Having to euthanize and properly dispose of a poultry flock due to a disease like HPAI can be devastating emotionally for poultry farmers. Even with indemnification payments, an HPAI outbreak on a grower’s farm can have long-lasting negative impact on the farm’s finances, according to Jordan Shockley, Ph.D., Associate Extension Professor, Department of Agricultural Economics, University of Kentucky.
Shockley reported on financial impact of extended downtime on the finances of broiler growers at PEAK 2024 in Minneapolis, MN, on April 17, 2024. He conducted analyses on looking at the impact of losing one, two or three broiler flocks on a growers’ finances under two scenarios. One scenario was called the beginning farmer, where the HPAI outbreak occurs during year two of production. The beginning farmer has very little equity and high debt. The experienced farmer has much more equity and less debt.
Beginning broiler growers tend to have very high debt loads because lending institutions are willing to fund such highly leveraged investments because the integrator assumes the market risk and the growers’ payments from the integrator are steady and somewhat guaranteed. But there aren’t payments if there are no flocks. So extended downtime hurts all growers significantly but is particularly harmful to beginning growers because they are so highly leveraged.
Downtime which prevents three flocks from being placed and marketed can put the farms finances in a hole which can take several years or even a decade to get out of, and there is no way to ever recoup the lost revenue. Loan payments must be made even if there aren’t birds on the farm. If the payments are deferred, the amount owed will increase as interest is accrued.
Shockley said that his analysis should reinforce the importance of diligently following your biosecurity plan on a poultry grower’s farm. The risk of HPAI infection is still high and the impact on a farm’s finances can be devastating.
To learn more about HPAI cases in commercial poultry flocks in the United States, Mexico and Canada, see an interactive map on WATTPoultry.com.
View our continuing coverage of the global avian influenza situation.
