Poultry Enterprise: Sunrise Farm - Case Study Example

Poultry Enterprise Name: Tutor: Course: Date: Executive Summary Global consumption patterns have shown that the current population is shifting from red to white meat. The popularity of chicken is increasing hence the need to improve poultry farming and related enterprises. The economics of poultry farming targets specific consumers or a certain market segment. In this case, Mr. Briggs runs a broiler enterprise with chicks sourced from a hatchery in New South Wales applying strict standards on vaccination and quarantine. Sunrise Farm will be run according to the HACCUP standards. The broilers will be under starter and finisher diet which is a high protein feed provided through an automated feeding system. Artificial light is used to encourage growth so that a desired weight of 1.4 kgs is achieved within four to eight weeks. Lasota or F vaccine and IBD Live is added through Occulonasal and drinking water respectively at various stages of growth to increase production and reduce diseases. Sunrise Farm is fully owned by Mr. Briggs and is assisted by four fulltime workers. This system is a medium enterprise taking into consideration the recommended broiler farming practices involving stocking, caring, housing, feeding, vaccination, watering, slaughtering and packaging. The farm has a processing plant with two fulltime butchers and a refrigerated truck supplying the larger market of New South Wales. This poultry project is set to start in December 2013 with an initial capital of AUD$ 845,000 with a two year serviceable loan of $400,000 at 5% interest rate. The first income of 1200 broilers of meat will be determined in July 2014 through an income statement. Costs and revenues are entered on daily basis. Sunrise Farm Broilers is to be sold as a brand to the meat market mainly burgers and mince and patties. The average price of 1.4kg of broiler meat is $10 with 9600 birds’ turnover in the year 2014. The expected gross turnover per year is $743,100. The enterprise is to borrow a loan of 48% of the total startup capital which will be serviceable within two years. Industry Justification The current global population is rapidly changing towards white meat owing to health concerns brought about by the red meat. High protein is obtained through efficient processes that are cost effective and relatively affordable to a greater proportion of consumers. Broiler meat is regarded by many consumers as favorable. The broiler farming is an efficient feed utilization system preferred by more than 150 poultry farmers in New South Wales. The industry is very mature having grown since 1950s with a great opportunity of delivering low cost protein to the Australian market (Andrews et al, 2007). The weekly, monthly and yearly sales are encouraging. Broiler meat is low in fat and cholesterol. The proposal for confinement farming for broilers has been widely accepted to meet animal welfare standards and increasing demand for white meat. Confinement farming is commonplace and account for more than 80% of the current broiler farming methods. The growth of confinement farming is stimulated by a mass market and the popularity of chicken burgers, ham, sausages and fries for all income segments. The new Sunrise Farm will contribute in increasing the level of income and market share through weekly sales. Prospective white protein production is expected to increase optimal consumption of space, feeds, lighting and watering which are compliant to current environmental standards. Poultry farming is one of the lucrative businesses for livestock farmers though it has a higher element of risk (Biligili & Hess, 2005). If the poultry receive optimal conditions, they generate sufficient income capable of creating jobs, consumer products and income within the agricultural sector. Australia is the sixth exporter of poultry meat to the Asian countries and this means that the market is mature and stable. There is adequate R&D on vaccines, breed and genes to ensure fast growing and feed efficient birds. Genetics and Breeding One day old Cornish crosses will be sourced from Crina Integrators (DSM Nutritional Products suppliers) who specialize in hatching and breeding of chicks for commercial broiler industry in Liberty, New South Wales. The chicks are from parent stocks producing fertilized eggs from separate genetic lines for females and males (Shane, 2001). The Cornish crosses have high feed conversion ratio, rapid growth rates and low activity levels. Ordinary broilers have a yellow skin and white feathers. Hybridization with the Grey Junglefowl brought about the yellow skin of these domestic birds. Producer houses are derived from Canadian types of 15,000 birds laying hatching eggs