Contract chickens, get an inside look

SALEM, Ohio — “I’d totally do that,” said Hannah Malmsberry, 25, talking about her attitude toward taking care of chicken houses instead of going into an office each day.

Hannah and Nate Malmsberry, of Mahoning County, manage two contract chicken barns that hold nearly 100,000 broilers, or meat chickens, at a time.

Before Hannah started chicken farming, she worked for Nestle and Freshmark in research and development. She had no farming experience, but her detailed personality helped her be successful in the workplace and has also paid off in chicken farming.

Nate works for Williams Energy as a construction manager. His entrepreneurial spirit led him to purchase 42 acres from the bank in the spring of 2014. He didn’t have a plan for the land at the time, but it was selling for the right price and he jumped. It’s now the site of their two barns.

“I’ve always wanted to farm, but it is really hard to get started,” said Nate, who lives in the homestead at his family’s farm.

“Farmers can’t get financing to get started, but with something like this they will,” Nate said about USDA Farm Service Agency’s willingness to finance chicken barns.

The Malmsberrys are just one of nearly 300 chicken growers across Ohio. Two companies, Case Farms and Gerber’s Amish Farms Chicken, contract growers in Ohio, and more than 2 million meat chickens are processed each week in Ohio between the two companies.

“Family farms make up 85 percent of all chicken raising, with 2-10 houses each. These are relatively small farms,” said Mike Lilburn, an Ohio State professor and supervisor of the Poultry Research Center in Wooster.

“Socioeconomically, it has allowed a lot of people to stay in agriculture.”

Getting started

The same year Hannah and Nate were planning to tie the knot, they started working with the Farm Service Agency to get all the paperwork aligned.

They spent from March to November of 2016 getting permits, working with the county and securing the loan.

They married in June of 2016 and a year later, a day before their anniversary, the first chickens arrived.

“Most people get a dog,” she joked, “but we got chickens.”

Business model

Ohio State’s Lilburn says the vertical integration business model of contracting producers is working, “and as long as consumption continues to increase, there will be a demand for people to build the houses for broilers.”

National contract chicken facts

50% — More than 50 percent of farmers have been with their current company for 10 or more years.

45 days — Chicks grow to market weight of 4-7 pounds in about 45 days.

3-4 percent — Is the mortality rate.

No hormones or steroids are administered.

31 g — the amount of protein in a 3-ounce cooked, boneless, skinless chicken breast.

3x – The decrease the poultry industry has had on its environmental footprint because of advancements in the last 30 years.

Source: National Chicken Council, www.chickencheck.in

“The companies aren’t investing a lot of real estate money into raising chickens. They use land farmers usually already own,” Lilburn said, who has been with OSU for 31 years.

Case Farms has been contracting growers for more than 20 years, but the vast majority have started with in the last 12, said Sam Caudle, complex manager at Case Farms’ Canton location.

“The largest benefit we see is that it allows us to use capital in different ways,” Caudle said. “It has allowed us to grow our business and focus on the processing of chickens.”

Extensive process

The Malmsberrys did their homework, visiting other chicken farms and talking extensively with Joe Costa, Case Farms director of housing sales.

To build two barns, they knew to expect 4-6 months of construction.

The nearly nine months of paperwork and planning included a Federal Emergency Management Agency permit, nutrient management plan, storm water management plan, working with the Ohio Environmental Protection Agency, Mahoning County permitting, and drilling two wells, among other things.

It sounds like a lot, and it was, Nate said, and there were some delays in getting approval.

Learning curve

Case and Gerber work with the new growers until they are able to be efficient on their own.

“When new houses get up and running, we are there every day for guidance, then we back off as the caretaker gets the hang of it,” said Costa.

“There is a big learning curve; they give you all the tools, but don’t spoon feed you,” Nate said. “For the first two weeks, a flock supervisor was here every day and she was fantastic.”

Glen Mott, Gerber’s vice president of compliance, said they provide a five-member team for support, available when needed. The company also has  a consulting vet and nutritionist that visit each farm once a month.

In the Malmsberrys’ two barns, there are just over 100,000 birds. All are continually monitored — every drop of water, ounce of food and weight gained is recorded.

Making a profit

Case provides incentives for growers do to their best and be as efficient as they can.

The same is true at Gerber’s, where growers are paid by square foot as a minimum payment, said Mott.

