Poultry farm management and profitability guide

Cost items

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Variable costs and fixed costs

Calculating depreciation per flock

1. 1Write down what each item cost: the house, then the equipment (feeders, drinkers, brooders, water tank, scales).
2. 2Estimate its useful life: for example 10 years for a well-built house, 3 years for feeders and drinkers.
3. 3Divide the cost by the useful life: this gives the share for each year.
4. 4Divide this yearly share by the number of flocks in the year (5 to 6 flocks of white broilers per house, for example).
5. 5Add up the shares: this is the “depreciation” line of each flock.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Where the money comes from

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

What lowers income without anyone noticing

• Mortality: a bird that dies at the end of the flock has eaten almost all its feed and brings in nothing.
• Missing birds: theft, predators, birds eaten or given away without being recorded.
• An uneven flock: when selling per bird, the small ones fetch less and pull down the price of the whole flock.
• Selling late: every day without a buyer costs feed and worsens the feed conversion ratio.
• Unpaid credit: a sale that has not been paid for is not income.

The formulas

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Worked example, with letters instead of prices

1. 1The flock: 1,000 chicks received, 960 broilers sold at an average of 2.0 kg, so 1,920 kg sold. Feed taken out of the store: 64 bags of 50 kg, so 3,200 kg.
2. 2Replace each price with a letter: P = price of one chick, A = price of one bag of feed, V = selling price of one kilo, D = all the other costs of the flock (energy, water, health, litter, labour, transport, depreciation).
3. 3Total costs: T = 1,000 × P + 64 × A + D.
4. 4Income: R = 1,920 × V (add manure and empty bags if you sell them).
5. 5Net margin: R − T. Cost per kilo: T ÷ 1,920. If V is smaller than T ÷ 1,920, every kilo you sell loses you money.
6. 6Now replace the letters with your own prices: the calculator does this calculation for you.

Example taken from the lesson “The feed conversion ratio” (level 4)

Three scenarios before every flock

• If all goes well: your best figures (mortality, weight, feed conversion ratio).
• If things go moderately: 10% more losses and sales one week late.
• If things go badly: heat, disease, low selling prices.
• Rule: if the middle scenario already gives a negative margin, do not start the flock as it is. Change something first (number, type of chick, buyer, date).

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Production cost formulas

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Cost per egg: the special points

• A pullet costs money before she lays: the chick and all the feed from day old to the start of lay (around 21 weeks) are spread over the whole laying period.
• Spent hens bring in money at the end of lay: their income is deducted from the total cost of the flock.
• Only saleable eggs count: broken, cracked or dirty eggs are removed before dividing.
• The laying rate is everything: the higher it is, the more eggs the day’s costs are shared across.

What moves the cost per kilo

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

The formulas

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

The School’s benchmarks

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

The length of a cycle

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Several houses in rotation

• One age per house (all in, all out): never two ages mixed, not even to “fill a gap”.
• Staggered houses: with three white broiler houses, a flock goes out about every two and a half weeks; with two, about once a month.
• Houses 15 to 20 metres apart, visited from the youngest to the oldest, with boots for each house.
• One record sheet per house and per flock, never a shared sheet.
• Cash must cover the feed of all the flocks in progress until the next sale, not just one.
• Broilers and layers: separate sites, or at least distant houses with strict boots and visiting order.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Building the calendar backwards

1. 1Choose the selling date: two weeks before a festival rather than two weeks after.
2. 2Subtract the rearing period (6 weeks for white broilers, 10 to 14 weeks for coloured chickens): this gives the chicks’ arrival date.
3. 3Check that the house will be cleaned, disinfected and ready the day before that date, downtime included.
4. 4Subtract a further 15 days, more before festivals: this is the deadline for pre-ordering the chicks.
5. 5Write everything on a calendar for the year: festivals, seasons, flocks, downtimes, pre-orders, payment dates.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

The key moments of the year

The daily record sheet (one per house and per flock)

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

The weighing sheet (every week)

The feed register

The sales sheet

The cash book

The one-page summary at the end of each flock

• Chicks received, birds sold, dead and culled (number and %).
• Total feed eaten (bags and kilos), per phase.
• Average selling weight, age at sale, actual feed conversion ratio, production efficiency factor.
• Income, costs, gross margin, net margin, cost per kilo.
• What went well, what went badly, and the improvement chosen for the next flock.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Clear roles

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Checks that protect everyone

