1. An Integrated Poultry Complex Opportunities for Contract Growers October 27, 2014

2. Background for This Meeting “Feasibility Study Identifying Specific Strategies to Recruit and Retain Vertically Integrated Poultry Operations in Pittsylvania County” –BR Bock Consulting, lead contractor –Broad Energy Solutions, subcontractor –Lawton Lewis and Associates, subcontractor This meeting is to assess the level of interest from potential contract growers. 2

3. Topics Why recruit a poultry complex? Goodness of fit for Pittsylvania County What is involved in being a contract grower? Q&A Grower survey—interest and current operation –Anonymous 3

4. 4 Sanderson Farms Complex in Palestine, TX ~1200 direct, full time employees ~100 contract growers –496 broiler houses, 48 hen houses, and 8 pullet houses 1.25 million large birds/week processing facility –~200 acres, roads, natural gas, electricity, water & waste water Separate feed mill –25 to 50 acres, rail, roads, natural gas, electricity, water Hatchery –~15 acres, roads, natural gas, electricity, water https://www.sandersonfarms.com/static/newsletters/Spring-2014.pdf

5. 5 Economic Impacts of an Integrator Complex

6. 6 Good Potential Opportunity for Small Farms Looking to Diversify 6 http://www.coopercenter.org/sites/default/files/publications/PittDanville%20agbusi ness_%20final.pdf

7. 7 Need for Additional Jobs in the Region http://virginiascan.yesvirginia.org/communityprofiles/MapSearch.aspx?type=default

8. 8 Pittsylvania County Good Fit for an Integrator to Take Advantage of Market Trends Quality Grower and Workforce Availability Transportation and Utility Infrastructure Avoiding Community and Environmental Challenges

9. 9 Main Rail and Natural Gas Lines Bisect Pittsylvania County 9 Norfolk-Southern Transco NG line Rail is critical for receiving feed inputs from the Midwest and other areas. A complex will use more corn and soybean meal than is produced locally Natural Gas provides a low cost energy source for a complex that may use as much as 100 MMBtus per hour

10. 10 Pittsylvania Cumberland Anderson * * * http://www.nass.usda.gov/Charts_and_Maps/Crops_County/pdf/CR-PR13-RGBChor.pdf * Lenoir

11. 11 Multiple Interstates are Easily Accessible Depending on location, major interstates can be within 50 miles of a plant

12. 12 Poultry Litter Good as Hay and Pasture Fertilizer for Cattle Industry 12 http://www.coopercenter.org/sites/default/files/publications/PittDanville% 20agbusiness_%20final.pdf

13. 13 Land Application of Poultry Litter as Fertilizer –Low cost NPK source for local farmers; value-added products such as compost also an option –Nutrient management plans required –Some nitrogen and phosphorus in feed inputs from the mid-west end up in poultry litter –Environmental question: Are local crop requirements sufficient to effectively use nutrients in litter and: Avoid saturation of soils, especially of phosphorus Avoid nutrient runoff and water quality problems

14. Favorable Regional Nutrient Balance Fertilizer P + Manure P – Crop P Removed—2010, IPNI County Level http://nugis.ipni.net/map/ Pittsylvania Cumberland Lenoir

15. 15 More Than 6X Fertilizer P Used vs. Amount of Poultry Litter P to be Produced

16. What is Involved in Being a Contract Grower? 16

17. Structure of Integrated Broiler Industry Integrator –Owns breeder flocks, hatcheries, feed mills, & processing –Provides chicks, feed, medication, technical support –Responsible for processing and marketing –Contracts egg production and bird growing to farmers –Assumes input cost and poultry market risks Grower –Grows flocks under very specific integrator specifications –Provides land, labor, housing, equipment, utilities, and litter management 17

18. Broiler Production Contracts Grower compensation based of pounds live weight Bonus incentives for superior bird performance –Competitive rankings based on average production cost per pound for all flocks sold during the same week Risks –Variations in bird placement, size of birds produced, disease, utility costs, and bird performance –Changes in regulations affecting land application of litter –Facility upgrade costs during life of production facility –Loss of contract 18

19. Financial Considerations for Growers Typical poultry house capital costs –~$250,000 per house –25,000 to 30,000 square feet per house –Minimum of two houses, typically 4 or more Typical gross annual income per house--$45 to 55K Typical annual fixed and cash costs--$35 to 40K Annual cash returns during mortgage--$6 to 10K (usually 15-year mortgage) Annual cash returns after mortgage—$20 to 25K 19 http://extension.uga.edu/publications/files/pdf/B%201167_5.PDF

20. Meeting Tomorrow Evening for General Public Please feel welcome to join us tomorrow for a presentation on how a poultry complex would affect the general public Your comments will be welcome there also 20

21. Q&A 21

22. Survey 22

23. 23 Thank you for your time and interest. Contact Information Bert Bock brbock@brbock.com (256) 627-5035