within 26 weeks (Reece et al, 2001). Other cases involve parent hens laying 180 eggs in a production period of 40 weeks. Breeding is a two stage process where the parent stock is bought from the primary feeder as one day old then placed in specialist starter farms or rearing houses until 8 weeks. Alternatively, integrator farms contracts farmers and supply them with materials and methods while the farmer provides the space. Production One day old chicks will be taken to a brooding shed in an Alabama like climate of 200F in winter and 1000F in summer. The 25 foot * 156 foot size housing structure is anticipated to house 9600 birds and has an insulated ceiling and curtain side walls. Minimum ventilation needed for heating period and specific amount of fresh air. 250 Watt heat lamp/50 chicks are used while small feeders are younger chicks replaced when they get older. Dry saw dust is used as bedding and sturdy fencing to rid off predators. When they are 6-8 weeks they can be dressed with a carcass weight of 70-75% of the live weight. Daily labor is included especially during the first three weeks. A two diet sequence of starter and finisher comprises 24% protein for the first 2 weeks, 22% from 2-5 weeks and 19% from 5-8 weeks. Each broiler consumes about 2 pounds per feed for every grain pound with the 8 weeks growing period. Feed to gain ratio is kept less than 2.5. Lasota vaccine is used for a day old, IBD vaccine for 7 day old and Lasota and Mildstrain for two weeks old. The first batch of birds delivered is 1200. The second and third batches will be delivered each month until all the 8 cycles are covered. The birds will be slaughtered when they reach the average live weight of 2 kg. Upon dressing, the net weight is expected to fall between 1.4-1.6kg which will fetch a good market price of $9. Price of broiler meat is occasioned by demand and prevalence of diseases such as New Castle and Gumboro. Management Chicks may be vaccinated at the hatchery with an extra $0.10/ chick to prevent Marek disease, mortality and poor performing broilers. A Coccidiostat added to the medicated feed. Overcrowding should be prevented while ventilation, temperature, feeders and waterers checked regularly every day. Beaks of broilers are to be trimmed after two weeks using a hot blade. Good ventilation is kept when broilers near the market weight. Fans placed to blow air past the chicks (Bayliss & Hinton, 2000). Broilers checked for external parasites like ticks, lice and mites and certain chemicals used on the chickens to rid them off. The employees will be tasked with overall management of the poultry enterprise with defined roles. The house cleaning and feeding will be done by two employees while two others will be supplying feeds and vaccines and also marketing the products. The other two employees will have to clear the house and ensure proper ventilation, lighting and optimal humidity (Shane, 2001). Crina Company will have a role of testing the internal and external conditions and advice accordingly. Constant and closer care is always required for these birds since slight change in conditions will cause a great loss and unprofitable enterprises. Poultry farming requires complete involvement and care. Brooding The sensitive part of brooding is the first 14 days when broilers are changing from immature to mature thermo regulation system. What will be regulated are air quality, temperature, feed and water. Temperature is kept at 260C to optimize feed conversion ratio, better health and immunity (Shane, 2001). Cloaca measurement will be kept between 40.4-40.60C since low temperatures reduces growth rates. The oxygen concentration will be kept at 19%, Carbon monoxide and ammonia at below 10ppm while dust levels at 3.4mg/m3. 24 ml of water is guaranteed to each bird per day. Water lines will be disinfected using 40-50 micron water filters. Paper will be used in 50% of the brooding area while feed is 50g/bird. Optimum light density is invariable by less than 20%. Security of the vulnerable broilers is ensured through disinfecting feet of attendants while visitors will be kept at a distance from the chicks. Other equipments introduced into the brooder are disinfected. Welfare Proper house environment will be guaranteed to ensure optimal broiler production at higher densities. The stocking densities on bird welfare for Sunrise farm will be kept at 7.8 pounds per square ft which is equivalent to about 38 kg per square meter (Shane, 2001). The farm will have the instruments to determine and record environmental conditions in the broiler house like ammonia, temperature, litter moisture, relative humidity, and light intensity. Bird welfare will be monitored through a stress hormone levels (corticosteroid), mortality, health