• Counting the bags every week: this is check number one, because feed is the farm’s money.
• Counting the birds at arrival, at each culling and at sale: “missing” birds with no recorded deaths are a warning sign.
• The record sheet checked every week, with a walk round the house.
• A visit at an unexpected time, now and then.
• A farm WhatsApp group: every day a photo of the record sheet and of the flock, every week the average weight.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Pay, motivate, train

• A fair wage, paid on the agreed date, without exception.
• An end-of-flock bonus based on figures the employee controls (mortality, FCR, house ready on time), calculated in front of them with the record sheet. Never on the selling price, which they do not control.
• One day off a week, organised with a replacement, and decent housing if they live on site.
• An emergency budget (gas, vet) with receipts, so that they can save the flock at 2 in the morning without waiting for your approval.
• Training: the NEXTEKCI School is free and awards a certificate for each level.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Buying well

• Chicks: an approved hatchery, a pre-order at least 15 days ahead, an arrival date set for when the house is ready, chicks counted and checked on arrival.
• Feed: a regular supplier, intact and dated bags, a few bags weighed on delivery, a sample kept from each delivery.
• Change feed supplier only after two flocks in a row with problems written on the record sheet, never on the promise of a lower price.
• Equipment: several quotes, and strength before price; a leaking drinker wets the litter for the whole flock.
• Keep all invoices: they make up the flock account and the financing file.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Per bird or per kilo?

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

What a written sales agreement should state

• The number of birds, the type and the expected average weight.
• The date and time of collection, and who transports.
• The selling method (per bird or per kilo) and the price, or how it will be calculated.
• Weighing: in front of both parties, scales checked, empty crates weighed separately to deduct their weight.
• Payment: a deposit for large quantities, the balance before or at loading, a signed receipt.
• Health conditions: 8 to 12 hours of feed withdrawal before slaughter, withdrawal periods of treatments respected.

Keeping your buyers

• Two or three different buyers, so you never depend on a single one.
• A buyers’ book: name, phone, what they take, how they pay, how the last sale went.
• A message one week before the sale: photo of the flock, weighed average weight, number available, date.
• No credit without a track record. An unpaid sale costs more than a slightly cheaper one.
• The whole flock sold within one to two weeks; the buyer is found before the chicks are ordered.
• Keep your word on date, number and weight: a buyer who is well served comes back and brings others.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

The steps of a well-financed project

1. 1Work out the total from quotes: house, equipment, working capital (the chicks, all the feed for the first flock, wages and energy until the first sale) and a contingency margin of 10 to 15%.
2. 2Calculate the expected yearly margin: net margin per flock in the middle scenario × number of flocks per year.
3. 3Calculate the payback period: total cost ÷ yearly margin, in years. Benchmark: 3 to 4 years in the middle scenario is a good project; beyond 6 to 7 years, the project waits.
4. 4Check the rest: a buyer who can take the extra production, a team to run the house, enough water, cash for all the flocks running in parallel.
5. 5Choose a source of finance whose term matches the life of what is being financed.
6. 6Prepare the file, then start small if necessary: the house can be built in several stages, at the pace of the flocks.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Sources of finance

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

The file that convinces

• Three flock summaries with their daily record sheets.
• Up-to-date registers (feed, health, sales, cash).
• Quotes for the house and the equipment.
• The flock rotation calendar.
• The payback period calculated in the three scenarios.
• One page on your buyers, and your team’s training certificates.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Mistakes and their remedies

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

Rules to write down while all is well

• Sell earlier than planned if mortality exceeds your threshold despite the vet, or if cash no longer covers the feed.
• Reduce stocking density for the next flock after heat mortality or uniformity below 70%.
• Add a house only after three flocks in a row with a positive net margin.
• Take a break after two flocks in a row at a loss with no cause corrected: understanding is better than a third loss.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

The lines of the dashboard

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5

The monthly routine

1. 1Gather the record sheets of each house, the feed register, the cash book and the sales sheets.
2. 2Fill in the dashboard, house by house, then the line for the whole site.
3. 3Colour each box: green, orange or red, compared with the target.
4. 4For each red box, look for the cause on the record sheet, with the stockman.
5. 5Decide on one action per house, write it down, and check its effect the following month.
6. 6File the dashboard with the previous ones: twelve months of dashboards are worth a bank file.

Benchmarks: NEXTEKCI School lessons, levels 2, 4 and 5