ROTEM DEALER UPDATE ON HOUSING

Jim DonaldAuburn University,

AL

What Are We Trying To Accomplish?

Best Environment - Day 1 To Catch Temperature, Equivalent

Temperature, Air Quality, Litter Quality, & Light

Using Least Amount Of Fuel, Electricity, & Water Possible Without Sacrificing Performance

Once Birds Are In The House, Heating System, Ventilation Mode, & Cool Cells Are Primary Tools For Managing The Environment

Broiler Performance Components: Integrator

Chick Quality – Providing The Genetic Package Feed - Ingredients/Milling/Ration Formulation Transportation (Chick Delivery & Live Haul) Health Programs - Chick/Feed/Farm Health Program - Surveillance & Diagnostics Ensure Growout Program Implementation Promote Operational Consistency In Growout Provide Housing Standards With Incentives

Broiler Performance Components: Grower

Environmental Protection – Rearing Facility (House)

Climatized Air (Temp - TNZ /Quality/ Uniformity) Litter (Quality/Quantity) Feed & Water Distribution Avoid Binge Feeding Limit Causes Of Infectious Disease Limit Stress Minimize Body Maintenance Maximize Growth

AgriStatsCategory 2000 2005 Change

Days To 5.0 Lbs. 45.141.8-3.3Avg. Weight 5.165.71+0.55Avg. Live Cost 22.76 24.85 +2.09Grower Pay 4.785.24+0.46

“There Are Lies, Damn Lies, And Then There Are Statistics” --Will Rogers

HOUSE CONSTRUCTION: PROBLEMS CASH FLOW HOUSE SIZES /

STRUCTURE INSURANCE ELECTRICAL

CASH FLOW LARGER HOUSES INCREASED MATERIAL COST INCREASED BUILDING

COSTS NEW HOUSES ARE

CHALLENGE TO CASH FLOW FIX BY CUTTING CORNERS

IN CONSTRUCTION

Example: 40 X 500 Assumptions

4 Houses – 80,000 Ft2, 5#, 6 Flocks/Yr, 96% Livabil.

$1.15 Gas, $0.075/kwh, $.05/# Base Pay, 6.75% Int.

No Hired Labor, 0.77 Ft2/Chick Total Initial Investment = $680,000 /Ft2) Farm Credit (1st) Mortgage = $578,000 (85%) Other (2nd) Mortgage = $102,000 (15%) 1st Mortgage Assignment/Yr= $58,620 2nd Mortgage Out Of Settlements=$10,345

Costs & Returns – 40 X 500

Gross Receipts-2,992,369# @ .05 = $149,618Variable Costs (Out-Of-Pocket) = $ 57,413Fixed Costs (Morts.+ Ins.) = $ 74,912Total Costs = $132,324Net RetUrns = $ 17,294Return on Investment = 2.543%

*Excludes “Fuel Allowance”

Cash Flow Squeeze - Solutions?

1. Do Nothing?2. Increase Base Pay To Grower?

(Ex: ½ Cent Increases Net Returns By ~$15,000 On 80,000 Ft2 Farm)

3. Company Provides Part Of Initial Investment? (Pullet House Model)

(15% Of Investment Cost Increases Net Returns By ~$15,000) (@ 6% Interest)

4. Differential Pay Rates For New Houses?5. Relocation – Leave U.S.?6. Others?

INSURANCE SUFFER $3/1 LOSSES IN PAST

ON POULTRY HOUSES PREVIOUSLY WERE NOT VERY

INVOLVED GET OUT OR GET SERIOUS TOTALLY ENGINEERED SPECS. HOUSE INSPECTIONS

HOUSE CONSTRUCTION: OPPORTUNITIES LARGER HOUSES FOR

CASH FLOW MORE HOUSES IMPROVED STRUCTURAL

STANDARDS INSURABILITY AND

BANKING IMPROVED ELECTRICAL

STANDARDS

Example: 54 X 500 Assumptions

3 Houses – 81,000 Ft2, 5#, 6 Flocks/Yr, 96% Livabil.

$1.15 Gas, $0.075/kwh, $.05/# Base Pay, 6.75% Int.

