How much do you know about contract poultry farming? Here are some FAQs to get you up to speed:-
What is Contract Poultry Farming?
Contract poultry farming refers to a farming arrangement where farmers raise chickens under a contract for a poultry processing companies. This is system of production has been used since the 1930s and is now an industry standard in poultry production throughout the world. The relationship is symbiotic and generally works well for both the poultry farmers and the companies offering the contract.
The company generally provides the birds, feeds, technical support and markets while the farmer provides the land, housing, facilities, labor and management. Contract poultry farming generally leads to a high level of efficiency in the poultry production process and this in turn leads to affordable pricing for consumers. In countries where contract poultry farming is more established and has been around for decades, there are farmers that have raised chickens under the same contract for generations.
What Are the Benefits of Contract Poultry Farming for Farmers?
The biggest advantage of contract poultry farming is risk mitigation. It will insulate the farmer from the risk of fluctuating market prices as well as volatility in the poultry feeds prices by locking in the prices. The farmer won’t have to worry about the fluctuating costs of poultry feed ingredients such as soybean and corn which represent the bulk of the costs of poultry production. The farmer compensation under a contract poultry farming arrangement is not dependent on the costs of poultry feeds and other farm inputs.
How are Broiler Chicken Farmers Paid Under this Arrangement?
The contract poultry farming company will provide the farmer with a written arrangement that details how the payments are to be disbursed. As a poultry farmer, you will actually get compensated for how well you take care of the birds and on how much weight the birds have put on.
Contract poultry farming companies generally use a performance-based incentive system that gives more rewards to the poultry farmers that are able to more effectively convert the poultry feed they are given by the contract poultry farming company into weight gain in the chickens that they raise.
The payment formula for contract poultry farmers also includes other factors such as the number of birds raised by the farmer, the amount of feed that the farmer has used as well the performance of the farmer’s flock compared to that of the other poultry contract growers. The contract poultry farming company also considers the weight of the birds that are delivered to the poultry processing plant.
How Much Money Can a Farmer Make From Contract Poultry Farming in the Philippines?
The amount of money that you will earn from your contract poultry farmer will depend on the number of factors that have been mentioned above. For some Filipino farmers, the revenues that they earn from their contract poultry farmer is generally the sole revenue source. However, for some Filipinos in the professional field in the Philippines as well as OFWs, the income from contract poultry farming is generally a supplemental income source to other income sources. Overall, farmers engaged in contract poultry farming in the Philippines generally earn much more than other farm households in the Philippines.
What Should I Watch Out For When Entering into a Contract Poultry Farming Agreement?
As a contract poultry grower, you will be entitled to the following:-
- The written copy of the contract growing agreement with the poultry company.
- Detailed info on how and how much you will be paid.
- Exit clauses in the contract: This information should detail how the contract should be cancelled without serious legal consequences for the contract poultry grower.
- Right to terminate a contract with the poultry company after issuing an advance notice.
- Right to association with other growers.
Should I Take a Loan to Start or Expand a Contract Poultry Farming Business?
Contract poultry growing is like any other business and as an investor, you will occasionally need to take a line of credit to get things moving. However, this is a personal investment decision and the grower must make the decision on their own based on factors such as the size, scope as well as how much debt they are willing or able to absorb.
Will the Contract Poultry Company Offer Support When a Farmer is Facing Difficulties?
In most cases, yes. Contract poultry companies offer a vast array of support options. They carry out regular farm visits, have Service Technicians as well as Animal well being specialists that can offer a wide array of support services including offering technical advice, answering questions and ensuing the best poultry management practices are implemented.