and behavior emphasizing on walking ability by checking leg structure/strength and. Optimal stocking density of 7.8 prevents birds from growing slowly, increased jostling and lowered walking ability. Since stocking density will affect broiler welfare hence managing broiler environment is critical (Scientific Committee on Animal Health and Animal Welfare, 2000). The farm will also ensure feeds and water are availed in time and workers actively check all the conditions required. The welfare of farm employees will also be considered through proper farm housing and food. Employees will be required at all times within the premises. The owner will have a responsibility of supervising and ensuring all the feeds, water, vaccines and monitoring is properly and regularly done. Nutrition Broiler nutrition will involve use of starter and finisher mash on a continuous basis. Starter is a granule size feed small enough for the chicks to pick up quickly. Starter feed contains glucose, fat, animal concentrate and plant cellulose for healthy chick growth carrying high immunity to face the potential stresses like handling, diseases, climate variation, and vaccinations (Shane, 2001). Each bird will require 1 Kg of starter feed before shifting to finisher feed. The rational balance of all needed nutrients will be kept in this feed for maximum weight gain and faster growth. Feed will constitute the largest cost item in Sunrise farm broiler production (Feddes, Emmanuel, & Zuidhof, 2002). The broiler finisher will be advised after the chicks have consumed 1 Kg of starter feed to the point of birds’ disposal. This feed has very high energy ratio to get faster, energy level goes with well balanced protein, and the maximum weight will be gained by ensuring a feed conversion ratio of 80%. This will mean the costs represent 60-75% of the total cost. A rational goal will be to provide a 4-pound broiler after consuming 9-10 pounds of feed. The goal of this project will be to attain a feed conversion of 2.1 pounds of feed which is equivalent to 1 pound of gain. Broilers will have a complete feed availed at all times. A chick starter mash will contain a coccidiostat for strong immunity and getting the chicks off to a better beginning of 0.25 pound per chick. A growers mash will be used for use utmost five weeks which is about 2.75 pounds. The finisher feed will be administered when the broilers are five to eight weeks weighing 5 to 6 pounds. For good results growers mash will be used interchangeably with starter and finisher from chick stage to eight weeks with good results. Feed will be purchased as mash, pellets, or crumbles since the later two usually provide an effective feed conversion. These birds will need sufficient amounts of feed during which the conversion rate soars when the birds grow older. Health and Diseases Broiler production is limited by diseases which is the greatest factor contributing to their mortality. These constitute viral, parasitic, bacterial and diseases. These diseases will be treated according to the causative agent. In New South Wales, the common poultry diseases is the Infectious Bursal Disease (Gumboro) and Newcastle. All the conditions will be checked like excessive mortality, feed and water consumption patterns, behavior, chicken activity and litter conditions (Dawkins, Donnelly & Jones, 2004). When Gumboro and Newcastle diseases are sighted, broiler chickens will be vaccinated with New Castle, Mild Strain, Lasota or vaccines will be mixed with drinking water twice in the rearing period. The vaccination history of chicks will be requested from Crina Integrators while buying the one day old chicks from this supplier so as to establish what was done, where to start and what was not done. The application of vaccines will be as follows; Lasota vaccine will be administered to prevent Newcastle for the one day old chicks. IBD vaccine will be used for the 7 day old to prevent infectious bursal disease. Lasota will be again used to prevent NewCastle after 2 weeks and later Mildstrain prevents Gumboro at three weeks. Microbiology and production The one day old chicks will be bought from Crina and raised for six weeks under intensive actions like cleaning, disinfecting the chicken houses, and providing enough rest for chicks for 2 weeks. At the age of 5-6 weeks, the broilers will have reached an average dress weight of 1.4 kg equivalent to a live weight of 2kg at this point they will be selected based on size, slaughtered, packaged and sold to various markets in New South Wales and Victoria (Shane, 2001). The broilers will have completed a cycle which is about 8 weeks long thus completing 6 to 7 cycles in one year. To eliminate the potential of bacterial pathogens, crude protein level of