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Poultry Farming Feels the Pinch

by 5m Editor
15 October 2008, at 7:49am

WEST VIRGINIA - Poultry farmers are facing major challenges, including the high costs of propane and maize. Even large companies are facing challenges but the future for the industry is strong.

This winter could be a quiet one for some poultry farms in West Virginia, according to a report from WVNS.

Some farmers are considering shutting down their chicken and turkey operations during the winter months to save energy costs, said David Workman, West Virginia University Extension Service agent for Hardy County.

"It's a bad situation all the way around," he said. "Some are thinking about closing their doors this winter and saying, 'Talk to me again in the spring.'

"Some of the ones who are able to do so, who have the resources to make their minimum payments, are thinking about it."

The Energy Factor

Much of the reason for the hard times in the poultry industry is the increased cost of energy, Mr Workman explained. Poultry farmers use propane to heat their coups. The cost of propane has increased in recent months, which hurts farmers year round, he said.

"Chickens are unable to thermo-regulate themselves until they are 2 or 3 weeks old," he said. "[Farmers] have to heat the chicken houses. When [propane] is $1.89, $1.99, $2.04 or what ever it is, that's bad for the farmer."

For each new flock, farmers must maintain a temperature of 90 degrees for the first few days, he said. The temperature then gradually can be lowered until the chicks mature. So poultry farmers do not only use propane during the winter months, he said.

"Some are hoping to get last winter's [propane] bill paid off this month," he said.

High fuel prices are affecting the state and national poultry industry in more ways than one, said Joe Moritz, poultry specialist with the West Virginia University Extension. In addition to the price of propane, poultry farmers, like everyone else, are paying more for gasoline and diesel.

A second issue is the increase in the price of corn, which is the main food for poultry.

"Feed costs are really important," he said. "Corn, since I've been in this business, had been around $2 a bushel. Now it's up to $6 or $7 a bushel. When it increases that much, it makes it very difficult on farmers."

Industry-wide Problems

Increased energy and feed costs are forcing poultry farmers to make changes, Mr Moritz said.

"Farms are cutting back production," he explained. "My understanding is that the number of flocks produced per farmer is being reduced. They might go down from seven cycles to six cycles."

And the poultry downturn is not just confined to West Virginia. Texas-based Pilgrim's Pride Corp., which has operations near Moorefield in Hardy County, reported July 29 a net loss of $48.3 million for the third quarter of 2008. CEO Clint Rivers blamed high feed costs for the losses.

"We have worked diligently to pass along price increases to our customers to help offset the impact of record-high corn and soybean meal costs," he said in a news release. "But like other producers, we simply have not been able to keep pace with extreme price volatility in the grain markets."

Total feed costs for the company in the third quarter was $266 million more than the same period in 2007, according to information from the company.

Tyson Foods Inc., which also has operations near Moorefield, also reported losses in its chicken unit for the third quarter of 2008, while other divisions did better, according to a news release from the company. Tyson's operating income was $45 million compared to $212 million for the same period in 2007. Net income was $9 million compared to $111 million for the third quarter of 2007. Tyson president and chief executive officer Richard L. Bond said the higher costs that are hurting the industry are likely to continue.

"Grain costs were up an additional $140 million compared to the third quarter of 2007 and are expected to increase approximately $550 million for fiscal 2008," he said in the news release.

Some companies have offered to help local farmers through the difficult times, Mr Workman said.

"Pilgrim's Pride a year ago offered to finance the cost of more efficient brooder stoves. The technology made a few shy away," he added.

Strong Future

Despite the sharp downturn, Mr Moritz said he is confident the state's poultry industry will make a comeback.

"[Poultry is] the number one agricultural commodity in the state," he said. "The industry did $89 billion last year. We're the 15th largest broiler-producing state in the nation."

The Mountain State also is the 14th largest producer of turkeys in the country. Each year, turkey farmers in the state raise 3.5 billion turkeys, he said.

Despite the industry's problems, poultry consumption is high across the nation. The average American eats 61 pounds of chicken and 13.1 pounds of turkey each year, he said.

"It's the most consumed product of meat," Mr Moritz said.

And West Virginia is poised to continue taking advantage of that strong market, Mr Workman added.

"Geographically, we're in good shape," he said. "Most [poultry producers] are in the West and North. We're located near 65 percent of the nation's population. We can meet the needs of a hungry nation."

The problems in the poultry industry will continue for a while, Mr Workman said. The challenge will be for the state's farm families to weather the storm.

"[The problems] can seem to come on overnight," he told WVNS. "They're not going away overnight. I just hope our farms and farm families can ride it out."