No Hired Labor, 0.77 Ft2/Chick Total Initial Investment = $664,000

($8.20/Ft2) Farm Credit (1st) Mortgage = $564,570

(85%) Other (2nd) Mortgage = $99,630 (15%) 1st Mortgage Assignment/Yr= $57,260 2nd Mortgage Out Of Settlements=$10,105

Costs & Returns – 54 X 500

Gross Receipts-3,029,696# @ .05 = $151,485Variable Costs (Out-Of Pocket) = $ 54,575Fixed Costs (Morts. + Ins.) = $ 73,382Total Costs = $127,957Net Returns = $ 23,528Return on Investment = 3.543%

*Excludes “Fuel Allowance”

ELECTRICAL WORK DONE BY

QUALIFIED ELECTRICIAN COMMERCIAL EQUIPMENT SUFFICIENT SIZE

COMPONENTS BACKUP GENERATORS WIRED BY CODES MUST WORK AS A

“SYSTEM”

ELECTRICAL “SYSTEM”

ENERGY CRUNCH & FUEL FLUCTUATIONS

DETRIMENTAL TO GROWER INCOME

INCREASING ON YEARLY BASIS

HELD HOSTIGE BY PROPANE & NAT. GAS

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05

Propane Electric

Per House Energy Costs24 Class A Houses – N. AL(Small Birds -7.2 Flocks/Year)(-$43K Farm Income–’05/06)(-$94K Over 3 Years) $3,700

$5,800

$7,600

Per House Water & Litter Costs – N. AL

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

1992 1994 1996 1998 2000 2002 2004

Water Litter

(24 House Average)

Full Cleanout + Acid Pad Treatment

Added Cooling Pads

New Well

Poultry Energy Use Greatest Cost Facing Growers -

Energy Nearly 100,000 US Broiler Houses Electricity - Requires 20,000-35,000

kwh Per Year Per House Electricity Rates - Highly Regulated

& Relatively Stable Predictable Electricity Cost Ranges From $1,500

to $2,500 -- Average of ~ $2,000/House/Yr.

The Problem Is Propane

Poultry Production Is Propane Intensive Each House Uses 200-700 Mil. BTU/Year Middle East - Conflicts & Uncertainty Gulf Coast Storms Disrupt Prod. & Dist. Asia – 8-10% Annual Industrial Growth Hard Winter Up North Spurs Demand Propane Follows Crude Oil Price – OPEC Crude $70; Last Year $40; 2 Yrs Ago

$25

Propane Cost - 8 Houses - S. AL (Big Birds - 5 Flocks/Year)

2002-03 30,000 gals @ $0.55 = $16,500

2003-04 30,000 gals @ $0.80 = $24,000

2004-05 30,000 gals @ $1.02 = $30,600

2005-06 30,000 gals @ $1.19 = $35,700

Change = $19,200 Less Net Farm Income

Net Effect Of Propane Price Increase Of 40 Cents/Gallon

Added Costs ~$1,600/House/Year Big Birds Added Costs ~$2,400/House/Year Small

Birds Average Reduction In Net Farm Income =

~ $2,000/House/Year(~$25 Million In Alabama)

(~$150 Million In SE U.S.)

RETROFITTING NEW EQUIPMENT CONTROLLERS TUNNELING 6” COOLING SYS. HP FANS MINIMUM

VENTILATION SYS. = VENTS

SOLID WALLING REMOVING

CURTAINS ADDING

INSULATION INCREASING R-

VALUE INCREASING HOUSE

TIGHTNESS SEVERAL CHOICES

SPRAY FOAM QUICK WAY TO

SOLID WALL INSULATE TIGHTEN HOUSE SHORT TERM

BAND-AID

Annual Gas Savings @ $1.40/Gal

Per House Gas Use Gas Cost SavingsBefore 5,000 gal $7,000 ---After 2,247 gal $3,146 $3,854

$0.00

$1,000.00

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$6,000.00

$7,000.00

Before After

HOUSE TIGHTNESS SOLID WALLING INCREASING SP IMPROVED

NEGATIVE VENTILATION

INCREASED MANAGABILITY OF AIR & TEMP. CONTROL

Vapor Barrier On Interior Before Plywood Is Nailed Up

EXTERNAL HOUSE WRAP

VALUE OF INSULATION BECOMING MORE

IMPORTANT GROWER PAY

AFFECTED ENVIRONMENT

AFFECTED BIRDS AFFECTED GOOD INSULATION =

HIGH EFFICIENCY

Fiberglass Batt Sidewalls

Blown Cellulose Sidewalls

BETTER CONTROLLER USAGE GARBAGE IN =

GARBAGE OUT EDUCATE USERS DEVELOP

STANDARDS ADJUST

PROGRAMS

ALTERNATE FUEL UPDATE

LOTS OF INTEREST PRODUCTS DELIVERY VENTILATION RESIDUAL EFFECTS

OR BYPRODUCTS

ENERGY CHARACTERISTICS

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

Cost of Fuel Required to Produce 1 Million BTU's

Coal Litter Waste Oil Shelled Corn HardwoodWood Pellets Propane Fuel Oil Natural Gas Electricity

