Chicken Still Major Arkansas Business
This article was published on Saturday, November 25, 2006 3:42 PM CST in Business
By Kim Souza
The Morning News
Email this story Print this story Comment on this story Long before Wal-Mart Stores Inc. became a household name, poultry ruled the region and state.
When John Tyson, the founder of Tyson Foods, first introduced the concept of vertical integration in the middle 1940's, it eventually led to more chicken- and related food-processing jobs in Arkansas.
Records from the University of Arkansas Poultry Science Center show that by 1950 there were 19 food processing plants in Springdale, including Campbell's Soup, Swift and Armour.
Now, more than 60 years later, the region is still known for its poultry. According to the National Chicken Council, Benton and Washington counties rank second and third in the nation in terms of overall chicken production. Arkansas ranks second behind Georgia in broiler production.
In the last 12 months, Arkansas produced 1.21 billion broilers compared to Georgia's 1.32 billion, said Richard Lobb, spokesman for the National Chicken Council.
"Poultry remains Arkansas' most valuable commodity. Last year Arkansas broilers had a value of $2.65 billion, which was 42 percent of the state's overall farm receipts," said Larry Traub, agriculture economist for Economic Research Services of the U.S. Department of Agriculture.
In contrast, Arkansas rice production ranked second with a value of $713 million.
Arkansas' poultry industry is directly responsible for 45,000 jobs. Another 30,000 Arkansas jobs are indirectly related to the poultry industry in support businesses.
Together, those jobs comprise more than 5 percent of the total jobs in Arkansas. Jenny Popp, associate professor of agricultural economics at the University of Arkansas, said it's pretty significant for one industry to contribute that many jobs.
At the state level, those jobs represent $2.42 billion per year in labor income. (Popp defined labor income as wages, payments and fringe benefits paid by employers and income received from self-employed individuals such as doctors or lawyers.)
In Benton and Washington counties, 9,900 jobs are directly related to poultry producing or processing while another 5,400 jobs are indirectly related to the industry. Labor income for these area jobs totals $515 million per year or 6.7 percent of the regional income earned.
"Much of that money stays in the community and supports other local non-related businesses such as retail shops, bowling alleys and restaurants," Popp said.
Despite the challenges the chicken industry has faced in recent years from global trade instability, immigration, volatile pricing and environmental concerns, the poultry industry is rebounding at a steady pace, Popp said.
Feeding that rebound are people like Randy and Cheryl Robinson, who say poultry farming is a good life.
According to the National Chicken Council's profile, the small family farm continues to be the backbone of America's poultry production. The council estimates that more than 90 percent of all chicken raised for human consumption is produced by independent farmers working under contract with integrated chicken companies like Tyson Foods, George's or Simmons Foods.
The Robinsons own 106 acres in Wedington and operate six poultry houses along with 160 head of cattle. After years of Randy working as an independent truck driver with a cattle business on the side, the couple opted to raise poultry to supplement their income so he could be closer to home.
The investment into the poultry growing business didn't come cheap for the Robinsons 16 years ago, and the cost has continued to escalate annually. The Robinsons estimate a capital investment of more than $660,000 in their six houses, not including maintenance and upkeep.
"Now the estimated cost for a standard chicken house to company specifications will cost you roughly $195,000 just for the tunnel-ventilated house, well house and back-up generator," said Greg Copeland, a long-time poultry grower in Prairie Grove.
Copeland owns and operates four houses and grows broilers for George's of Springdale.
Like the Robinsons, Copeland owns his land and operates a cattle and hay business in addition to growing poultry. Copeland sold a business in Fayetteville and came into poultry business with outside capital, which he said has kept him profitable despite the rising utility costs that are squeezing contract poultry growers.
The average net price paid to growers for large broilers ranges from 5 to 5.2 cents per pound, local growers said.
"The average range in the price paid per pound between the top producer and bottom producer in the group is as narrow as a half of one cent in many cases. The companies have leveled the playing field, and the price paid is pretty much the same for the top half of their producers. But those growers who fall below the average -- and that is half of them -- will get less," Copeland said.
The pricing structure that penalizes half of its growers could use some adjustment, Copeland said. Pricing issues are just one of the concerns growers have expressed with the present system.
"We are continually seeing our propane, natural gas and electric costs go up, and sponsoring companies have offered very little support relief to help the growers with our expensive utility bills," Robinson said.
Meanwhile, poultry companies are making money and the American consumer is enjoying a quality product at a low price, while the grower is the one being squeezed, Copeland said.
