Saturday, March 13, 2004

WILLARDS, Md. - Dennis Bradford walks by a rundown, gutted chicken house on his way to his afternoon rounds at newer buildings. Chunks of the roof are caved in; most of the windows were blown away during Hurricane Isabel. The structure contrasts sharply with the larger steel buildings that house 100,000 chickens — and Mr. Bradford’s career.

“The rest of the houses are in good shape, but that one is really unsalvageable,” Mr. Bradford says, pointing at the columns in the middle of the old house that made chicken deliveries difficult when it was in use.

The building, later burnt down by the local fire department as a precaution, symbolizes a movement that is sweeping across chicken farms in the Delmarva Peninsula, the region between the Chesapeake Bay and Atlantic Ocean in Delaware, Maryland and Virginia.

Chicken growers in Willards and in the rest of the region have given up traditional farming practices and replaced them with more tech-savvy procedures to stay viable in an industry that is constantly changing and consolidating.

Delmarva’s poultry industry, which accounts for 8 percent of total U.S. poultry production, has thrived since its inception in 1923 as the brainchild of a Delaware homemaker. The demise of the industry is predicted with increasing regularity, however.

Local officials say the chicken business is still a vital segment of the regional economy — some 15,000 chicken farmers and processing workers in Maryland produced 293 million broilers in 2002, providing $440 million to farmers, or 35 percent of the state’s total agriculture income.

But now more than ever, chicken growers are under attack.

While Maryland grapples to control a mild avian-flu outbreak — which prompted Russia to cut off poultry imports from the state — chicken growers and processors say Maryland no longer can count on the industry unless some dramatic changes are made.

Land is being taken over by retirees moving near the Atlantic Ocean beaches. Farmers now must submit complex, costly environmental plans to the state. The area has the highest production costs in the nation, and there are few state programs to entice younger folks into the business. And more companies are relocating to the South to cut costs.

State and local governments are trying to help by preserving farmland and easing burdensome regulations.

Some entrepreneurs are creating niche operations. And there is no indication from poultry companies in Maryland that they will close or move out.

But as the U.S. poultry landscape undergoes change, so does the landscape of Delmarva’s chicken industry.

Industry in transition

When Delmarva’s broiler-chicken industry arose in the 1920s from the region’s commercial egg industry, most chicken houses were shacks with only small windows to ventilate the powerful smell of dust, manure and ammonia.

Growers sold their flocks of chickens to nearby slaughterhouses that sent the birds to processing plants. But that practice changed by the late 1950s as operations merged and expanded into large companies working on contract systems with growers.

Contracts reduced growers’ risk in raising chickens but made farmers more dependent on processing companies, which demanded bigger, better-valued birds grown in a shorter period of time.

The high-volume, low-margin business, in which one-thousandth of a penny per chicken in production costs can make or break a farm, pressured growers to turn to automated systems to take care of laborious chores and increase capacity loads.

The newer houses at Mr. Bradford’s farm are pitch-black inside to prevent chickens from running around and losing weight, which necessitates more grain to feed them. The houses are equipped with two long rows of feeding spots, replenished automatically by a machine to allow around-the-clock eating. Adjacent water lines feature small nipples that the birds pull on.

All of the machines allow Mr. Bradford to operate his farm by himself, a feat that wasn’t possible a decade ago. “It’s a lot less work than it used to be,” Mr. Bradford says, while checking for dead chickens in one of his older houses.

He still works in the houses three to five hours daily, and his chores also include killing sickly birds. But he relies on computer systems to take care of such other important tasks as changing the temperature and feeding the chickens. The demand for high-tech systems like the ones at the Bradford farm became more evident in November, when Tyson Foods Inc., the nation’s largest chicken producer, closed its Berlin processing plant.

‘A risky situation’

The shutdown of Tyson, Worcester County’s largest private employer, left 650 workers unemployed. It also forced most of the region’s 155 growers to find contracts with the other three companies with processing plants in or near Maryland.

Several growers who have won contracts had to shell out thousands of dollars, despite getting a settlement from Tyson, to improve or build new houses. Allen Family Foods Inc., Mountaire Farms Inc. and Perdue Farms Inc. have higher housing standards for chickens than Tyson’s former plant required.

