Investing in a poultry farm means you must decide whether your business will emphasize egg production or producing birds for consumption. This guide will assist you in starting and running your poultry farm business.
- Determine your target market
- Before you start your business
- Based on yields and mortality rates
- As your pricing policy
- When estimating sales
- When you buy an existing company
Determine your target market
The process of estimating demand
Probably the most important thing you need to do is estimate the type and number of customers who might buy your products.
Table birds that are sold in supermarkets are produced by a handful of very large producers who, because of their economies of scale and tightly controlled processes, can supply them at very competitive prices. There are smaller producers that tend to concentrate on niche markets, such as organics, outside of these large companies.
In the same vein, intensive egg producers that house their birds in enriched cages face thin profit margins as well.
Retail sales and trade sales may mix depending on how your own business operates.
Sales of goods and services
A large portion of your sales will probably come from trade sales. According to how your business will operate, your trade customers may include:
- Several large retailers and supermarkets
- Offer egg packing services
- Processing units
- That sell wholesale
- To local merchants
- Such as restaurants and hotels
- Other poultry farm enterprises (chickens sold from a breeding operation)
Determine whether these customers will buy your produce and whether the price they are willing to pay will allow you to profit from it. Here are some options:
- Ask egg packing stations, supermarkets, wholesalers, and processors what price they will pay you for your eggs and/or poultry farm meat and what it would take to enter into a contract with them. A Defra statistical publication on the Gov.uk website provides average packer-to-producer prices and other farmgate prices. Publications like the ‘Farm Management Pocketbook’ by John Nix provide useful information about gross margins.
- You should make a list of local retailers and caterers that you think may be interested in your products and then approach them. You will need to provide them with a reasonable reason for changing if you already provide them with products. Quality may be improved, prices may be reduced, deliveries might be more frequent or service may be better
- Consider contacting other poultry farm enterprises to find out whether they would be interested in having you supply them with chicks if you plan to start a breeding operation
Publications for sale
You should estimate the number of people that will purchase your product directly from you at the farm gate or in other ways if you plan on selling directly to the public. People who purchase directly from you may be more inclined to do so if you provide these factors:
- Camping or caravanning facilities can be found nearby if you need holiday accommodation. Fresh produce is often in high demand by holiday makers – and they may be willing to pay more for it
- When your area is not well served by stores
- There must be something that distinguishes your products from your competitors. You may be the only organic poultry farm in your area, for instance.
- You can take up a regular stall at one or more farmers’ markets
You can expect farm gate sales to make up a relatively small percentage of your overall sales.
Discover what people want
You may want to consider conducting a survey of local retailers and catering outlets if you plan to sell a large portion of your product to them. In this way, you will be able to identify the segment of the market you ought to target. Talking with prospective customers may reveal, for example, that there is unmet demand for organic and free range eggs and meat in your area. You may find you will have a market for your products when you start your enterprise if you conduct this kind of research.
Legal and tax issues, plus current trends
- Trends in the poultry farm industry
- Laws related to poultry farm
- Tax rules related to poultry farm
Before you start your business
If you are looking to operate a poultry business, you can choose from several types of enterprises, including:
- raising and hatching chicks for sale to other poultry farm businesses. You will do this by keeping a breeding flock, generally in a temperature-controlled environment with slatted or deep litter floors. Generally, female birds outnumber males by a ratio of 13:1. Incubators are used to keep the eggs for 18 days after they are laid in nesting boxes by the hens. Hatcher cabinets are then used for three days until day 21 when the embryos hatch. Chicks are typically sold one day after hatching.
- The purpose of this process is to provide 17-week-old pullets to laying flocks. In general, chicks are grown into pullets from chicks purchased from a specialist breeder (listed above) and then reared in a controlled environment until they reach 17 weeks of age
- To produce eggs for human consumption, keep a flock of laying chickens. Typically, pullets are bought as 17-week-olds and start laying at around 18 weeks. After they begin laying, their production peaks during the first 13-15 weeks, after which it starts to decline. It usually takes 52 weeks for a flock of birds to lay eggs, and then they are all culled when they are between 72 and 77 weeks old. Egg production involves a variety of methods, such as intensive, free-range, organic, barn, and poultry farm
- Raising broilers. The table poultry farm is produced using these methods. Chicks are normally fed a controlled environment when they are day old and are acquired from a specialist. Intensive units fatten the birds until 46 days of age, while free-range units fatten them until 56 days of age. When using fast-growing strains of birds, organic units must keep them until they are 81 days old; when using slow-growing strains, organic units must keep them for a minimum of 70 days. In order to discourage the use of faster-growing breeds, they must be kept for at least 81 days.
