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Entering the Poultry Business

Date: 12/14/2017

Interested in pursuing a career as a poultry farmer and not sure how to get started?

Whether you’re in the market to purchase an existing farm or plan on building new, there are some important steps to go through. Getting started can be overwhelming, and financing can also be a big hurdle to overcome. Below are some ideas to help get you started.

1. Fix credit issues. Check your credit and consider paying off ALL collection items. Remember: a credit history that reflects debts have been paid in a timely manner is what lenders want to see. If you have past delinquencies, get ready to explain why they occurred. If there are any errors on the report, have them corrected. Check out myfico.com to get some tips on how to improve your credit score.

2. Financing. In order to purchase or construct poultry houses, you’ll need to inject some of your own personal cash into the project. If a down payment is a problem, there are some alternatives. If you already own the land where poultry houses will be built, then you may have equity in the land that can be used. Whether you are constructing houses or purchasing an existing farm, start looking at what you own and see if there’s equity in other real estate that can be used as additional collateral.

Lenders look at overall collateral values in comparison to the loan amount, but they also look at net worth and a ratio called owner’s equity.  Since net worth is important, you’ll need a list of all assets for your lender – not just those being used as collateral.  Your lender will also need tax returns from all applicants and for the farm you are purchasing (if purchasing a farm).  Three years of tax records is usually requested.  Go ahead and sign the copies of your tax returns since most of us electronically file and no longer sign our returns.

3. Think long term.  Whether you’re looking to purchase an existing farm or build new houses, think about your long term goals to see what best suits you.  If you’re interested in purchasing a farm, running it a few years and then selling it for a profit – then an older farm may not be the right choice for you.  If you want to purchase an existing farm and expand later – then a farm with very small acreage might not be what you need.  Everyone has different circumstances to deal with, so think both short term and long term to see what options are available to best meet your goals.

4. Get some experience.  If you don’t have poultry farming experience, try to find a farmer with an operation similar to what you’re looking for and offer your free labor in exchange for free training.  This is probably a good idea even if you have some previous poultry experience.  Ask plenty of questions and try to get an idea of what day-to-day life on the farm entails.  Try to be there at various times of day and during different cycles of a flock.  Learn about dead bird disposal, biosecurity, how to handle breakdowns, temperature control, fan usage, and other aspects of the operation.  Remember that you’ll receive training from the poultry integrator and get specific instructions on how they want the farm operated.  However, working on a farm prior to the purchase will give you some experience and insight into managing such an operation.

5. Get educated.  Check with the state extension service in your area and look for training and articles related to poultry farming.  Most extension offices have a wide array of information available on their websites related to poultry farming.  Also, check to see if your state has a poultry association.  These organizations provide grower meetings and trainings to help with issues unique to poultry farmers.  No need to wait to purchase or construct a farm to attend meetings.  Contact them to get dates and times and get a jumpstart on your poultry education.

6. Start looking.  If you are interested in purchasing an existing farm, there are a few places to look.  Most farms, whether listed with a realtor or for sale by owner, are advertised online.  This is also a good way to see an overview of what’s available in your area and market pricing – even if you’re just looking at your neighbor’s farm.  Look for the type of poultry house you desire – broiler, breeder hen, pullet, or commercial egg.  Note the age of the houses, update requirements, acreage, and extras.

Additionally, you can contact a realtor to help find a farm or contact the poultry integrator(s) to see if they know of any farms for sale.  Lenders that specialize in poultry lending may also know farmers that are interested in selling.  As you begin your search, keep in mind there’s a big difference between types of poultry houses, and some are more labor intensive than others.

7. New construction.  Looking to build brand new?  Get in touch with poultry integrators in the area to see if they’re willing to give a contract on new construction.  Remember, the poultry company has to approve the land where houses will be constructed.  The poultry integrator will be the information source for projected income information and building specifications.  They’ll also have a list of contractors that construct poultry houses, vendors who sell/install poultry equipment, or do grading work and make pads.  Additional bids to obtain might be for wells, freezers, incinerators, etc.

8. Environmental.  When you’re ready to buy or build, you may need to obtain a Certified Nutrient Management Plan (CNMP), also known as a waste management plan, by contacting the Natural Resource Conservation Service (NRCS).  The NCRS representative will need all pertinent information about the farm including location, size and number of poultry houses, and number of birds to be placed. NRCS does not handle permitting and registrations, but they can provide contact information for finding out if any permits or regsitrations are required.    Remember to give NRCS permission to share your information with your lender for the loan file.  Typically, all of this needs to be completed before financing can be finalized.  All paperwork can take some time to complete, so getting started early is a great idea.

Conclusion

From cleaning up your credit to environmental permits, there’s a lot to be done prior to purchasing or constructing a poultry farm.  Rely on the poultry integrator to give you important information on projected income, upgrades, specifications and other pertinent instructions.  Get ready for financing by checking your credit and compiling all your personal information.  Also, remember to get started on the environmental matters early since both the poultry company and your lender will want these handled before you begin construction or decide to purchase.

Beth Gardner has 25 years of banking experience.  Located in Enterprise, Alabama, she can be reached at [email protected] or by calling 1-866-347-9944.  First Financial Ag Finance is an Equal Housing Lender

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