A. Kaye and Bill Kenney spent $38,000 to upgrade their two chicken houses in Parsonsburg after switching last year from Tyson to Allen’s, a Seaford, Del., chicken company.

The couple, who have raised broiler chickens for 28 years, say they stuck with chicken farming because of the steady cash flow. They made about $50,000 annually growing for Tyson and hope to make slightly more with Allen’s. “Our home is located on the farm,” Mrs. Kenney says. “We would have to move away from our home to get completely out of the business, and that’s not something we want to do.”

Still other farmers say too much debt is involved with the business, especially for older operators.

David Barnes, another grower in Willards, says he scaled back over the past six years rather than take on more debt to retrofit his chicken houses with new ventilation systems and backup generators.

“It’s a risky situation to put that much of your livelihood on equipment,” says Mr. Barnes, 56, who grows 35,000 chickens for Mountaire Farms but plans to quit farming and go into another line of work in five years. “I’m reaching an age where it does not make sense to take on more debt when the return on investment is not there.”

Wicomico County Commissioner Virgil Shockley, 50, hesitated on relying on a computerized system even though he has put $50,000 worth of new equipment into his Snow Hill chicken farm to grow for Allen’s.

“I believe that my old-school way of farming is just as good if not better than these computer systems,” says Mr. Shockley, who grew up on a poultry farm that has operated since the commercial-broiler industry emerged in Maryland.

Egg came first

The broiler industry evolved from the peninsula’s vibrant commercial egg industry in the 1920s. Both Allen’s and Perdue originally were hatcheries that changed operations to raise broilers.

Before the Great Depression, marketing chickens for consumption was a byproduct of egg production. Generally, old hens and cockerels were processed for meat, but the operation was not profitable by itself.

A housewife in Ocean View, Del., Cecile Steele, changed that view in 1923 after receiving a mistaken order of 500 chickens, 10 times her usual amount, to replace a laying flock.

Instead of returning them, Mrs. Steele housed the birds in a piano box and then built a small shed. She sold the surviving 387 birds 18 weeks later for 62 cents per pound.

The venture was more profitable than egg production, and by 1926, the Steeles had increased capacity to a flock of 10,000. And so the broiler industry was born in Sussex County, Delmarva’s largest producer of chicken meat. Other egg farmers began switching to broiler production, and hundreds of processing plants opened throughout the nation by the 1940s.

The broiler industry in Delmarva thrived from the region’s mild climates, sandy soil for easydrainage of chicken manure, low labor and building costs, proximity to several large markets and farmer-friendly credit programs, says historian William H. Williams, who has documented Delmarva’s poultry history.

Mounting challenges

In the late 1940s, however, more chicken companies began locating new plants in the South, where labor and land costs were cheaper and there was better access to grain.

To lower production costs, companies integrated other operations, such as feed mills and hatcheries, and turned into one-stop shops for chicken farmers, who were working on a contract system by 1959.

Chicken production surged in the 1960s and 1970s with newly invented technologies — but so did chicken waste. Farmers traditionally had used their chicken manure to fertilize corn and soybean fields. But now environmental groups linked chicken-manure runoff to excessive nutrient buildup in the Chesapeake Bay.

Outbreaks of Pfiesteria piscicida, a microscopic algae brought on by phosphorous nutrients, depleted some plant and fish life in the Bay in 1997.

The next year, the Maryland General Assembly passed a bill requiring commercial farms to implement a nutrient-management plan that would limit the amount of nitrogen and phosphorous released. One highly contested provision required farmers to sign a document granting government enforcers right of entry to their farms, without prior notice, as part of the process.

Gov. Robert L. Ehrlich Jr., the Republican who succeeded Democrat Parris N. Glendening in 2001, last month introduced legislation to repeal the right of entry while allowing the Agriculture Department to assess the plans. The agency would be required to give farmers 48-hour notice before visiting.


‘Smells like money’ Just minutes from the Atlantic Ocean, many Eastern Shore farms have become prime real estate, especially for retirees moving from Pennsylvania, New York and New Jersey.

On the Upper Eastern Shore, the population has increased 17 percent, from 332,632 in 1980 to 390,798 in 2000. The area includes the counties of Caroline, Cecil, Dorchester, Kent, Queen Anne’s, Somerset, Talbot, Wicomico and Worcester.

The rapid urban development strains the poultry industry as farmers live among neighbors who are opposed to the dust, odors and noise.

