Diversifying & Betting The Farm

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Mueller plans to build his chicken barns in the corner of this corn field just south of his home. His barns would house “breeders,” the hens that lay the eggs that will hatch to be raised for meat. Credit Grant Gerlock / Harvest Public Media

Thanks to Harvest Public Media for this story on diversification that some farms take on in order to take advantage of growing demand, and open space:

The Gamble Of The Farmers That Raise Our Chicken

Tim Mueller has raised corn and soybeans on 530 acres near the city of Columbus, Nebraska, for decades, but today he is planning to take a big gamble.

The big box retailer Costco is building a new chicken processing plant in Fremont, about an hour from Mueller’s farm. The company plans for the plant to slaughter 2 million birds per week. To raise all those chickens, the company is recruiting about 120 farmers to sign on as contract poultry farmers.

Mueller wants in. But to do that, he plans to take out a massive $2 million loan to finance the construction of four chicken barns.

As pork and poultry production grows in the U.S., this is an increasingly common arrangement. Farmers sign multi-million dollar deals to do business with big corporations. The company provides animals and feed. The farmer builds the barns and cares for the animals. It requires a major investment from the farmers who enter into the agreement and hope the investment will pay off.

We walk out of Mueller’s home and down a gravel driveway about 50 yards to the corner of a cornfield speckled with young, green corn stalks. This plot of land is where he wants to build as many as 12 new chicken barns, with room for a total of 180,000 birds. That would require about $6 million of loans.

“Makes me a little more diversified, brings some extra income in,” says Mueller. “Every farmer needs extra income.”

Mueller has never raised chickens, except for backyard birds. But like many farmers, the chance for steady income when grain prices are down, as they are now, has grabbed his attention. Also, he says, adding chickens would help two of his sons come back to the business.

“Bringing the boys back to the farm is huge for me,” Mueller says. “I’m not a big enough farmer to where another family could farm and do corn and soybeans and survive. This way they can.”

You can hear the excitement in Mueller’s voice when he talks about raising chickens, and maybe some nerves, too, thanks to that big loan. Should his two sons join the business, they would have to take out similar loans as well.

“My wife and I talked a lot about this investment,” Mueller says. “She said the same thing, ‘God, that’s a lot of money’.”

Buying another section of farmland to raise more corn would cost nearly as much, Mueller says. The poultry contract is supposed to pay off the debt…

Read the whole story here.

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