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Managing Risks and Returns in Emerging, Higher-Value Markets - WV Small-Scale, Pastured Poultry Short Course

Managing Risks and Returns in Emerging, Higher-Value Markets - WV Small-Scale, Pastured Poultry Short Course. 1 Dee Singh-Knights, 2 Alexandria Straight, 3 Nola Wilson 1 Extension Specialist, 2 Extension Agent, 3 NESARE Outreach Leader West Virginia University Extension Service

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Managing Risks and Returns in Emerging, Higher-Value Markets - WV Small-Scale, Pastured Poultry Short Course

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  1. Managing Risks and Returns in Emerging, Higher-Value Markets - WV Small-Scale, Pastured Poultry Short Course 1Dee Singh-Knights, 2Alexandria Straight, 3Nola Wilson 1Extension Specialist, 2Extension Agent, 3NESARE Outreach Leader West Virginia University Extension Service WIA Educators Conference, Indianapolis, Indiana, April 2-3, 2014

  2. NESARE PD Program Training Modules“Sustaining Family Farms and their Communities by Building Capacity to Enter and Compete in Local Markets” Value-Adding and Direct Marketing Sustainable Production Practices Networking Partnership

  3. Rationale: Building Capacity to Enter and Compete in Local Markets • $8.9 b spent on food in WV - Reducing leakages is important to sustaining local communities • Growing interest in the availability of affordable local food in West Virginia for reasons of health and supporting the local economy • 39% more farmers are targeting local customers • West Virginia restaurants and hotels increased purchases of local products by 360% • West Virginia Department of Education this year committed $250,000 in school food funds for local purchases • More than two dozens county school systems report buying directly from West Virginia farms

  4. Managing Risks and Returns in Emerging, Higher-Value Markets – WV Small-Scale, Pastured Poultry Short Course • Short-course with several modules: Help limited resource producers assess feasibility, grow, process and market pastured poultry • Production - Can it be done? • Marketing- Can you sell it? • Profitability - Will it make money? • Processing - Can you process it efficiently and safely? Working H Farms, WV

  5. WV Small-Scale, Pastured Poultry Short Course • 104 existing and aspiring small-scale poultry producers attended 1 of 4 (3-hour) workshops • Workshop covered business and feasibility planning, food safety regulations and recommendations, and production systems, nutrition and processing considerations. • Participants participated in a hands-on poultry processing demonstration session • Five sessions planned for 2014 Preston County Ritchie County Kanawha County Summers County

  6. Pastured Poultry Pros • Strong demand for pastured poultry exists • Potential for extra farm income/new farm income • Low capital investment required to get started • Can start small and grow • Can be run by one person • Kids can help • Provides sustainably produced meat • Chickens build soil fertility • Chickens attract customers for other products • Proposed rule change to expand on-farmprocessing exemptions for poultry slaughter to 20,000 birds RainbowFarmsWV.com

  7. Pastured Poultry Cons • Very labor intensive--especially on-farm processing • Usually seasonal, unless the producer builds substantial housing • Limited support system of suppliers, contractors and retailers • Weather-related stress, predation, picking up diseases from wildlife are issues • Reliable processing facilities remain hard to find Working H Farms, WV WVUES Workshop

  8. Module 1: Production – Can it be Done? • Production information and experience – choose production system • Requirements for • Land, Water • Building and facility • Equipment and machinery • Management and labor • Supply sources for chicks, feed, equipment • Additional considerations: • Supply, timing, specifications • Breeds, quality and production rate • Business size RainbowFarmsWV.com

  9. Module 1: Production – Can it be Done? • Legal, Regulatory and Liability Issues • Currently… 1000 bird limit per calendar year without inspection. Proposed increase to 20,000 in 2014 • Must be slaughtered where they were raised • Slaughtered under sanitary conditions; not adulterated • Must be correctly labeled - add poultry exemption number • Cannot cross state lines • Can be distributed in-state to household consumers, restaurants, and hotels. • Must keep adequate records (slaughter, sales)

  10. Module 1: Production – Can it be Done? • Label Requirements – Mandatory Features • Product Name • Net Weight/ Unit • Safe Handling Statement • Address Line • Product Handling • Stored, transported in a clean sanitary environment to keep products wholesome • Kept solidly frozen • Permits • Meat and Poultry Distributors License ($5.00) permit give the WVDA the right to inspect your freezers • Food Handling Permit ($50) Bone Creek Farm 1815 Bone Creek Rd Berea, WV 26327 304.349.5660 Whole Duck

  11. Module 2: Marketing – Will it Sell? • Have you assessed your Market? • Target market descriptions – who are your customers • Marketing options – where can I sell my products • Existing market demand – how many do they want, when do they want it, what exactly do they want • Expected price – what can I expect to sell it for – what will customers pay • Expected sales volume – how many can I sell • Marketing Considerations: Farm/food safety and labelling issues, and rules/regulations for direct marketing;

  12. Average cost to process a chicken on farm was $1.15/lb. Average cost to slaughter and process a bird off farm was $1.60/lb. Highest prices: farmers’ markets (5lbs, 8 wks.), restaurants (3.5lbs, 6 wks.) Highest farm revenue – from parted-out birds Highest proportion of sales – On-farm

  13. Break-Even Analysis per Batch of 100 Broilers • Price needed to cover the cost per bird Total Expenses = $1,130 Number of Birds 100 birds = $11.30/bird (minimum price) • Price needed to cover the cost per pound sold Total Expenses = $1,130 Total Lbs. Sold 450 lbs. = $2.50/lb. sold (minimum price) Break-Even Price per Bird Sold Break-Even Price per Pound Sold • Use these numbers to determine if your should go ahead with this enterprise: • Can you clear this price in the market you want to sell in? • Can you find another market that will clear this price?

  14. Module 3: Profitability – Will it Make Money? • $$ Capital costs – what are my start-up costs? • $$ Operating costs – what are my day-to-day costs? • $$Income Statement – have I looked at the potential costs and returns? • $$ Break-even analysis – cover your costs first • $$ Sensitivity Analysis – have I looked at how simple changes may impact my bottom-line (Effects of changes in feed costs, finishing age, processing equipment, buildings, etc) Working H Farm, WV

  15. Module 4: Processing – Can you Process it Efficiently? • Scale-appropriate processing equipment and processes • Hands-on demonstration of appropriate processing equipment, set-up and actual steps for processing & evisceration. • Food Safety and GHPs considerations

  16. Resources Available • Food Safety • Good Manufacturing Practices • Standard Operating practices • Hazard Analysis Critical Control Points Plan • Record –Keeping • Sample Flock Record Log • Sample Slaughter Record Log • Egg Production as further income diversification • Curriculum and Supporting Materials available at • http://anr.ext.wvu.edu/sustainable-ag/sare/sustainable-ag. • Small-Scale Poultry Processing Video: • http://anr.ext.wvu.edu/sustainable-ag/sare/sustainable-ag. • Cost-of-Production benchmarks (based on actual case studies in WV) • Financial Analysis Templates • Scale-appropriate processing equipment • Producer/grower - 100 Bird Limit Exemption

  17. Summary • Profitability would depend on: • Scale of operation • Processing equipment used • More equipment requires large scale of operation • More equipment reduces labor cost/bird • Feed cost management • Producers considering purchasing cooperatively • Improvements for 2014 • Include egg production for further income diversification • Include GHP, GMP in preparation for the FSMA RainbowFarmsWV.com

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