Local poultry companies report no openings for new growers at this time. But Cheryl Robinson remembers not many months ago as many as 10 real estate agents knocking on their door in one week wanting to list their property.
"Many of the local poultry growers sold out because the land price was too good to pass up, and now those new farmers are having a tough time because they are still paying for the property and their payout profits hardly cover the expenses," she said.
Both Copeland and Robinson agree that making a profit hinges on if a farmer is still paying for the farm.
"It took us several years to realize any profit, and we don't have nearly as much money invested as the new farmers would," Randy Robinson said.
The Washington County Extension Agency estimates that 75 percent to 85 percent of local poultry growers have other jobs to help support the family in addition to their poultry operations. The National Chicken Council estimates that nationwide growers earn a gross average of $25,000 to $32,000 per year for each chicken house. They said poultry growing is not usually considered a full-time job.
"Today, farms are larger and most growers have four or more houses to operate which makes growing more like a full-time job," Randy Robinson said.
"Growing poultry may not be considered a full-time job but it does confine you. We haven't taken a vacation in many years," said Cheryl Robinson.
Copeland said it's been at least six years since he had vacation.
"Even though the houses are equipped with automatic temperature controls, you still have to pick up the dead animals each day and dispose of them. You have to be there to run interference if the climate control alarm sounds. There is no such thing as a day off," Cheryl Robinson said.
Local farmers agree continual price hikes in utility costs are cutting into profits. They are also troubled by the environmental concerns with poultry litter, avian influenza and the soon-to-come animal identification requirements, Copeland said.
"Even though there are challenges in the industry and some growers are having a really tough time, if local companies advertised for growers tomorrow there would probably be a waiting list for the positions," Cheryl Robinson said.
In their 50's, the Robinsons said their three children work in agri-related industries; but with land prices rising and increasing poultry set up costs, it's not feasible for young families to get into the growing business, they said.
Ken Knies, the regional vice president for Farm Credit Services of Arkansas, said there is some interest towards poultry farming among young people but there are challenges. He said the value of real estate, the cost of building facilities and the environmental issues can make the business tough.
Fast Facts
Tyson Foods Inc. employs more than 22,000 in Arkansas -- 8,000 in Benton and Washington counties. George's of Springdale employs 4,000 with facilities in four states. Simmons Foods based in Siloam Springs has 4,000 employees in Arkansas, Oklahoma and Missouri.
This article was published on Saturday, November 25, 2006 3:42 PM CST in Business
By Kim Souza
The Morning News
Email this story Print this story Comment on this story Long before Wal-Mart Stores Inc. became a household name, poultry ruled the region and state.
When John Tyson, the founder of Tyson Foods, first introduced the concept of vertical integration in the middle 1940's, it eventually led to more chicken- and related food-processing jobs in Arkansas.
Records from the University of Arkansas Poultry Science Center show that by 1950 there were 19 food processing plants in Springdale, including Campbell's Soup, Swift and Armour.
Now, more than 60 years later, the region is still known for its poultry. According to the National Chicken Council, Benton and Washington counties rank second and third in the nation in terms of overall chicken production. Arkansas ranks second behind Georgia in broiler production.
In the last 12 months, Arkansas produced 1.21 billion broilers compared to Georgia's 1.32 billion, said Richard Lobb, spokesman for the National Chicken Council.
"Poultry remains Arkansas' most valuable commodity. Last year Arkansas broilers had a value of $2.65 billion, which was 42 percent of the state's overall farm receipts," said Larry Traub, agriculture economist for Economic Research Services of the U.S. Department of Agriculture.
In contrast, Arkansas rice production ranked second with a value of $713 million.
Arkansas' poultry industry is directly responsible for 45,000 jobs. Another 30,000 Arkansas jobs are indirectly related to the poultry industry in support businesses.
Together, those jobs comprise more than 5 percent of the total jobs in Arkansas. Jenny Popp, associate professor of agricultural economics at the University of Arkansas, said it's pretty significant for one industry to contribute that many jobs.
At the state level, those jobs represent $2.42 billion per year in labor income. (Popp defined labor income as wages, payments and fringe benefits paid by employers and income received from self-employed individuals such as doctors or lawyers.)
In Benton and Washington counties, 9,900 jobs are directly related to poultry producing or processing while another 5,400 jobs are indirectly related to the industry. Labor income for these area jobs totals $515 million per year or 6.7 percent of the regional income earned.
"Much of that money stays in the community and supports other local non-related businesses such as retail shops, bowling alleys and restaurants," Popp said.
Despite the challenges the chicken industry has faced in recent years from global trade instability, immigration, volatile pricing and environmental concerns, the poultry industry is rebounding at a steady pace, Popp said.
