Organic Broadcaster

Group finds advantages in working together to serve market

By Jody Padgham, MOSES

There’s a growing market for grass-fed, locally raised poultry, but access to processing and the high cost of quality feed create challenges for small-scale poultry operations. The farmers of Pasture Perfect Poultry (PPP), an LLC operating near the southern shore of Lake Superior outside of Ashland, Wis., have found a sustainable way to overcome these challenges by working collectively.

“There is lots to be gained in working together,” claimed founding member Chris Duke. “Each member has skills that they bring to the group that helps to make it strong.”

Pasture Perfect Poultry was created in 2007 by three neighboring farmers as a solution to a lack of poultry processing facilities. The farmers, Chris and his family of Great Oak Farm near Mason, Jay Cablk and Carrie Linder of Vranes Farm near Benoit, and Jason and Melissa Fischbach of Wild Hollow Farm outside of Sanborn, (all about 15 miles apart) were each raising small numbers of pastured poultry and selling to neighbors and friends.

“We all came to the same crux,” Chris explained. “We could sell every bird we raised, but we struggled with access to able and consistent processing.”

Each had explored a diversity of processing options, including driving three hours to an inspected plant, but found none were sustainable. Efficient poultry processing equipment is available, but not cost-effective for small-scale producers. Chris and Jason started talking, and quickly recognized that there was more to be gained by collaborating than competing. Jay was soon brought into the conversation, and the three farmers began exploring how they could work together to overcome obstacles.

Nine years later, Pasture Perfect Poultry is a thriving group with five farm members—Brian Clements of Northcroft Farm in Moquah and Bob Rice of Muskeg Ridge Farm near Iron River recently joined the group. All of the operations are diversified, with some full-time and others part-time farmers. PPP provides processing, joint purchasing and marketing to its members. PPP will sell over 3,000 pastured broilers and 250 turkeys this year to customers throughout the region.

Chris said the group’s goals from the beginning have been to enable individual farmers to stay in production, make enough money for poultry to be worthwhile and sustainable, and stay friends. Numerous long discussions and a well-crafted operating agreement, based on a model created by Jason, (who is the area’s Agricultural Extension Agent), have been key.

“It seemed like a lot of work at the time. After all, we’re just friends, working together,” Chris remembered. “But now I’m really grateful. The operating agreement provides the organizational framework.”

The operating agreement describes how new farmers can buy into the group, and how a farm can leave. Production practices are detailed, and the financial end of things is laid out. The agreement is revisited every year, and revised if needed. Annual meetings, held each fall, are used to discuss the year’s outcomes and hash through any issues.

Solving the Processing Dilemma
The group’s first joint activity was to solve the processing dilemma. After doing research, the group decided to set up a mobile processing plant that the farmers could take from farm to farm, and agreed to each contribute labor to run the plant. While able to utilize some equipment Chris already had, they decided to buy a really nice, thermostatically controlled rotary scalder with a timer from PoultryMan equipment in Pennsylvania for over $3,200.

Finding the finances for start-up expenses for a group like this, especially from generally cash-strapped new farmers, can be burdensome. Exploring financing options, PPP was thrilled to secure a $2,500 flexible-term micro-loan from the area food co-op. The loan covered the majority of the expense, with the farmers each able to put in a few hundred dollars instead of over a thousand dollars. The business was able to pay off the co-op loan from profits over the next two years. None of the farms was in a position to put over $1,000 into additional infrastructure.

Without this loan, handling the processing would have been a real sticking point, Chris said. Other costs, such as marketing, bags, propane, ice, etc. are paid out of PPP’s portion of the sales income.

The group constructed a mobile processing unit on a 16-foot snowmobile trailer with a plywood deck. It holds the scalder, a picker, stainless steel processing tables, and (now 2) bulk tanks to hold ice for chilling the processed birds.

“With a five-person crew, we can process, chill, pack, and label, 325 birds in under 10 hours,” Chris noted. The processing trailer (and PPP-member crew) are brought to each member farm when a batch of birds is ready. Customers come in the late afternoon and early evening to pick up pre-ordered processed birds. Each farm has chest freezers for storing late-season birds, and PPP has a walk-in freezer at one of the member farms that the LLC uses for longer term storage.
Wisconsin law limits operations that process and sell on-farm to 1,000 birds per year, and so, for the time being, none of the farms can go over this amount. Any growth in production would necessitate adding more producers. This year the group has begun exploring what would be involved in putting up an inspected brick- and-mortar processing facility to expand their capacity, but for now the mobile plant serves them well.

Economies of Scale
Early on, the group recognized the value in joint marketing the processed birds. Customers purchase a Pasture Perfect Poultry broiler or turkey, and buy through the PPP website, or through an area CSA (Bayfield Foods), with pick-up on the member farms or at the CSA drop-off sites. All birds are labeled with the PPP label, and available fresh (at limited times) or frozen.

