Rather than make the expensive upgrades required by big poultry companies, some chicken farmers let their barns fall out of use. Shenandoah Valley Organic sees a business opportunity in all that neglected infrastructure.
For decades, Virginia Burkholder and her husband had raised chickens on Clay Bank Farm, a 65-acre plot of land in Dayton, Virginia, where the gravel road from town bends sharply west toward Shenandoah Mountain. After they sold the farm’s dairy operation to their son in the mid-‘90s, those broiler chickens, which they raised for a large meat company in the farm’s single poultry house, became the couple’s primary source of income. But in 2014 some bad news found its way down the gravel road. Representatives from the chicken company told the Burkholders they’d have to upgrade their chicken house’s ventilation system if they wanted to continue receiving premium pay. The cost for the requested modifications was $70,000—an investment that likely would have taken them five to 10 years to pay off.
“[We] just couldn’t see spending that kind of money at that age,” said Burkholder, who was 68 at the time.
It was a painful dilemma, though not an unusual one. As The Counter reported in 2017, commodity chicken farmers are routinely asked to pay for expensive building upgrades by the vertically integrated meatpackers, or integrators, who supply their birds and feed. Those modifications, which are typically requested in the name of improving efficiency, may make sense from the integrator’s point of view—but they can be a tall order for the farmers, who often take on debt to finance them.
What can make it a particularly undesirable predicament is the fact that producers who decline to make the required enhancements may find themselves out of a job, as integrators have been known to stop delivering birds to farmers they deem non-compliant. That can render the barns, built to highly specific standards, functionally useless—especially in the many regions of the country with only one poultry company (the Shenandoah Valley, where the Burkholders live, currently has two). And so, the barns often sit empty after a contract is terminated, regardless of whether a farmer is still in debt for them.
As the Burkholders weighed the pros and cons of investing in new infrastructure, Virginia heard from someone at church about a new poultry company called Shenandoah Valley Organic. It was actively recruiting growers, and happy to contract with ones whose facilities were considered too old, too small or otherwise antiquated by the area’s other chicken companies. Burkholder put in a call to Corwin Heatwole, the company’s young founder, to learn more. Before long, she was up and running as an organic chicken farmer—a late-career reinvention that exemplifies a notable shift in one of the region’s bedrock industries. By welcoming decommissioned barns that larger poultry companies might shun, Shenandoah Valley Organic has opened new economic opportunity to a growing number of area farmers, while quickly establishing itself in a market long dominated by a handful of power players.
The 1980s were a boomtime for poultry in the Valley. Like many of his peers, Heatwole’s father first built a chicken house in 1984 on the family farm where Corwin grew up. Before long, his dad added a second house to expand his production for Rockingham Poultry, one of the local chicken companies, usually referred to as “integrators” for their vertically integrated business model.
“At that time it was a 30-couple-percent return on investment,” Corwin Heatwole said.
Those rosy numbers had chicken houses going up all over Rockingham County. According to USDA data, Rockingham County’s total broiler chicken sales rose from 45.5 million in 1982 to 118.3 million in 1997, by which point the county’s poultry industry (including turkeys, another major commodity in the area) was valued at $336 million—more than three-quarters of the county’s total farm production that year.
By 2005, when Heatwole was in his early 20s, he bought a chicken farm of his own. The houses were newer and larger than typical 1980s houses, but chicken farming profitability had trended in the opposite direction. More than two decades after his dad’s entry into industrial-scale chicken farming, Heatwole says he was earning the exact same price per pound of chicken, not adjusted for inflation, while paying far more for land, fuel and other inputs. Income had never increased, while the cost of doing business had skyrocketed.
“I felt like by going out on my own, I could create a higher return on my investment.”
The integrator landscape had changed, too. Rockingham Poultry and its local competitors had been bought out by a series of larger, more distant companies. The old Rockingham Poultry complex—a self-sufficient unit including a hatchery, feed mill, processing plant and roster of contract growers—that Heatwole’s father once grew for now belongs to Pilgrim’s Pride, a Texas company that was itself purchased a decade ago by JBS S.A., a Brazilian conglomerate that is the world’s largest meatpacker. (George’s, headquartered in Arkansas, is the only other conventional chicken integrator operating in the Shenandoah Valley.)
After a few years’ hard work on his new farm without a ton to show for it, Heatwole was beginning to cook up an idea. He didn’t like how the conventional industry “sardined” chickens into his houses, and he didn’t particularly care for the structure of the integrator-grower relationship—especially the way farmers can be forced to make costly investments to keep up with integrators’ changing requirements. At the same time, Heatwole saw the market for organic food exploding, and sensed opportunity.
In 2012, he bought another small farm with an old, empty poultry barn, filled it with 300 organic-certified chicks and launched Shenandoah Valley Organic, or SVO. He hauled some small initial flocks in a trailer behind his pickup to a small organic processor in Northern Virginia. Before long, he was delivering 3,000 birds per week, maxing out the capacity on his second, small farm along with another one he’d started to rent.
“I felt like by going out on my own, I could create a higher return on my investment,” Heatwole recalled.
