Side Bar: Contract Feeding

We’ve talked about a lot of different aspects of different livestock species. One thing we need to cover is the topic of contract feeding. The poultry industry is vertically integrated, which means you will feed for a company if you decide to get into that species. The swine industry is split, so you have the option to be independent or you can choose to feed for a company.

Here are some considerations you should look at when considering whether or not to become a contract partner:

•The risk is minimized because you don’t own the animals or the feed

•However,the risk increased because you do own the waste and the building

•Knowledgeable resources will be available to you from the company, but you are still the oneneeding to do the work, make decisions and learn new skills

•Start Up Needs: with a contract, you may not need as much collateral for the bank and a lot of the feeding/watering/care facilities will be part of the construction process.

•The income is brand new, but remember income includes value of manure. The income can come at more stable times, but contracts can vary as to payment mechanisms

•A contract means you have a partner, but you are working with and for them in some regards. As a result, you will not have as much control over some of the decisions as the company will have their ways they like to see things done

Learn more about each Livestock industry.