Best Practices for an Extra Flock Check (Ben Chandler Commentary)

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Have you heard about a poultry farmer getting an extra flock check? There are several ways to use that revenue to help grow their commercial poultry farming business.

Most loan payments are scheduled based on the typical number of flocks grown in one year. Having an extra flock settle in a year means you’ll receive an extra check.

Poultry farmers should consider how it may be most productive to use this revenue: apply it to their current debt commitments, evaluate their emergency fund, or update their farm or equipment.

Generating an Extra Flock Check

When a poultry farmer signs an agreement with their integrator, they agree to a specific number of flocks and grow cycles within a 12-month period. The integrator determines the number of flocks they will receive in a 12-month period based on the size and type of birds and the out times between the flocks. Larger birds take longer to mature than smaller birds. So if they’re raising 4.5-pound birds, you can expect more flocks within the year than if you raise 9-pound birds. The type of bird and target weight will determine the grow time for the birds.

Depending on the timing, they may sometimes end up with an extra flock being delivered within a calendar year. An extra flock could mean an extra check that year, along with extra expenses.

What Happens When You Get an Extra Flock Check

A farmer knows when their flocks will settle, so they should be able to calculate when an extra flock will occur in their loan year. Before the integrator sends the check to the bank, the farmer will want to alert their lender about what they want to happen with that money. Some best uses for extra flock income would be to pay down debt or invest, pay down the principal of your loan, increase your emergency funds, pay outstanding credit card balances, pay down or pay off your auto and equipment loans, or reinvest in your farm. There are several ways to use extra flock check money to improve a poultry farm and grow the owner’s equity. If the farm accrued extra operating debt from fuel costs and other high operating expenses, it could pay off some of the costs incurred over the year, leaving more capital from future flocks to invest in the farm.

If your loan payments, credit card debt and emergency funds are in good shape, consider using your extra money to upgrade or expand your farm operations. This could include updating the poultry houses, buying a new piece of equipment, or adding or expanding a cattle herd. You may even want to explore buying additional land to support your plans.

Extra flock checks can happen and should be anticipated. The agreement with the integrator and lender will help determine how often and when to expect them.

Ben Chandler is the managing director of the poultry lending division at First Financial Bank of El Dorado.