Another upside was the way he gained new independence to make his own decisions about how he raised his chickens, rather being told what to do by an integrator.
“[Founding the company] checked a lot of boxes, not just revenue,” he said.
After a year of selling organic chickens to the small processor in Northern Virginia, Heatwole had proof of concept. He’d also realized that the real ticket to success would be the ability to process the birds himself. And so, over the course of another year, during which he kept a steady stream of organic chickens headed north, he worked to find the capital to expand into processing and met with potential customers, from bulk buyers down to tiny retailers. All of them, Heatwole says, were eager to buy more organic chicken.
Within a year, SVO was processing up to 70,000 organic-certified chickens sourced from about 40 poultry houses in the area.
By late 2013, Heatwole had set his plan in motion, renting an old turkey processing plant in Harrisonburg, Va., that had been sitting idle for more than a decade. That December, he retrofitted it with 20 semi-truck loads of equipment he bought from a bankrupt chicken processing facility in Mississippi. This was a crucial step: The five largest poultry companies control about 60 percent of the ready-to-cook chicken market in the U.S., and much of the slaughter infrastructure. But with his own processing plant up and ready, Heatwole was able to sign contracts with a handful of other farmers to start supplying the new plant with organic chickens. The first birds came off the line in January 2014, and the company grew quickly. Within a year, SVO was processing up to 70,000 organic-certified chickens sourced from about 40 poultry houses in the area. Today, the company’s product is sold under its Farmer Focus label, the public-facing brand customers see.
Shenandoah Valley Organic
One of the biggest differences between SVO and conventional integrators is that SVO does not own a feed mill or hatchery, and does not supply its growers with company-owned chicks or feed. Instead, its growers buy their own organic-certified chicks and feed and, as long as they meet SVO’s protocols (Certified Humane and Animal Welfare Certified, in addition to USDA Organic), are pretty much free to raise their chickens however they like in whatever kind of facility they have. In return for that greater up-front investment and risk exposure, Heatwole says SVO growers enjoy more independence along the way to an annual profitability increase usually somewhere around 40 to 50 percent as compared to what they’d made raising chickens for conventional integrators.
For some of the roughly fifty farmers who now raise organic chickens for SVO, the greater up-front investment required by its model was a stumbling block early on.
“It’s a risk, there’s no doubt about that,” says Harry Showalter, another Rockingham County farmer who left a conventional integrator to grow for SVO four years ago.
In conventional poultry farming, integrators own the birds throughout the supply chain—so while growers are incentivized to raise healthy birds to make profit, they take less of a hit when disease or another calamity takes out a flock.
But if some catastrophe were to wipe out one of Showalter’s flocks just before harvest, he figures he’d be out about $160,000. Still, for him, greater autonomy has been worth risking threats that may never materialize. One of the reasons Showalter switched to SVO in the first place was that his previous company wanted him to spend between $150,000 and $200,000 to upgrade poultry houses he considered perfectly adequate. “I just opted to put that [money] in chickens and feed rather than in upgraded equipment that I didn’t really need,” he said.
“It’s been a real good change for me,” Showalter continued. “It’s kind of given my farm back to me in that I’m doing my own thing here without a big company mandating what I should do.”
Elsie Cline, another chicken grower who farms a few miles away, had similar concerns as she considered a switch to SVO after more than two decades with a conventional integrator. When her husband first began talking about it, Cline says, she was skeptical.
“I dragged my feet because I knew how much you had to put out up front,” she recalled.
Now, nearly four years later and making a lot more money, she looks back on it as “the best move we have ever made.”
“Some of our oldest barns that were previously empty are some of our highest-performing barns.”
Like Showalter and Burkholder, Cline says she also was facing pressure from her integrator to make costly upgrades to her poultry house. In these three farmers’ cases, switching to SVO allowed them to avoid that expense and keep their older houses generating revenue. But in the decades since large-scale chicken farming first swept through the Shenandoah Valley, however, many other farmers in similar positions have simply let their houses drop out of the production cycle as the integrators’ requirements have changed.
From the start, SVO has accepted growers who bring these old barns out of retirement. In part, that’s because they’re abundant in the area—the infrastructure already exists, and might as well go to use. According to Heatwole, a majority of the houses that first supplied SVO’s processing facility when it opened had previously been sitting empty for some time. Now, the company’s roughly 50 contract growers collectively have over 100 chicken houses in production. Of that total, Heatwole says, just two were newly built for SVO birds, while about 30 had been empty until SVO came along. Though these barns had fallen out of conventional integrators’ production chains, they’ve had no trouble pulling their weight.
“Some of our oldest barns that were previously empty are some of our highest-performing barns,” he said.
The fact that SVO now offers some farmers the opportunity to put retired or near-retirement infrastructure back into productive use has been a good thing for the area’s farm economy, says Tyler Whitley, contract agriculture program manager for the nonprofit farmer advocacy group RAFI-USA.
“Those are single-use facilities …. It’s difficult to find a use for them after they’ve been cut off by their conventional integrators,” Whitley said. “Having a smaller integrator who is willing to take on smaller houses is certainly beneficial for the farmers.”
