Cattle and Chickens

Pasture Poultry Profits

Texas cattleman Cody Smith trades tradition for better income from "happy" chickens. (DTN/Progressive Farmer image by Karl Wolfshohl)

People in much of the world can pick out the shape of Texas on a map. In their mind's eye, they see sweeping landscapes and rugged men on horseback tending to deep traditions and fine cattle.

Cody Smith is not one of those men.

Smith and his wife and daughter moved from Florida to Central Texas to be near family. They began buying ranchland in late 2012 and named their place Cobb Creek Farm. Early on, Smith fed cattle into a newly organized cow-calf and grass-finished beef business. He still has some cattle. But with the benefit of real-time financial analysis, Smith has moved toward pasture-raised chickens. The chicken business, he found, has a low-cost front end and a quick payoff at the end of their brief lives.

"Just a basic business guy" is how Smith describes himself. He didn't come from an agricultural background, though he spent his youth among farmers in Nebraska. He moved to Florida as a teen and spent his career as a consultant there, working with mid-size companies in financial distress. This is why he looks for profit, not tradition, in farming and ranching. As a result, he has reduced his cattle investment and put some of his ranchland up for sale.

CATTLE VS. CHICKENS

"Three years down the road, we've decided that the cattle business doesn't fit the amount of acreage we have (about 1,000 acres), and we don't need this amount of pasture to make a profit," he says. "Pasture poultry pays the bills. From a cow-calf perspective, I can't make the numbers work."

He isn't alone in that, of course. Cattle economists have said for years that over the long haul, return on investment in the cow-calf business is very low to negative, if all costs are considered. And cattlemen often do not include land cost, their own labor or management in the financial equation.

Stan Bevers appreciates Smith's thinking.

"I don't disagree with him at all, and I've got cows myself," says Bevers, a Texas AgriLife management economist based at Vernon, Texas. "We won't feed the world with range chickens, but if he's found a niche, that's great."

Bevers says drought, much heavier carcass weights and dietary trends all contribute to fewer cattle. But he also believes profitability is a big reason there are fewer beef cows now.

"We've maximized production, and costs continue to rise," he says. "Have we reached a point where we can't do it anymore for the price? One year we may see record profits, but over 45 years we haven't broken the long-term downtrend of fewer beef cows."

Smith and his wife, Lauren, a world champion Ironman triathlete, relocated from Orlando, Fla., to rural Hillsboro, Texas, with their younger daughter. Cody considers it a dream move because the people are great and the public schools are good. "Our daughter is the happiest she's ever been," he says.

"When we decided to move, my wife and I had the goal to heal the land and produce healthy food," he continues. "However, it had to be profitable. I think a lot of people go into business without thinking about that, and they simply chase their dream and find themselves in trouble."

Smith began reading voraciously and partnering with people who could help.

"I started reading The Stockman Grass Farmer and The Progressive Farmer, immersing myself in knowledge. And in reading, I realized there were a few people already doing what I wanted to do."

One of these was Jim Gerrish of American GrazingLands Services in May, Idaho. Smith contracted with Gerrish as a livestock and grazing consultant. Gerrish's son, Ian, now works for Smith. Ian also consults locally on grazing and installs electric fencing.

ADD NEW INCOME

"Jim Gerrish stressed diversification by adding enterprises such as sheep and pastured poultry to cattle," Smith says.

Smith set about improving his land, starting with a visit to his local Natural Resources Conservation Service (NRCS) office for contracts and technical guidance on fencing, water development, native range planting and cover crops.

"NRCS has been extremely helpful," he says, of the USDA agency. "People in the local office have bent over backward to help, because they really want people to take advantage of these programs. They are passionate about seeing people progress."

Cover crops made his pastures more productive. "We drill a mix such as rye, oats, triticale and peas into existing pastures in the fall. It's been a great program that provides a tremendous amount of forage, if it rains."

Smith's desire for cash-flow soon brought him to the conclusion that his newly improved pasture resource was best used for poultry. "We ran a large number of stockers along with our cow-calf business. Yes, they made money, but for the amount of work that went into it, the return didn't make sense to me," he notes.

But the notion of a traditional poultry business didn't work for him, either. For one reason, the Smiths did not want the expense of building a traditional broiler house. They wanted to raise broilers in a low-stress environment free of hormones and antibiotics. They envisioned customers who would value -- and pay for -- broilers produced under these conditions.

"[But] we didn't dive into poultry right away," Smith says. "We came up with a plan."

One piece of the plan came to the Smiths in the person of Grady Phelan. Phelan was an apprentice and one-time farm manager who had worked for Joel Salatin, the Staunton, Va., farmer, author and expert in low-resource natural production practices. Phelan moved to Texas in 2012 to manage the poultry end of Smith's Cobb Creek operation.

FINDING A PARTNER

Phelan also visited with producers and processors and met a gem, Mike Hale, of Windy Meadows Family Farm at Campbell, Texas. Hale has a successful pasture poultry business and processing plant. Hale offered to form an alliance with the Smiths if they decided to grow birds and build a processing shed, as he could not produce enough birds for his market.

Phelan began producing winter birds for Hale, and he and Smith started selling to wholesalers, a number of farm-to-market retailers, buying co-ops, food trucks and restaurants.

"Mike [Hale] helped put us in the poultry business," Smith says. "He had us producing 600 birds a week last winter for four to five months."

The broilers are raised in hoop pens, also called Mobile Range Coops. These are basically greenhouse frames with sides that are covered with net wire. Mobile Range Coops cost $5,750. Smith is the distributor. The pens are towed to fresh pasture in between batches. The structures cost a small fraction of traditional broiler houses.

Each coop holds 600 broilers to their finish weight and currently produces a net profit of about $1,000 from gross returns of nearly $5,000.

"We have decided to make free-range poultry our featured ag product," Smith says. "It's the track that I believe has the highest profit potential."

MAIL-ORDER BUSINESS

Phelan now goes to the post office in Hillsboro early on Friday mornings to pick up new boxes of chicks. (Yes, they are mailed.) He brings them home to Cobb Creek for seven to eight weeks where they are started in brooder houses, then moved to the mobile range coops and then processed for sale.

Smith doesn't plan to exit the beef business entirely, since there is a USDA-inspected slaughter plant for cattle within 10 miles of the farm. He wants to buy certified grass-fed cattle, and he will process and market these. But pasture poultry, with its low initial investment and seven- to eight-week return, will likely be his main enterprise.

"We're selling to a lifestyle, really, one that doesn't want hormones, antibiotics or growth stimulants like arsenic," Smith says. "The chickens have been outside with plenty of room to move around. It's a very humane, natural approach. The way the other guys do it is fine; this is just different, that's all. A lady put it well the other day. She said, 'I just don't want my chickens to be sad.'"

(CZ/AG)