Based on yields and mortality rates
Making financial projections for a poultry farm enterprise involves making an informed estimate of the yields of each part of the venture as well as allowing for the death of a certain percentage of your birds. Here are some figures you might find useful when making your estimates:
- A bird can lay 310 eggs per year with ‘enriched’ intensive egg production
- As well as 300 eggs per year with free-range production
- Using barns and poultry farm houses
- Of the 240 or so eggs laid by a breeding flock member each year, you could expect 80% to 85% to hatch
- Related to intensive egg production are 5%
- Higher than those related to free-range egg production
- Or barn/perchery production – similar to free-range
- Beef production – 3%
- To 5% to broiler production
Figures are taken from The Farm Management Pocketbook (various editions), John Nix
The figures in this article are only included for illustration purposes, however, they are useful as a starting point. It is likely that your results may be different, especially if you don’t have much experience.
As your pricing policy
Below you will find some examples of typical prices you can expect for the sale of your products:
- Intensively produced eggs, the average price from a packer: 55 pence/dozen
- The average price of free-range eggs from a packer – 85 pence/dozen
- Average price per dozen of perchery eggs and other eggs from a packer – 75 pence
- A day-old chick (with the Marecks vaccination) is for sale to laying flocks for 65-70 pence each
- We are selling day-old chicks (with IB vaccination) to broiler producers for 20 pence each
- Pullet that is 17 weeks old ($4.10)
- Or a hen that is 17 weeks old ($4.10)
The figures represent DEFRA averages and are provided for illustrative purposes only. Since prices in the farming sector can fluctuate significantly, it is recommended that you check the DEFRA website on the Gov.uk website for the most up-to-date price information. Publications such as the ‘Farm Management Pocketbook’ by John Nix can also provide helpful pricing information.
In the example, the price of eggs represents how much a specialist packer may charge. When you sell to a packer, they will collect the eggs, grade them, and pack them so the price you receive is based on that. You’ll have to grade and package the eggs yourself if you’re selling to retailers, but you’ll likely receive almost double the price per dozen. Additionally, if you sold direct to the consumer, you might realize three times as much as the packer’s price.
Both eggs and poultry farm meat from organic producers are likely to be priced higher than those from free range producers, as long as there is a market for their product.
When estimating sales
The number of products you sell and the price at which you sell it are the two main factors that will determine your total sales revenue. You will receive a price that is influenced by whom you sell to, as well as the nature of your business (for example, organic and free-range farms are likely to receive higher prices than an intensive operation). In addition to the physical size of your farm (and the laws that govern stocking density), the efficiency of your farming methods, the number of employees you have, and the capital you have available to invest in your flock, the quantity you produce can also be limited.
Additionally, you need to consider:
- Whether you have experience (or not)
- A high level of mortality among your birds
- As well as lower than expected egg and broiler yields
When you buy an existing company
Rather than starting your own poultry farm, you may choose to acquire an existing one. Going concerned can mean that the products, customers, regular sales, staff, premises, and equipment already exist.
The following items should also be considered:
- You should check the age, health, and condition of the flock, for example, laying hens should not be approaching the end of their useful life
- In the case of an intensive broiler or egg unit, the cages must meet current regulations. In this case – and if you plan to continue intensive production – you will likely have to replace them all, which will be very expensive. It is almost certain that the cages will be compliant if the unit is currently being used, but if it has been unoccupied since the start of 2012, there is a small chance they won’t be.
You should have the right skills and experience on your team, including legal and financial expertise if you plan to buy a business. To ensure the price you pay for the business is not too high, establish the real trading position and financial position of the company.