Whitley, who works with poultry growers in 13 states, agrees that SVO’s contracts result in significantly better net earnings for growers as compared to conventional contract, and says that to his knowledge, farmers are “very happy with the relationship with SVO.”
At the same time, he worries that the lack of another organic processor in the area makes SVO’s producers vulnerable: they’d be left in the lurch if the company were to fold.
“That’s not something that’s a problem with SVO,” Whitley said. “That’s a problem with the market and the fact that our government has allowed the industry to become so consolidated and so vertically integrated.”
Larger structural issues with the industry aside, the emergence of a new chicken company that pays its growers well is a significant benefit for the region’s chicken farmers, said Mike Weaver, president of the Contract Poultry Growers Association of the Virginias. Weaver, an outspoken critic of conventional integrators who has long advocated for improved grower pay and legal protections, raised chickens for 15 years on his farm in West Virginia. His sister-in-law is an SVO grower, and the system strikes him as closer to the more equitable approach to poultry farming he has long fought for.
“We cater to small farms because we know we can sustain them.”
“I’m tickled to death that SVO has taken off and is doing as well as they have,” he said.
In the summer of 2019, five and a half years after opening a processing facility outfitted with salvaged equipment from a shuttered plant, SVO put in a state-of-the-art German processing line. According to Heatwole, it allows the company to double its production speed and a new ability to harvest giblets—edible organs for which there exists a large market, but that were previously too labor-intensive to remove. Heatwole says representatives from “numerous other large companies” have come by to check out the new machine, and that SVO has a waiting list of interested growers with a collective capacity to double current production, if or when sales allow.
According to the company’s growers, its success has been trickling down to them.
“My net pay is better by a good bit,” says Showalter, who was 23 when he built his first chicken houses in the ‘90s, and whose dad began raising turkeys nearly 50 years ago. “Some of my flocks have been 100 percent more net profit.”
Now, Showalter’s youngest daughter works with him on the farm. He hopes that the increased profit will make his farm a more attractive inheritance to his children when he retires. That’s the kind of narrative that Heatwole says his company is trying hard to nurture—as well as capitalize on for marketing purposes.
“We cater to small farms because we know we can sustain them,” Heatwole said. “The decisions we make go back to, ‘Is it promoting and protecting a generational family farm?’”
All that makes Brett Fansler, a 23-year-old SVO grower in Mathias, West Virginia, a sort of poster child for SVO’s commitment to the future of family farming. Had it not been for SVO, in fact, Fansler says he wouldn’t have a farm of his own in the first place.
He grew up on a farm a few miles down the road, where his dad raises cattle and has two chicken houses. His grandpa has three other chicken houses next door, right beside two more yet that belong to an uncle. Over the years, Fansler logged a lot of hours in chicken houses.
“Any time I was able, I was normally in there with dad,” he said.
By the time he was in high school, though, with margins growing tighter and tighter, the long hours and often-unpleasant working conditions made the whole prospect a lot less appealing.
“If you broke even, you was doing good,” said Jay Fansler, a cousin of Brett’s father who also lives nearby and has raised poultry his whole life.
Though Brett loved farming, by the time he graduated high school in 2014, following his family’s footsteps into poultry didn’t appeal in the least. Instead, he took a job as a mechanic in town and didn’t include poultry in his future plans.
“That tells you how much I wanted to be a chicken farmer. The week after I graduated, I went to work at the garage,” he said.
A few years later, however, word reached Brett’s father that SVO was expanding into the Mathias area, about 35 miles from the processing plant in Harrisonburg. Eager for a change of pace, he decided to give it a try.
“Everyone perked up and watched how it was gonna go,” recalled Jay Fansler, his cousin.
Brett’s dad was plenty happy with the new arrangement, and before long, Jay had followed suit, dropping his contract with a conventional integrator to sign up with SVO. Brett’s uncle switched over, too, and soon, Brett himself—who just a few short years previously had sworn off chickens for good—was in the market for a farm of his own.
“I saw how good [raising chickens] actually can be,” he said.
SVO was willing to offer him a contract—a financial commitment that was the key to getting a bank to give Fansler a mortgage loan.
Just south of where he’d grown up, Fansler found a 63-acre property with a decades-old chicken house that had been retired nearly 20 years ago, more recently used to store hay. Though the structure was ancient by conventional standards, SVO was willing to offer him a contract—a financial commitment that was the key to getting a bank to give Fansler a mortgage loan.
He spent a few months cleaning out the old building, installing new equipment and retrofitting it for organic production, a relatively easy task involving things like providing outdoor access for the birds. Fansler’s first 10,000-chick flock arrived in September, 2018, and he hasn’t looked back since. After a very near brush with extinction, the Fansler family poultry farming tradition in Mathias lives on.
“[SVO] put me in business,” said Fansler, standing outside the old poultry house, now filled with organic chickens. “This company makes growing chickens fun … It’s not really a job.”
He has big plans for the place. Before long, he hopes to start fixing up the old house on the new farm. It needs some work, he says, but like the chicken house down the lane that made all of this possible, there’s still good life in it yet.