44 <strong>Poultry</strong> <strong>Your</strong> <strong>Way</strong>
Turkey chicks in brooder house. MANAGEMENT ALTERNATIVES INDUSTRIAL: CONFINEMENT Industrial Management: Confinement The industrial management alternative is familiar to most growers because it originated in the poultry sector. During the 1920s synthetic Vitamin D was developed. This scientific achievement allowed growers to bring their birds inside. Layer hens were the first to be raised in total confinement as commercial markets <strong>for</strong> broiler meat had not yet evolved (Kennard, 1951). By the 1950s, however, markets <strong>for</strong> chicken meat had grown to the point where large-scale, indoor broiler production made economic sense (Fanatico, 2002a). Today, nearly 100 percent of all broiler production in the United States takes place on farms that use industrial management practices. This management alternative is characterized by: • Large flocks (20,000 – 1,500,000 birds per farm) • Confinement housing • Automated equipment • Marketing contracts • Substantial capital investments Birds are raised inside barns year-round. Many of the daily tasks such as feeding, watering, and egg collection are automated through the use of specialized equipment. However, there is a price <strong>for</strong> this labor-saving technology. Industrial-style barns and equipment are expensive compared to the alternatives. Large capital outlays and financing are typical. And, because of the large volume of birds required to make these capital investments worthwhile, most industrial production and promotion takes place under contract with regional or national companies. These companies, called integrators, conduct all of the product marketing and pay growers a prearranged contract price to manage hatching eggs, broilers, turkeys, and laying hens. Contract terms differ by species. For instance, the majority of industrial turkey production takes place on farms where growers manage their birds independently and purchase poults, feed, and other inputs on their own. These growers sign contracts in advance of production. Contracts often stipulate a live-weight price. By contrast, almost 100 percent of broiler production is managed under “grow-out” contracts where farmers own their barns and equipment independently, but are legally obliged to use birds, feed, and other inputs supplied by the integrator. Contract broiler producers are also required to work regularly with a companypaid service person who is assigned by the integrator to make many flock management decisions (Jacquie Jacob, University of Minnesota poultry extension specialist, personal communication, 2004). Consequently, broiler grow-out contracts have been likened to service contracts where the farmer supplies day-to-day labor (services). Hatching egg contracts are similar to broiler contracts in that integrators supply the majority of inputs, including pullets (birds that are ready to lay). Like the broiler producers, hatching egg growers are responsible <strong>for</strong> financing the land, housing, equipment, utilities, labor, and litter (Cunningham, 2002a). According to University of Minnesota Extension poultry scientist Jacquie Jacob, the majority of table egg production in Minnesota, Michigan, and Wisconsin takes place in facilities owned by large companies rather than by independent growers. In this case, companies control all aspects of production and hire employees to per<strong>for</strong>m daily tasks. In some cases, these companies may purchase table eggs from independent growers if they are short on supply or if they are in the market <strong>for</strong> specialty eggs (such as organic or cage-free eggs). Specialty eggs are typically produced under contract and sold under the company’s label. These types of arrangements may grow in the future. But <strong>for</strong> now, the overall volume of table eggs raised under contract by independent growers is relatively small. For this reason, the industrial management description that follows focuses on contract broiler and turkey meat production. <strong>Poultry</strong> <strong>Your</strong> <strong>Way</strong> 45 MANAGEMENT ALTERNATIVES