“If they meet humane standards and feed conversion targets, they get bonuses based on performance and achieving good results.”

It is about body weight vs. feed conversion in meat chicken contracts, and top producers will make more. It is competitive, and a number of factors go into it, said Lilburn.

“Some people are just on top of things. There’s some variability, but there is a floor and the producers know the floor,” he said.

Between the flocks

The biggest surprise to the Malmsberrys was how much work there is to do cleaning between flocks.

“It is probably triple the work we expected,” Nate said.

The birds grow to 4 pounds in 34 days. After the flocks are loaded for processing, everything must be cleaned.

They are at the mercy of Case Farms as to when the next flock will arrive, which could be anywhere from three days to three weeks.

They have found it takes about five days to do all the cleaning procedures well.

“The cleaner your barns, the less the next flock has to fight bacteria,” said Hannah, whom Nate calls a perfectionist when it comes to caring for the flock and cleaning the barns.

She said a thorough cleaning also eliminates bugs that may be eating your feed and saves you grief in the long run.

The Malmsberrys are working to mechanize more of their cleaning process with automatic blowers to remove the dust from every barn surface.

“It is all about the details — monitoring their environment, food and nutrition,” she said.

Hannah’s flock has consistently topped the charts against other producers, which helps on the financial return.

Bartering

Their two barns are 60 by 652 feet, with 40,000 square feet under roof. They produce 1,100 tons of chicken litter per year.

They are still working to calculate a fair price for their manure, as they barter with some and sell to others.

When a new truckload of young chickens arrives, each farm is required to have their birds unloaded in 2 ½ hours. The truck driver waits for them to unload the birds with other live birds in the truck. So to unload the birds, the Malmsberrys must have help, Nate said.

They recruited two friends, Mark and Matt Bandy, who also farm and use some of the chicken litter in exchange for helping. The four of them can get it done in an hour and 15 minutes.

Animal welfare

After the chicks are unloaded, the process starts again for Hannah in nurturing the chicks, monitoring everything and removing animals that die. Their mortality rate is 3-4 percent, and she pulls the dead chicks daily and has been certified to compost them.

The meat birds head for the processing plant after being at their farm for about 34 days and the process starts over for the Malmsberrys.

“We kill animals for a living. It’s not pretty, but we do it really well,” said Motts, who has been with Gerber for 29 years. “We are experts at raising birds and processing them.”

Both Gerber and Case are audited by a third party and strive to offer a humanly treated protein source to their customers. They are regulated by FDA and the USDA.

“We want them to get to the plant in good condition,” Caudle said. “We are the biggest proponents of animal welfare because it’s our business.”

Contracting chickens FAQ

What companies contract chickens in Ohio?
Case Farms and Gerber’s Amish Farm Chicken

What is the farmer responsible for?
Land
Housing
Utilities and maintenance of the housing
Complying with all regulations associated with state and local animal housing, nutrient and water management.
Daily care and management of the barn.
Keeping detailed records.
Cleaning out barns between flocks.

What is the contractor’s responsibilities?
Delivering healthy chicks to the farm
Veterinary care
Technical advice and general guidance
Supply and deliver feed
Transportation to processing plant.

What are the farmers paid?
In the contract model, there is a base price, then growers can receive bonuses based on a number of factors, including feed conversation rates and where they rank on other statistics compared to fellow growers. The national compensation average is $25,000 annually per barn.

How long does it take to pay off a barn?
The average barn loan is for 15 years. The time it takes a farmer to pay it off depends on if they put everything they make back into the barn or if they use some of it for living expenses.

What is the demand?
On average, almost 95 percent of contract farmers are retained year over year by the same company and most companies have waiting lists for farmers wanting to enter a partnership or increase capacity building more houses.

Are those chickens in cages?
No. The modern meat chicken houses we have seen pop up in Ohio in the last 15 years do not have cages. The chickens freely roam the barn, eating and drinking as they please in an environment monitored for bird comfort.

Is there any government oversight of these poultry contracts?
The company-farmer relationship is regulated by federal law. Livestock and poultry procurement and marketing practices are regulated by the USDA Grain Inspection, Packers and Stockyards Administration to protect farms and consumers.

Sources: National Chicken Council, www.chickencheck.in; Sam Caudle complex manager at Case Farms’ Canton location; and Glen Mott, Gerber’s Amish Farm Chicken vice president of compliance.