broiler litter will be applied to enhance preservation and ensure lower mortalities. Two-kg lots of litter will consist of pine wood shavings and broiler chicken excreta which will be acidified to pH 1·5 with sulfuric acid, then anhydrous ammonia will raise the pH to 5·0. This is expected to increase the crude protein level to about 36·6% for 28% while decreasing the moisture content to 17% from 21% and to a smaller extent the litter fiber content. Crina Integrators will conduct the microbiology tests at a fee. To start with, the entire house is heated then brooder rings will be mounted on each brooder (heating) unit. These rings will be expected to provide a "microclimate" compared to the rest of the room thus preventing drafts, keeping the birds close to feed, water and each other. Cup waterers or nipple in every pen will be fully functional as the brooder rings supplemental jug waterers will always remain filled. Upon arrival of the birds, they will be introduced to the feed and waterers by placing into the rings (Berg, 2008). Feed will be placed on paper near the pen floor and others placed in the feeders to encourage young chicks to eat. In fact, broilers will be brooded in one portion of the house after 3 weeks they will roam or access to the entire barn. Natural ventilation will be facilitated through large insulated door panels or opening curtain-sided walls on the sides of the barn. Product quality and safety For broilers to fetch a good price and market share there must be enough feeds, vaccines and care. Marketing activities to be done will include value adding through packaging, quality, grading, and promotions (Shane, 2001). Two salesmen and packaging team will be employed to ensure proper utilization of these activities and sale of large product volumes quickly to provide Mr. Briggs with sufficient profit. To improve value, the addition will be done within the business so as increase likeability of the broiler meat prior to selling. The processes will essentially be slaughtering, weighing, cutting chicken portions, packaging, and grading. Sunrise farm will process its meat products within the business. This will ensure the product fetches good prices when compared to relatively unprocessed meat. Cornish-crosses are high quality chicks with excellent genetic manipulation for quality performance of broiler meat in the Australian market. The enterprise will ensure its flock gets proper feeding, proper handling and good ventilated houses at all growth stage for good quality meat. The chicks will always be kept alert with no deformities and with uniform weight during placement (Belanovskii & Omel’yanenko, 2002). The chicken meat will be sold when it is still fresh after value addition. Safety of the broilers will be a function of ventilation, cleaning, vaccination and feeding. Poultry wastes will be handled as a solid litter deposited to saw dust or wood shavings. The droppings will be collected in bedding placed on the saw dust spread on the solid shelter floors to absorb the urine. Since the floor is concrete, broiler flock litter will be regularly removed and fresh litter applied. The waste will be collected loaded to a truck hired by the farm. The farm is to acquire a new truck in the coming year. Litter obtained will be spread in a crop farm nearby to improve fertility of soil. Care shall be taken when removing the wastes so as not to stress the birds. The farmhand will go round checking the points with higher concentration of wastes and immediately arrange for a cleanup. Project plan The broiler house size will be 54m by 8.2m with 28 unit cage per row. There will be a total of four rows. The capacity of the cage will be 80 broilers/cage *30 cages/row * 4 rows= 9600 broilers. The layout below will require a substantial amount of funds with construction of the poultry house alone covering $400,000 from December 2013. During construction of the house, trees and shrub will be planted to reduce pollution, noise and pests. The pen house will be completed by March 2014 with electricity, fencing and sheds installed then disinfected. Deep litter is also erected. May 2014: First batch of 1200 broiler chicks arrive June 2014: The second batch of broiler birds and successive batches follow July 2014: Processing and packaging of the first batch December 2014: Half year results to determine break even Mr. Briggs will have 100% ownership of the enterprise in the 100 acre farm which has a demand value of $5 million. The owner will borrow $400,000 from a local bank based on debt financing. The rest $445,000 will be raised through own savings. Assuming the interest rate of the loan will prevail at 5% for two years the funds will be sufficient to break even in the 5th cycle. Sunrise farm is determined