Joint marketing under a unified label led to the need for standardized production practices so customers could expect a consistent product no matter which farm produced it. Production standards for PPP are laid out in the operating agreement and encompass issues such as time in brooder (3 weeks), access to pasture (full access from 4 weeks to butcher via day-range or individual pen), the number of birds allowed per pen (75) and acceptable finish weights (4-6 lbs.). Individual farmers make their own decisions about production style and equipment, based primarily on predator pressure. Broiler batches are generally 300-325 birds at one time, with two to three batches per year, depending on the farm.

The group found it was easiest and most economical for Pasture Perfect Poultry to purchase the chicks, poults (young turkeys) and certified organic feed, with bagged feed delivered by the pallet to a centrally located place rather than shipped by the bag to each farm individually. This year the LLC will also purchase brooder bedding and grit by the pallet. With the LLC “owning” the inputs in the production, each farmer operator contributes the equipment, land, utilities and labor. Each farm also provides one laborer to work on each processing day, joining the crew as the unit moves from farm to farm. Processing dates are planned well in advance each spring, taking into account vacations and family commitments. Each PPP farmer is responsible for attending each processing date, or hiring a replacement in case of illness, etc.

The financial aspect of the LLC has been well thought out. The goal is to pay farmers $20 per hour for their labor. “In 2014 at our farm we made $21.09 per hour!” Chris added. The $4.69/lb. they currently charge (for broilers and turkeys, fresh or frozen, not certified organic but fed organic feed), allows each farmer to be paid $2 for each processed bird that meets the weight expectations. Each farmer also gets paid $200/day for each processing day, unless they can’t contribute labor, and then the farmer pays PPP $200 so replacement labor can be hired. If birds are processed that are damaged or don’t meet the weight parameters (4-6 lbs.) the farmer must pay a $5 processing fee and then can take the bird home to eat.

Farmer payments at this point are once a year when the season is over so that any adjustments for mortalities can be considered. The group is talking about ways to modify this to payments after each processing/sales day to help with each farm’s cash flow.

More than $$
Another benefit of this shared production model is the group’s agreement to share each farm’s risk. Because PPP “owns” the chicks and feed, which are the major inputs for poultry, the group decided that it only made sense that they all share in the financial implications of any disasters. Chris related one farm’s tragedy when 90% of the 10-week old turkeys were killed by a lightning strike.

“When we realized we were not going to be able to get folks their Thanksgiving turkeys, we refunded them their down payments. That way, the farmer was not out the money from the sales, PPP was – PPP had paid for the chicks and feed,” Chris said. “Since we don’t get paid until the end of the season, the loss was shouldered equally by each producer – it could have happened to any one of us!” In another instance, Jay was out for a summer because of a broken leg. Members stepped in to take Jay’s birds onto their operations and complete production, insisting Jay still take 50% of the net income from each bird.

Starting with three farms, growing demand and the 1,000-bird limit led Pasture Perfect Poultry to take on a fourth farm in 2014 and a fifth for the 2015 season. Each of these new farms have been taken on with great care, as PPP members want to be very careful to maintain quality standards. The two new farmers had each helped on the other farms over the years, and had some experience raising poultry. Current members visited the new farms and looked at every aspect of the operations, asking questions and making recommendations to ensure that the PPP standards would be met.

One advantage of the group is allowing flexibility in an individual farm’s production year. Overall production levels for Pasture Perfect Poultry are decided at a spring planning meeting. The largest producers are raising three batches of 325 birds per year (under the 1,000 bird limit). Those who wish to take a vacation or need time off for other reasons can opt out of their “quota” and allow others in the group to take on more production. The two newer members have started out with fewer birds and will be refining, improving and expanding into full production capacity, allowing room for Pasture Perfect Poultry’s growth.

Pasture Perfect Poultry presents a wonderful model of how producers that could potentially be competitors can turn things around to become strong collaborators. The benefits of group decision-making and combining skills adds up to a successful business that is good for both the eating community and the farmers. The keys to this group’s success are clearly the well thought out operating agreement, a careful commitment to quality as well as the needs of the individual producers, and the commitment to maintaining friendships. Even those not raising poultry
should look closely at what this innovative group has done.

“Overall, Pasture Perfect Poultry seems to be serving both customers and farmers well—it’s a work in progress, but we really think this is a good model for others to use!” Chris concluded.
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Jody Padgham, the Financial Director for MOSES, raises sheep and poultry on her 60-acre grass-based farm near Boyd, Wis.

Read about issues with poultry processing from the Organic Processing Institute.

From the May | June Issue

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