As dairy farms struggle, poultry company's growth feeds interest in chickens
Two years ago, the first group of 72,000 chickens arrived on Terry Shuey's dairy farm in Bethel Township, Lebanon County.
Also based in Bethel Township, Bell & Evans has embarked on a massive $263 million expansion project that entails building a 560,000-square-foot poultry processing facility which it expects will create nearly 1,100 full-time jobs over the next three years. The new plant will house four processing lines, each able to process 600,000 birds per week for a company that already handles a million birds per week.
The expansion will help Bell & Evans meet growing consumer demand for chicken, but also create new opportunities for livestock and grain producers, as well as developers eyeing housing and retail projects in the wake of local job growth.
At Little Hill Farm, Shuey said, the decision to branch into the poultry business boiled down to real estate limitations.
Her farm is only 120 acres. More land is both hard to find and afford, she said, making it difficult to expand dairy operations beyond the 95 cows she has now.
Add in the volatility of milk prices and she knows her herd isn’t enough to comfortably support two families. Shuey runs Little Hill with her brother, Rich Hill, and her husband, Kevin Shuey.
“We needed to diversify to add to our income,” she said.
With Bell & Evans just five miles away, the family decided to move into chickens, eventually contracting with the all-natural and organic chicken producer.
Little Hill first added two chicken houses, which can each hold about 36,000 broiler chickens, birds raised specifically for meat production.
Construction started in 2015 and chicken operations began in May 2016. The broiler houses receive new flocks about five or six times per year.
Little Hill is now planning for a third broiler house. Shuey said the decision to raise chickens has paid dividends. “It’s helped our bottom line."
As dairy farmers struggle with low milk prices and dozens in Pennsylvania have lost contracts this year with milk processor Dean Foods, others may follow her into poultry.
Indeed, many have started asking, according to Bell & Evans owner Scott Sechler. He announced in March that he was looking to add to the number of farmers raising chickens for Bell & Evans while having existing partners build more chicken houses.
The company has seen growing interest from dairy farmers in need of more stable income, Sechler said. “We have a long list of people that want to build.”
Many chicken farmers within an hour of Bell & Evans already have started building new broiler houses to boost the number of chickens they sell to the company, which hopes to complete its expansion project by 2020.
“There will be nonstop building of chicken houses,” Sechler said.
U.S. consumers eat more chicken than any other meat, and demand is still growing, according to the U.S. Department of Agriculture. The agency projects that chicken consumption this year will be about 92.5 pounds per person, an all-time high and up 10 pounds from 2013.
Bell & Evans needs to expand to meet future orders from two of its biggest customers, supermarket chains Wegmans and Whole Foods, which are adding stores nationally. Amazon, the owner of Whole Foods, also has growing needs for chicken through its Amazon Fresh grocery service.
Bell & Evans currently buys chickens from about 170 to 180 farms. The new processing facility will push that number to more than 300 farms in 15 surrounding counties.
“With dairy prices low, we’re saying this is another way,” Sechler said.
Housing, labor impacts
The growth of Bell & Evans, which could soon employ nearly 3,000 people, also could help drive additional job growth in Lebanon County and the surrounding area.
The state Department of Community and Economic Development said related sectors like manufacturing, construction, transportation and warehousing all could benefit.
“Generally speaking, projects of this size and scope can lead to significant positive impacts in the local economy and spur further development in the area,” said Michel Gerber, a DCED spokesman.
Some related sectors already are growing, especially along the Interstate 78/Interstate 81 corridor. E-commerce growth is driving development of more warehouses in both Berks and Lebanon counties.
DCED said as many as 1,000 additional jobs could follow. But with the regional unemployment rate hovering around 4 percent, workforce challenges could persist in Lebanon County.
“That is a fact I hear over and over from manufacturers,” said Karen Groh, president and CEO of the Lebanon Valley Chamber of Commerce. “When there is something new, employers are jockeying for who has the better benefits and wages. And employees jump from one job to another.”
The influx of new jobs also could present a challenge for the local housing market, where the supply of homes for sale has been tight, said Rob Cleapor of Lebanon County-based Iron Valley Real Estate.
That said, he is optimistic that the Bell & Evans project and the new warehouses along I-78/I-81 will spark housing projects in the Fredericksburg and Jonestown areas.
“I imagine (homebuilders) were prepared for this,” Cleapor said. He also expects restaurants and other retail development to spring up off the Lebanon County exits of the highway.
Sechler isn’t worried about finding enough workers or keeping them. His facility already draws workers from surrounding counties, including Berks, Schuylkill, Dauphin and Lancaster, so the housing impact won’t all be in Lebanon County.
He believes his company’s wages, which range from about $12 to $30 per hour, can compete with those of any employer. Bell & Evans and the Sechler family also contribute to local nonprofits and events.
He also believes his company’s community support and hands-on ownership can attract and retain workers. Sechler donated $2 million toward the construction of the WellSpan Sechler Family Cancer Center, part of WellSpan Good Samaritan Hospital, which opened in early 2016.
More organic feed
Sechler isn’t shy about the growth of his business, which should continue to expand as consumers demand healthier meat options from retailers and restaurants.
“I think it’s going to keep growing,” he said.
He has three extra pad sites next to his new processing facility that Bell & Evans could build on in the future.
“I am always looking for real estate,” he said. “Eventually we will use it.”
Tony Caterino doesn’t doubt that more growth is coming.
Caterino is the category merchant for meat at Wegmans, which will have 98 stores by the end of the year, including a new store opening in Manheim Township, Lancaster County. Wegmans has been buying meat from Bell & Evans since 2008 when organic products were just starting to become trendy.
Today Wegmans has more than 3,000 organic options in its store. Organic chicken is the fastest-growing area in the meat department, Caterino said. The chain offers more than 90 organic meat products, including 16 fresh and frozen products from Bell & Evans, which supplies all Wegmans stores.
Caterino recently visited Lebanon County to meet with Sechler to talk about future growth.
“We can’t grow without him,” Caterino said.
The state’s animal-feed producers also need Bell & Evans to grow if they want to convert from growing conventional grain to organic, said state Department of Agriculture Deputy Secretary Cheryl Cook.
Bell & Evans is one of the largest, if not the largest, buyers of 100 percent U.S.-grown organic grains. As demand for organic chicken grows, the need to supply more organic feed for the chickens also grows.
Bell & Evans currently sources feed from about 17 different states. Sechler would like to buy more organic soybeans and corn from Pennsylvania growers, so he is offering producers more money through long-term contracts to help cover their transition to organic chicken feed.
The Department of Agriculture also has a cost-share program through which crop and livestock producers can be reimbursed for a percentage of their organic certification costs.
Bell & Evans also wants to help producers increase their acres of organic farmland so the company has a stable supply chain for feed in the future.
“It’s big income for farmers,” Sechler said. Organic soybeans, for example, can fetch more than double the price of conventional grains.
However, the conversion to organic production requires a three-year transition period before crops are considered organically certified, Cook said.
Cook said she hopes the grain industry sees the potential to grow with companies like Bell & Evans and more farmers convert their systems. Other meat producers looking to expand into healthier options could also benefit from greater availability of organic feed.
“I can see a day as (Sechler) continues to grow that he grows into markets overseas,” Cook said. “The sky is the limit.”