and capable of making the required input to win the white meat market of New South Wales. The venture is worthy to be funded since the profit margins are high and income streams are progressive and consistent. The demand for broiler meat is greater than ever before. The business is also closer to most of the stores and retail outlets. The success of this venture will depend on the perception of the financiers and the efforts made to break even. Budget Sunrise farm budget will include developmental and operational costs. The project will take half the first year budget on construction and purchase of fixed assets. The provision for labor is based on a yearly estimate for 6 workers ranging from farmhand, transporters, slaughter and security. Income Description Total Broiler meat sales 9600 broilers(1.4kg) * 95% survival rate * 8 cycles per year * $10 per chicken $729,600 Manure sales 900m3*$15/m3 $13,500 Total income $743,100 Costs Description Total Development Construction of the house with fittings, accessories and equipment $380,000 Operational costs Starter mash (1kg per chicken for 21days)=9600kg* $40/50kgs $7680 Growers mash 1.5kg/chicken *9600 birds* $45/50kgs $12,960 Finisher mash 1.2kg/chicken*9600* $45/50kgs $10,368 Water per year $3000 Electricity per year $5000 Stress pack (0.2litres per chicken*$2*9600) $3,840 Gumboro vaccine (0.1g/chicken* 9600* $10/litre) $9600 New Castle vaccine (1ml*9600* $2/litre) $19,200 12 labor months $50,000 Water tank $200 Certification standards $20 Farm fixed assets Fencing $700 Generator $1000 Refrigerator $600 1 Vehicle $3000 Total costs $507,148 References Andrews, L.D.; Nelson, G.S.; Harris, G.C., Jr.; Goodwin, T.L. (2005). Performance of five strains of broilers in a four tier cage system with plastic floors. Poultry Sciences, 54, 54–58. Showed the various strains of broilers and their performance in a four tier system as described in the proposal. Biligili, S. F, & Hess, J. B. (1995). Placement density influences broiler carcass grade and meat yields. Journal of Appl. Poultry Res. 4:384-389.  Important in showing the production of broilers and their stocking densities Bayliss, P. A, & Hinton, M. H., (2000). Transportation of broilers with special reference to mortality rates. Appl. Anim. Behav. Sci., 28: 93-118. Describes how mortality rates should be reduced and gives special investigation to mortality rates Belanovskii A.S., & Omel’yanenko V.A. (2002). Acoustic stress in commercial poultry production. Sov. Agric. Sci., 11: 60-62. Offers more information on reducing stress among broilers Berg C.C., (2008). Foot-pad dermatitis in broilers and turkeys - prevalence, risk factors and prevention. Describes the diseases that influence broiler production Berk J., (2007). Influence of light intensity on light choice of broilers. 5th European Symposium on Poultry Welfare, Wageningen, 7-10/6/97: 46-48. Highlights the factors needed in optimizing production Dawkins, M. S., C. A. Donnelly & T. A. Jones, (2004). Chicken welfare is influenced more by housing conditions than by stocking density. Nature 427:342-344.  Elaborates the effect of stocking density and overall chicken welfare Feddes, J. J., E. J. Emmanuel, & M. J. Zuidhof, (2002). Broiler performance, body weight variance, feed and water intake, and carcass quality at different stocking densities. Poultry Sci. 81:774-779. Describes how stocking densities influences carcass weight and performance of broilers Scientific Committee on Animal Health and Animal Welfare.(2000). The welfare of chickens kept for meat production (broilers), p. 16. Provides more information on the welfare of broilers and how increased welfare boosts production. Reece, F.N.; Deaton, J.W.; May, J.D.; May, K.N. (2001). Cage versus floor rearing of broiler chickens. Poul. Sci., 50, 1786–1790. Describes the general best practices used in raising and sustaining young chicken Shane, S.M. (2001). Versatility of broiler growing cages. Zootecnica Int., 8, 18–19. The author describes the flexibility and popularity of cages to poultry http://www.aecl.org/associate-members/ Crina integrators is a brand of DSM Nutritional Products which is an associate member of Australian Egg Corporation and can be found in the link above. Read More

The industry is very mature having grown since the 1950s with a great opportunity of delivering low-cost protein to the Australian market (Andrews et al, 2007). The weekly, monthly, and yearly sales are encouraging. Broiler meat is low in fat and cholesterol. The proposal for confinement farming for broilers has been widely accepted to meet animal welfare standards and increasing demand for white meat. Confinement farming is commonplace and accounts for more than 80% of the current broiler farming methods.

