Poultry Flock Ownership: What to Consider
By Nathan Briggs, Ag Relationship Manager
In today’s poultry industry, most growers operate under contracts with integrators, where the integrator owns the chickens, provides the feed, and handles the processing. However, some integrators, particularly in the laying industry, are beginning to offer options for growers to own all or a portion of their flock. While this arrangement allows growers to receive more revenue for their product, flock ownership also comes with increased responsibilities, risks, and costs.
To help determine whether the risks of flock ownership are worth the potential rewards, growers should carefully consider the following questions:
Key Questions to Consider Before Flock Ownership:
- Timing and Motivation:
- When did you start considering bird ownership?
- Why do you believe now is the right time to move forward?
- Industry Experience:
- Do you have prior experience in the poultry industry?
- Partnerships and Contracts:
- Are you seeking to partner with an integrator for bird or egg purchasing?
- Can you secure a reliable and long-term egg purchasing contract?
- Expert Guidance:
- Who will provide veterinary advice?
- Who will offer nutritional guidance?
- From whom will you purchase genetics lines?
- Financial Considerations:
- How will you cover upfront feed and pullet costs?
- Do you need a revolving line of credit for operating expenses?
- What is your exit strategy if the investment does not work out?
Starting any type of poultry operation is a significant investment. Poultry barns and fixtures are typically financed over 12 to 15 years. If a grower is considering flock ownership, they may also need financing for the birds, with the loan term generally matching the length of rotation. For laying birds, this term is typically 15 to 18 months. Additionally, since flock ownership means the grower is responsible for providing feed, a revolving line of credit may be necessary to finance feed and other operating expenses. It is expected that this line of credit should fully revolve with each flock rotation.
Maintaining appropriate levels of working capital is crucial for any poultry operation, but especially for those with flock ownership. Unexpected expenses can arise, making it essential for growers who own their birds to have cash readily available.
Flock ownership is a significant decision, with many opportunities and risks to weigh. If you are considering flock ownership, reach out to our team of experts at Horizon Farm Credit today to discuss your individual situation.