected.

I'm certainly not implying that maintenance is the end-all for why houses need upgrading. We're still learning how best to operate buildings for maximum efficiency of production (note: not maximum yield). The way we ventilate houses, for example, is vastly different than 20 years ago, and much improved from 10 years ago.

We are also affected by consumer preference, and in many cases chasing a moving target. Genetics improve every year. The last estimate I heard (anecdotally) is that genetic improvement reduces time to target weight by one day (or maybe half a day) every two years.

At the end of the day, and I think growers and integrators alike would agree that growers who are personally involved in the daily operation of the farm tend to be successful. When the work and decision making is left to hired help then the potential for mismanagement increases. Just like any other small business.

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Man, you gotta love texags. That was one helluva response!

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Couldn't agree more. I'm Animal Science undergrad, Meat Science Grad School and now am on the restaurant side for a relatively large national chain in QA.

I enjoy reading stuff like this because I only get as far as the processing side of things...have only been to a couple of farms during my career.

Many, many moons ago I was the Hatchery Division Manager for Plantation. I'll just say at that time there is a reason they preferred contract farms to company owned farms.

I got my brother a job as a farm manager, but he decided to go back to where the conditions were better and he wouldn't have to work as hard - welding in the oilfield.

[This message has been edited by BQ93 (edited 3/22/2013 7:31a).]

Yes, I have a farm within 30 miles of Pittsburg.

Thank you google for finding this

Anyone know who I could call about building some houses near mt pleasant? I don't even know what department to look for.