Navigating Poultry Lending: Key Considerations for Ag Lenders
It turns out the age-old chicken-or-egg question has an easy answer: It’s both! Compared to other meats and protein sources, poultry and eggs have topped the leaderboard year after year. With steady growth and a consistent appetite for these proteins, poultry lending presents a smart opportunity for ag lenders looking to diversify their portfolios.
Poultry farming: Why it makes sense for ag lenders
Poultry farming is a stable, scalable business that can provide lending organizations a reliable customer base for years, thanks in part to its many advantages as outlined by the USDA.
Poultry feeds the world: Poultry is the most widely consumed meat across the globe, appearing in nearly every cuisine. More people eat broiler chickens, turkeys, and other poultry than any other type of livestock.
Inexpensive feed: U.S. poultry operations benefit from a domestic supply of affordable soybean meal and corn, which helps keep input costs manageable.
Efficient growth: Poultry reaches market maturity quickly, within 2 to 4 months, making it more feed-efficient than pork, beef or other livestock. This short cycle provides faster returns on investment.
Competitive prices: Poultry and eggs remain an affordable protein source, which helps sustain demand across income levels and meal types.
Types of poultry operations
Poultry farming offers multiple lending opportunities depending on the operation type and scale. Here are some common production models:
- Breeder birds: Raised to produce fertile eggs based on desirable genetic traits.
- Market broilers: Chickens raised for meat, typically reaching market size at 2 months. (Turkeys take longer.)
- Laying hens: Begin producing eggs around 4 to 4.5 months of age, with a laying cycle of 14–15 months.
Some producers integrate multiple stages of poultry growth, while others contract out early growth stages to third-party pullet farms.
Who leads in U.S. poultry production?
While poultry operations can be found nationwide, the industry is heavily concentrated in the southern and eastern U.S., spanning from Texas to Pennsylvania.
- North Carolina leads in broiler chicken production, raising 6.88 billion broilers in 2022 along with 1.1 billion turkeys.
- Iowa is the top egg producer, delivering nearly 1.97 billion eggs in 2022.
Sustaining a robust demand for poultry and eggs
Consistently strong demand is one of the biggest reasons poultry lending remains a compelling investment. Over the past two decades, poultry has overtaken red meat in popularity due to its affordability, versatility, and perceived health benefits.
While outbreaks of highly pathogenic avian influenza (HPAI) have disrupted supply chains and impacted sales, poultry and eggs continue to lead the market.
Key challenges for poultry producers
Like other ag operations, poultry farms must navigate challenges including:
- Labor shortages
- Rising feed costs
- Regulatory pressure around antibiotic use
But perhaps the most disruptive threat is avian flu. Once detected in a flock, producers must cull the entire herd, a costly and time-consuming remedy.
Resuming operations can take months due to factors like:
- Cleanup and sanitation requirements
- Investment in biosecurity upgrades
- A 4-month growth period for new birds to reach egg-laying maturity
These supply gaps can drive up consumer prices and hinder long-term demand.
Want to understand the impact of avian flu on lending risk? Our comprehensive guide for ag lenders details how outbreaks affect poultry operations.
Risk mitigation strategies in poultry lending
How can lenders support poultry operations while minimizing risk exposure?
One effective approach is to explore secondary lending options. These partnerships allow lenders to offer more competitive financing while preserving liquidity and the borrower relationship.
However, not all secondary lending organizations are alike. Collaborate with partners that understand agricultural lending inside and out, including market cycles, operational risks and the impact of disease outbreaks like avian flu.
Since 2003, Agri-Access has helped ag lenders offer flexible, customized loan solutions backed by a deep expertise in all things agriculture.
Ready to learn more?
Download our FREE Ebook, Grow Your Ag Lending Portfolio with a Reliable Capital Source. Then book a quick meeting with an Agri-Access relationship manager.
