New on Chicken Check In: Contract farmers + chicken companies = healthy, affordable protein

On May 20, 2022, in Chicken Check In, by Tom

In the U.S., chicken is king among all animal protein options because it’s affordable, safe, nutrient-dense and delicious. In fact, the average American consumes nearly 100 pounds of chicken per person, each year. This equates to approximately 160 million servings of chicken every day.

This blog post, “Contract Farmers + Chicken Company Partnerships = Healthy, Affordable Protein,” originally appeared this week on Chicken Check In.

Without the key business partnerships between contract farmers and processing companies, chicken may not be America’s No. 1 protein. What exactly is a contract grower? A contract grower is an independent farmer who works under contract with a chicken company to raise broiler chickens, or chickens for meat. More than 90% of all U.S. chickens raised for meat are cared for by contract growers. According to a March 2022 study conducted by FarmEcon LLC, Live Chicken Production Trends, found that when chicken farmer and chicken company business partnerships are mutually beneficial, successful and profitable, consumers win big, too.

“Not only is raising chickens under contract is one of the best and most reliable sources of cash flow that helps keep families on the farm, but the real winner is the American consumer: they benefit from the healthiest and most affordable protein in the meat case,” said Dr. Thomas Elam, President of FarmEcon LLC and agricultural economist.

Chicken companies are essential in removing about 97% of the economic risk farmers face in raising a flock compared to independent growers, including feed costs and concerns over confirmed customers or buyers, product demand and market volatility. Along with that, chicken companies take on about 80% of the total cost of raising a flock, 65% of which is feed investments alone.

Meet Gary Anderson, a retired U.S. Army helicopter pilot and chicken farmer in Alabama, who is also a contract grower. “On any given day, swings in the cost of feed inputs for livestock, things like soybeans and corn, could financially challenge a farmer,” he explained. “Changes in the end prices of chicken could, too. As a chicken farmer, I don’t worry about that. Processors take these market risks for me—providing the feed and a baseline price for chicken—letting me focus on raising my flocks in the best way possible.”

Despite contract growers providing continuous care of their birds, growout houses, housing maintenance and utilities, raising chickens still pays off—literally.

Here’s why:

  • According to March 2022 U.S. Department of Agriculture (USDA) data, 60% of chicken farmer household incomes exceeded the U.S.-wide median income for ALL households.
  • The top 20% of contract chicken farmers earn $142,000 on average, remarkably higher than the top 20% of all U.S. farm households.
  • Chicken farmer loan performance shows notably lower interest rates, more consistent payments and one of the lowest loan default rates in all of agriculture.

What’s more, such financial figures entice others to become chicken farmers as well. As of 2021, 20 processor companies reported 1,672 applications to enter chicken production and 335 requests to expand existing operations. Meanwhile, only 6% of chicken farmers left their processor company—including retirements.

Chickens are also healthier due to being raised by contract farmers. The average on-farm livability rate of U.S. broiler chickens was 95% in 2021, but only 82% in 1925. That’s because the chicken industry significantly invests in innovation to keep improving animal husbandry. The National Chicken Council also established the Animal Welfare Guidelines and Audit Checklist to ensure all birds are treated with respect, from the hatchery to the processing plant. This means good animal welfare includes chickens being healthy, comfortable and well-nourished.

To learn more about how contract farmer and chicken company processor partnerships yield big benefits, view the complete Live Chicken Production Trends report here.

 



Go To Top »