Chapter 2 - Expenses on Broiler Operations

The size of a broiler operation affects the types of expenses they have. For example, large and small operations provide labor in different ways (Table 2.10). For the smallest enterprises (1-2 houses) the primary operator reported providing the broiler enterprise with, on average, 25 hours of labor per week. For those with 1-2 houses the broiler operation is unlikely to be the primary source of income for the family. Operator hours rise steadily with farm size. For 3-4 houses operators typically worked 35 hours per week. Those farms with 9 or more houses required operators to work 45 hours per week with some additional hours provided by other family members and/or hired workers.

Table 2.10 - Labor commitments in contract broiler production expressed as median values in each class (i.e., half of farms in a class have greater values and half have smaller).

Source: 2006 Agricultural Resource Management Survey, version 4, production contracts only.

Smaller broiler farms use virtually no hired labor (Table 2.10). In contrast, larger operations rely on considerable amounts of hired labor, which allows for greatly expanded production for a given time commitment by the operators. For the large operations, payment for hired labor amounts to 0.45 to 0.60 ¢/lb produced or about 10% of average production contract fees.

For the farms surveyed, utilities were the major operating cost and amounted to 1.1-1.2¢ per pound, a significant cost when production contract fees average about 5¢ per pound (Table 2.11). Electricity expenses varied from 0.36-0.41¢ per pound of meat produced, with no apparent advantage for the larger operations. Most growers spent more on fuel with expenses ranging from 0.6¢ to 0.8¢ per pound, although the largest operations realized noticeably lower expenses in 2006.

Fuel expense can also be an important feature in contracts – three-quarters of the smallest producers surveyed received some fuel assistance from integrators, compared with 40% of the largest operation. The level of assistance declined as the farm operation increased in size. Assistance took two primary forms: reimbursement for fuel expenses or adjustment of compensation to reflect seasonal changes in fuel prices.

Table 2.11 - Utility expenses in contract broiler production.

Note: Estimates are median values among operations in each size class.
Source: 2006 Agricultural Resource Management Survey, version 4, production contracts only.