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The Green Book

Research Study of Large Pastured Poultry Farms

Research Study of Large Pastured Poultry Farms
Summer 2002 by Jody Padgham

A study undertaken in the summer of 2001 at the University of Wisconsin by Steve Stevenson and Don Schuster of the UW Center for Integrated Agricultural Studies looks at the history and economics of large pastured poultry operations in the U.S. Though still unpublished, Stevenson and Schuster are willing to share initial results with APPPA members. Though the sample size is small, and thus results statistically insignificant, there are several interesting pieces of information in the data.

In the summer of 2001 a national search was done to identify pastured poultry producers who processed 4,000 or more birds per year. 12 producers were identified in the U.S. Nine agreed to an in-depth phone survey about the processes and economics of their businesses.

Of the nine, 2 had raised birds for over 14 years, 7 were in the business less than 6 years. The average number of years of involvement was 7.5 years. Four of the 9 identified prior farming experience, the other 5 came from other occupations (some of which were ag-related).

Annual production ranged from 4000 to 50,000 meat birds, with an average of 14,500. The total production from these nine operations was 130,500 birds, which represents only .00016% of the total broiler industry in the U.S. Average production was 600 birds per batch.

Production
At one point in their history, all the producers raised birds in moveable 10x12' pens "because they read Joel Salatin's book". Five of the nine have since switched to day range systems, most citing labor efficiencies as the reason.

Farm size ranged from 4 acres to 312, with an average of about 625 birds per acre. All were raising Cornish Rock type cross. Four of the producers hire labor outside the family.

Costs for chicks varied between $0.53 and $0.75 per chick, with an average of $0.608. Death rate was about 10%, with brooder death ranging from 2-10%, field loss from 1-10%. Weather and predator loss were the largest death causes. Most used existing facilities to brood chicks, four heated with electric heat, four with gas brooders and one with wood heat. One producer calculated he spent $1283 on heat for the season, others did not have numbers to share.
All used shovel and wheelbarrow to clean out the brooders, 55% cleaned after every batch. One producer cleaned once a week, one once a year and one after every third batch.

The cost of the day-range houses ran between $187 and $800 per house, which included building labor, waterers, feeders and electronet. 10x12' pens cost $200-365 to build, with an average of $285 (figures include labor, waterers, feeders and some electric wire for predator control). 2/3 of the producers use some sort of automatic watering system, either nipple, gasum or homemade system with black pipe. The other third use 5 gallon waterers filled with pails.

All systems fed feed by hand using 5 gallon pails, with each feeding system being different.

Marketing and Finances
All producers interviewed relied on marketing their birds as "tasting better" and "better for you" than "store bought" birds. All advertised no antibiotics or growth hormones. 33% were certified organic, 67% were not organic but do not use antibiotics or growth hormones. All producers were able to sell all the birds they raised.

Two of the producers sell all 4000 birds direct to retail customers. Six sell both retail and wholesale. One also sells through a cooperative, delivering the birds live to the co-op. 31% sell retail from the farm, fresh or frozen, whole or cut. 26% sell direct to groceries. 18% sell to restaurants, most fresh sales. 11% sell at farmers markets, mostly whole birds and 50% fresh. Most all producers say their first sales were at farmers markets. One producer sold 40% of their birds from an on-farm store.

Prices ranged from $1.15 (for live birds) to 2.75 per pound. On-farm sales ranged from $1.65-2.25 per pound, retail ranged from $1.50-2.75 per pound, sales to restaurants ranged from $1.65-2.75 per pound, and sales at farmer markets ranged from $2.25-2.50 per pound. Sale weights ranged from 3.5-4.25 pounds, with the average 3.91.

Advertising was in the form of fliers, newsletters and ads in papers, with 67% of the farms putting money into advertising. Ad budgets ranged from $200-2,000 per year, with an average of $725.

Half of the producers said they were planning on expanding production in the following year.

4 had birds processed off-farm and traveled between 5 and 150 miles to get the birds processed. All used pickup trucks with trailers to transport the birds. Costs for off-site processing ranged from $1.00 to $4.00 per bird. (Average $1.41, excluding the $4.00, which was $2.08 higher than the next lower cost). 4 of the 5 plants used were privately owned, one was a co-op. 2 were very satisfied with their processors, 2 were "satisfied" and one producer was "not at all satisfied".

Five of the producers process on-farm. All use family to help. Hours spent processing ranged from 155-468 hours per year. On farm facilities processed between 100 and 1000 birds per day, with the average 385. The range of cost estimate to process (including labor) was $0.85-1.50 per bird. (average $1.17) This figure is $0.24 less than the average cost of processing off-site.

These nine farms produce 90% of their family income from the farm. The pastured poultry part of the operation ranged from 0-90%, with an average of 32%. (The 0% had high farm debt and worked off farm). Other farm income came from other meat sales, CSA and vegetables. All felt that chicken was a good way to get new customer interest in the farm for their other farm products. Only 3 of the 9 producers had off-farm income.

Overall financials showed that the average investment before processing (not including land, capitalization, management time, insurance or interest on investment) was $4.58 per bird. Average gross income per bird was $8.12. This leaves a pre-processing income of $3.54. Average processing on farm was $1.17, so average gross profit per bird was $2.37. Off farm processing averaged $1.41 per bird, leaving an average gross profit of $2.13 per bird.

Lessons learned and advice to others
Lessons and comments for others included:
· Slow growth- started with a small customer base, ensured quality and expanded slowly.
· Start with retail direct to customer and moved to wholesale. The farmers market really helps to expand the demand.
· Growth of the market and thus production expansion was faster than expected.
· Restaurants really like the product.
· Spend time to educate the public about the quality.
· Attention to detail in production is extremely important.
· Stay close to home and watch the birds closely.
· Learn from others- and their mistakes!
· Read books and then "throw them away."
· Jump in if you feel the market is there.
· Marketing should be easy- the birds sell themselves
Challenges and hard spots:

· Government regulations can be a huge challenge.

· Finding a good processor can be an obstacle.

· Keeping up with the time demands.

· Challenges of marketing.

· Finding quality equipment.

The full write up of this report will be completed later this year. For more information, contact Don Schuster at the University of Wisconsin, Department of Ag Economics, schuster@aae.wisc.edu 608-262-7879.