Feeding that rebound are people like Randy and Cheryl Robinson, who say poultry farming is a good life.
According to the National Chicken Council's profile, the small family farm continues to be the backbone of America's poultry production. The council estimates that more than 90 percent of all chicken raised for human consumption is produced by independent farmers working under contract with integrated chicken companies like Tyson Foods, George's or Simmons Foods.
The Robinsons own 106 acres in Wedington and operate six poultry houses along with 160 head of cattle. After years of Randy working as an independent truck driver with a cattle business on the side, the couple opted to raise poultry to supplement their income so he could be closer to home.
The investment into the poultry growing business didn't come cheap for the Robinsons 16 years ago, and the cost has continued to escalate annually. The Robinsons estimate a capital investment of more than $660,000 in their six houses, not including maintenance and upkeep.
"Now the estimated cost for a standard chicken house to company specifications will cost you roughly $195,000 just for the tunnel-ventilated house, well house and back-up generator," said Greg Copeland, a long-time poultry grower in Prairie Grove.
Copeland owns and operates four houses and grows broilers for George's of Springdale.
Like the Robinsons, Copeland owns his land and operates a cattle and hay business in addition to growing poultry. Copeland sold a business in Fayetteville and came into poultry business with outside capital, which he said has kept him profitable despite the rising utility costs that are squeezing contract poultry growers.
The average net price paid to growers for large broilers ranges from 5 to 5.2 cents per pound, local growers said.
"The average range in the price paid per pound between the top producer and bottom producer in the group is as narrow as a half of one cent in many cases. The companies have leveled the playing field, and the price paid is pretty much the same for the top half of their producers. But those growers who fall below the average -- and that is half of them -- will get less," Copeland said.
The pricing structure that penalizes half of its growers could use some adjustment, Copeland said. Pricing issues are just one of the concerns growers have expressed with the present system.
"We are continually seeing our propane, natural gas and electric costs go up, and sponsoring companies have offered very little support relief to help the growers with our expensive utility bills," Robinson said.
Meanwhile, poultry companies are making money and the American consumer is enjoying a quality product at a low price, while the grower is the one being squeezed, Copeland said.
Local poultry companies report no openings for new growers at this time. But Cheryl Robinson remembers not many months ago as many as 10 real estate agents knocking on their door in one week wanting to list their property.
"Many of the local poultry growers sold out because the land price was too good to pass up, and now those new farmers are having a tough time because they are still paying for the property and their payout profits hardly cover the expenses," she said.
Both Copeland and Robinson agree that making a profit hinges on if a farmer is still paying for the farm.
"It took us several years to realize any profit, and we don't have nearly as much money invested as the new farmers would," Randy Robinson said.
The Washington County Extension Agency estimates that 75 percent to 85 percent of local poultry growers have other jobs to help support the family in addition to their poultry operations. The National Chicken Council estimates that nationwide growers earn a gross average of $25,000 to $32,000 per year for each chicken house. They said poultry growing is not usually considered a full-time job.
"Today, farms are larger and most growers have four or more houses to operate which makes growing more like a full-time job," Randy Robinson said.
"Growing poultry may not be considered a full-time job but it does confine you. We haven't taken a vacation in many years," said Cheryl Robinson.
Copeland said it's been at least six years since he had vacation.
"Even though the houses are equipped with automatic temperature controls, you still have to pick up the dead animals each day and dispose of them. You have to be there to run interference if the climate control alarm sounds. There is no such thing as a day off," Cheryl Robinson said.
Local farmers agree continual price hikes in utility costs are cutting into profits. They are also troubled by the environmental concerns with poultry litter, avian influenza and the soon-to-come animal identification requirements, Copeland said.
"Even though there are challenges in the industry and some growers are having a really tough time, if local companies advertised for growers tomorrow there would probably be a waiting list for the positions," Cheryl Robinson said.
In their 50's, the Robinsons said their three children work in agri-related industries; but with land prices rising and increasing poultry set up costs, it's not feasible for young families to get into the growing business, they said.
Ken Knies, the regional vice president for Farm Credit Services of Arkansas, said there is some interest towards poultry farming among young people but there are challenges. He said the value of real estate, the cost of building facilities and the environmental issues can make the business tough.
Fast Facts
Tyson Foods Inc. employs more than 22,000 in Arkansas -- 8,000 in Benton and Washington counties. George's of Springdale employs 4,000 with facilities in four states. Simmons Foods based in Siloam Springs has 4,000 employees in Arkansas, Oklahoma and Missouri.