USED OIL GOOD

ALTERNATIVE FOR BTU’S

AVAILABILITY PRICE INCREASE TRANSPORTING

AND STORAGE ISSUES

#5 Waste Oil Example

In-House Collapsible Nylon Duct

Outside Furnace And Oil Tank

Duct Delivery Air Pattern

•Smoke Pattern Shows Excellent Air Mixing •Uniform Temp Side To Side & End To End

Floor To Ceiling Temp Difference 2-3 Degrees

PELCO BOILER VERSATILE

FUELS BTU RATING IS

HIGH HEAT WATER PLUMBING STORAGE &

DELIVERY RUNNING TESTS

Alternative Energy Furnaces

Corn Litter & Coal

Coal & Ground Tires

Many Recipes

Low EmissionsLow Smoke

OpacityFlow/Augering Issues

SHORT TERM ANSWER INSULATE WALLS TIGHTEN UP HOUSES MAKE HOUSE MORE

EFFICIENT THERE IS NO “QUICK

FIX” SOLUTION

SPRAY FOAM INSULATION

Fairly New - R-7/Inch Of Thickness Dries Solid, Waterproof & Fireproof Seals & Insulates & Serves As Vapor

Barrier Extend Productive Life Of Older Houses Spray 1-1.5” On Walls, Touch-Up

Ridges, Dog House Ceilings, & Cracks Must Control Darkling Beetles

0.12-.13 SP Before 0.26-.27 SP After

Spray Foam Test – 12 House Farm

Per House Test Results

11/05-5/06 - 4 Flocks (Avg. of 7 Flocks/Yr) Livability Improvement = 1.18% FC Improvement = .0559 [1.8304 -1.8863] Avg Wt Increase = 0.24 [3.84 v 3.60] (~2

Days) ADG Increase = .0043 [0.0976 v 0.0933] Avg Live Cost Decrease = .0090 [.2281

v .2371] Reduced Energy Cost = $665 Production Increase Value (@$.05)= $1,188 Improved Profitability = $1,853* Better Ranking & Settlement

LIGHTNING PROTECTION & GROUNDING HUNDREDS TO

CHOOSE FROM RELIABILITY LOW COST GOOD SERVICE KNOWLEDGE OF

POULTRY ELECTRICAL

LOCATIONS OF LIGHTNING & SURGE PROTECTION x

DIRECT AND INDIRECT TRANSFER OF ENERGY

INDUCED TRANSFER

BROKEN OR NO CLAMP

WHAT IS A GROUND LOOP?-HOW TO PREVENT THEM

A GROUND LOOP IS CAUSED BY A VOLTAGE DIFFERENCE BETWEEN TWO OR MORE GROUNDING POINTS.

GROUND LOOPS ARE CAUSED BY LIGHTNING IN COMBINATION WITH BAD FARM WIRING AND GROUNDING

BACK DOOR DAMAGE

GROUND POTENTIAL SURGE CREATE TRANSIENT OR GROUND LOOPS

LIGHTNING-CREATES BIG DIFFERENCE IN POTENTIAL

IF WE HAD NO NETWORKS WOULD GROUND LOOPS BE A PROBLEM

SINGLE POINT GROUNDING

MULTIPLE GROUND RODS

ALL TIE TO CENTRAL LOCATION

LOOKING FOR EQUILIBRIUM & CONTINUITY!!

4-WIRE SERVICES x

UFER GROUNDS LOW RESISTANCE

ADDITION TO POOR GROUNDING

EFFECTIVE IN BRINGING OHMS TO BELOW 25

5/8” REBAR x 20’ SURROUNDED BY 2” CONCRETE & 12 BELOW GRADE

OUR PROGRAM

JIM DONALD 228 CORLEY BLDG.

AUBURN UNIV., AL 36849 JIMDONALD@ACES.EDU

JESS CAMPBELL 215 CORLEY BLDG.

AUBURN UNIV., AL 36849 JESSCAMP@ACES.EDU

EDUCATE = POULTRY INDUSTRY

EDUCATIONAL MATERIALS

QUESTIONS?