The growth of confinement farming is stimulated by a mass market and the popularity of chicken burgers, ham, sausages, and fries for all income segments. The new Sunrise Farm will contribute to increasing the level of income and market share through weekly sales. Prospective white protein production is expected to increase optimal consumption of space, feeds, lighting, and watering which are compliant with current environmental standards. Poultry farming is one of the lucrative businesses for livestock farmers though it has a higher element of risk (Biligili & Hess, 2005).

If the poultry receives optimal conditions, they generate sufficient income capable of creating jobs, consumer products, and income within the agricultural sector. Australia is the sixth exporter of poultry meat to Asian countries and this means that the market is mature and stable. There is adequate R&D on vaccines, breed, and genes to ensure fast-growing and feed-efficient birds. Genetics and Breeding One-day-old Cornish crosses will be sourced from China Integrators (DSM Nutritional Products suppliers) who specialize in hatching and breeding chicks for the commercial broiler industry in Liberty, New South Wales.

The chicks are from parent stocks producing fertilized eggs from separate genetic lines for females and males (Shane, 2001). The Cornish crosses have a high feed conversion ratio, rapid growth rates, and low activity levels. Ordinary broilers have yellow skin and white feathers. Hybridization with the Grey Junglefowl brought about the yellow skin of these domestic birds. Producer houses are derived from Canadian types of 15,000 birds laying hatching eggs within 26 weeks (Reece et al, 2001). Other cases involve parent hens laying 180 eggs in a production period of 40 weeks.

Breeding is a two-stage process where the parent stock is bought from the primary feeder as one day old then placed in specialist starter farms or rearing houses until 8 weeks. Alternatively, integrator farms contract farmers and supply them with materials and methods while the farmer provides the space. Production One-day-old chicks will be taken to a brooding shed in an Alabama-like climate of 200F in winter and 1000F in summer. The 25 foot * 156-foot size housing structure is anticipated to house 9600 birds and has an insulated ceiling and curtain sidewalls.

Minimum ventilation needed for the heating period and a specific amount of fresh air. 250 Watt heat lamp/50 chicks are used while small feeders are younger chicks replaced when they get older. Dry sawdust is used as bedding and sturdy fencing to rid of predators. When they are 6-8 weeks they can be dressed with a carcass weight of 70-75% of the live weight. Daily labor is included especially during the first three weeks. A two diet sequence of starter and finisher comprises 24% protein for the first 2 weeks, 22% from 2-5 weeks, and 19% from 5-8 weeks.

Each broiler consumes about 2 pounds per feed for every grain pound with the 8 weeks growing period. Feed to gain ratio is kept at less than 2.5. Lasota vaccine is used for a day old, IBD vaccine for 7 days old, and Lasota and Mild strain for two weeks old. The first batch of birds delivered is 1200. The second and third batches will be delivered each month until all 8 cycles are covered. The birds will be slaughtered when they reach the average live weight of 2 kg. Upon dressing, the net weight is expected to fall between 1.4-1.6kg which will fetch a good market price of $9.

The price of broiler meat is occasioned by demand and the prevalence of diseases such as New Castle and Gumboro.

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