Chicken growers face challenges

IDABEL, Okla. (AP) -- This has not been an easy winter for Terry Gates as he's tried to keep thousands of baby chickens warm despite skyrocketing costs for heating fuel and one of the coldest seasons in recent memory.

Gates paid $11,200 for the propane to heat his barns for three weeks. That's as much as he paid all of last year.

"It's been a tough couple of months," Gates said, surveying 30,000 chirping baby chickens bouncing along a floor littered with chicken waste.

Over six weeks, the flock of yellow chicks puff out like popcorn kernels to fluffy white broilers fattened to 3.8 pounds apiece.

They will be trucked from the farm near Idabel in the southeast corner of the state to a nearby Tyson Foods plant at Broken Bow to be slaughtered, packaged and shipped to grocers.

The process of satisfying America's appetite for chicken is swift and efficient. But things aren't getting any easier for Gates and others holding contracts to raise chickens for the country's largest poultry companies.

Besides the high cost of fuel, chicken farmers say stricter environmental regulations have put the brakes on expansion. They also say they have no control over contract terms dictated by processors, including chicken giant Tyson of Springdale, Ark., and Dallas-based Pilgrim's Pride.

But perhaps the biggest problem is self-inflicted: there are just too many chickens for the market.

Falling demand internationally has helped produce a glut of poultry, says Don Barrett, a grower and publisher of the "Poultry Farm Outlook" newsletter.

The country's chicken production chain, spread across half the nation, cranks out over 30 billion pounds a year.

There are 926 registered chicken farms with 2,765 barns in Oklahoma. Most produce chicken for meat, but some are large farms with laying hens.

Oklahoma growers produce more than 200 million broilers, or young chickens named for the method many are cooked. They are worth $377 million, according to the U.S. Department of Agriculture.

Across the Red River, Texas growers fatten twice as many chickens. Arkansas farmers just down the road produce six times more, raising more than 1 billion birds worth more than $2 billion.

Chicken farmers, whose long barns with automated feed and watering systems dot the timber-laden landscape of southeast Oklahoma, are not exiting the business.

But industry growth has slowed in the region.

Under their contracts, the chicken processing companies provide each farmer with hundreds of thousands of chicks and all the feed free-of-charge; growers must provide the barns, utilities and water.

Growers are rewarded for growing bigger chickens at a lower expense for the company.

"Whoever grows the best chickens gets the most money and I like that," says Tom McCain, who raises chickens for Tyson west of Idabel.

But growers have little negotiating power for contracts let on a take-it-or-leave-it basis. McCain and Gates said they have good relations with Tyson. But some growers have complained to lawmakers that the companies change the terms and provide fewer birds after earlier agreeing to more.

Chicken raisers must test soil and keep records after Oklahoma passed tighter environmental regulations for the industry. Runoff over watersheds where chicken waste was used as fertilizer was blamed for excess nutrients that caused odor and taste problems in Tulsa's water supply.

Oklahoma farms produce an estimated 325,625 tons of chicken waste a year, but not all of it is spread out on the land, said Jack Carson, a spokesman for the state Agriculure Department.

Growers say because of the new rules big processors won't approve additional contracts that would allow individual farmers to get financing for new barns.

Instead, growers must buy existing farms to expand, a far more expensive option in the face of rising energy prices.

Tyson spokesman Ed Nicholson said some states are easier to operate in than Oklahoma. But he added that the company expands where capacity is underutilized and the company has plenty of production in Oklahoma.

Gates, a slender man with a bright smile, grows a flock for six weeks and gets two weeks off until Tyson brings more chicks. He'll raise just under a million birds this year.

Heat from propane keeps barns at a consistent 85 degrees because chicks cannot regulate their body temperature just after hatching.

In the warmth, older birds also burn fewer calories and add weight quicker.

His huge propane bill and other expenses sapped him of net profits for one midwinter flock to less than $3,000. That was income for eight weeks. Tyson paid $2,200 on the one flock to help with fuel expenses but it didn't make up for soaring energy costs.

But several flocks in spring and fall require little heat from propane and profits can be substantial, he said.

Challenges aside, Gates said he enjoys the birds and plans to stay in business.

"I really like what I do," he said.