“People complain that the chickens smell awful, but it smells like money to me,” Mr. Bradford says. Local and state governments have developed agricultural-preservation measures, but farms bring in substantially less revenue than residential developments near Ocean City, Maryland’s largest tourist destination. Perdue, headquartered in Wicomico County, is only 30 miles from Ocean City.

“It’s ironic, because people move here hoping to be a part of the open spaces they see from the highway,” says Bill Satterfield, executive director for Delmarva Poultry Industry Inc., a Georgetown, Del., trade association. “But then they notice the dust, odors, traffic and fowl, and they go about trying to change all of it.”

Mr. Ehrlich, who set aside $17 million for agricultural preservation in his budget for the fiscal year that begins July 1, directed agencies to permanently protect 1.03 million acres of farmland by 2022, 41 percent of the estimated 2.5 million acres left in the state.

The nine counties on the Eastern Shore have used about 40 percent of land-preservation grants that started in 1977, according to the Maryland Agriculture Department. Existing companies are hesitant to expand operations in the state, pointing to the lack of available farmland and stricter waste-dumping regulations.

David Pogge, president and chief operating officer for the Delmarva division of Mountaire Farms, says the company would continue to “heavily invest” in its hatchery in Princess Anne and its feed mill in Snow Hill, but likely would build new operations farther south.

“We’re certainly concerned with the amount of development that is taking up the agricultural acreage in the area,” he says.

Future farmers

Chicken companies are constantly looking for more growers as aging farmers retire, die or sell their operations. The average age of a Maryland farmer is 57.

Mike Pilcher, Allen’s operations vice president, says the company has 450 growers but loses about 10 of them annually. Younger people are less inclined to get into the industry because of the costs of starting a farm, which are well into the $50,000 range, says part-time grower Joseph Chisholm Sr., vice president of the Peninsula Bank branch in Pocomoke City, Md.

“This business is not for the faint of heart,” he says.

The negative publicity from the 1998 reports of chicken-manure runoff did not help, Maryland Agriculture Secretary Lewis R. Riley says.

“While the poultry industry shoulders its share of the blame, they are working with the government and are not the sole culprit of this problem,” says Mr. Riley, himself a Parsonsburg chicken farmer.

Mr. Riley urges that the state develop more recruiting programs. But financing initiatives are on hold because of the budget deficit.

Some programs, such as upgrades for a diagnostic laboratory in Salisbury, may get more attention as a result of the avian-flu outbreaks in the United States and Asia. The outbreak in Asia is blamed for the deaths of 22 persons and 100 million birds.

Maryland’s first case of a milder strain of the bird flu, which is not harmful to humans, surfaced last week at a Mountaire grower’s farm in Pocomoke City. State officials so far have destroyed some 328,000 birds at two poultry farms.

Moving forward

Despite setbacks, chicken companies on Delmarva say they will not leave anytime soon. Perdue picked up 31 of Tyson’s growers after the Berlin plant closed, and it continues to upgrade its five plants, says Rex Thompson, vice president for roaster operations.

“We believe the area is still agriculturally viable,” he says.

The industry’s saving grace is proximity to major Northeastern and Mid-Atlantic markets, notes Paul Aho, a poultry-business consultant in Storrs, Conn.

“It’s also important to note that we will likely see smaller, niche operations emerge in the near future,” he says, and they will provide products such as deboned or cooked chicken parts.

Harry Dukes, owner of a deboning plant in Georgetown, Del., changed the focus of the operation three times since its opening in 1992 to keep up with demand.

“People want more upgrades on their chicken product,” says Mr. Dukes, president of Eastern Shore Poultry Co. Inc.

But the importance of chicken production on the East Coast is diminishing as the South rises as a less-expensive alternative, Mr. Aho says. Members of the Maryland Poultry Issues Action Team, formed in June after Tyson announced it would close the Berlin plant, identify transportation and grain costs as growers’ greatest expenses.

The team calls for improvements of railroad tracks to allow 100 cars per train, compared with the current 50-car maximum. Chicken production on Delmarva is the most expensive in the nation because of the feed deficiency, Mr. Satterfield says.

“Feed is very dependent on corn and soybeans,” he says. “Farmers are having to transport a lot of that in from other states because there is less farmland available to grow it here.”

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