A few companies—such as Tyson and Perdue— almost all control American poultry production. They will soon join a retailer known for chicken sales rather than chicken production: Costco. The warehouse retailer is now building a farm-to-table production system to ensure a stable supply of barbecue chickens.

The operations center is currently being constructed on the south side of Fremont, a city in eastern Nebraska, with a population of approximately 26,000. As workers line up concrete walls and steel beams for processing plants, hatcheries and feed plants, cement trucks come and go. Approximately 100 new chicken farms in the area will sign contracts to raise these birds.

The concrete shell of the new chicken processing plant is being constructed on the south side of Fremont, Nebraska. This city with a population of approximately 26,000 is no stranger to the meat packaging business: the Hormel pork processing plant is located across the road. Fred Knapp/NET Nebraska hide caption

The concrete shell of the new chicken processing plant is being constructed on the south side of Fremont, Nebraska. This city with a population of approximately 26,000 is no stranger to the meat packaging business: the Hormel pork processing plant is located across the road.

When it reaches full capacity, the factory will process more than 2 million chickens every week. Some will turn into roast chicken, and some will be sold as parts.

“All of our barns in Nebraska and Iowa will collectively meet about 40% of Costco’s needs,” said Jessica Kolterman, a spokesperson for Lincoln Premium Poultry. Founded by Costco, responsible for the construction and management of the project. "This will roughly cover the western half of the United States, Alaska and Hawaii."

According to Kolterman, Costco sells approximately 60 million roast chickens each year. Establishing a system to store their own stores is a way for companies to better manage supply and costs, especially because poultry companies tend to no longer raise whole chickens.

Will Sawyer, a meat industry economist at Denver-based farm lender CoBank, said chicken producers are growing larger chickens for partial sales. "The vast majority are processed into chicken breasts or legs or thighs, or they are further processed into strips or chicken nuggets," Sawyer said. "This is how the industry has developed for more than 50 years."

Larger chickens are suitable for parts, but not suitable for rotisserie. With its own farm system, Costco will be able to ensure that there are enough chickens for sale in its rotisserie. Setting up the system in Nebraska will help keep the price at $4.99 because of the abundant supply of corn for chicken feed.

Sawyer said that other chain stores such as Wal-Mart are also supplying some of their own milk, but none of them is completely vertical to meat production like this. From the top down, Costco will control supply and demand, which makes some farmers worry that the company will have too much control. Large chicken companies are accused of charging customers excessively through pricing and manipulating farm contracts to punish growers who sign the contracts.

John Hansen, chairman of the Nebraska Farmers Union, said: "Costco is here. Although they have a good reputation as a corporate citizen, they are ultimately poultry contracts."

Costco will offer 15-year contracts to 100 to 125 potential growers. The number of chickens will vary, but a typical farm with four barns can raise nearly 200,000 chickens at a time. Critics have expressed concern about the odor and water pollution that these facilities may produce.

But Hansen said that farmers are taking financial risks. They will be responsible for funding and building new chicken coops, which may cost $1 million or more. If Costco decides to cut production, farmers may face empty barns and huge debts. "If you don't have birds, what would you do with a birdhouse that is a one-off building in most cases?" Han Sen asked.

Although the contract requires a large amount of investment in advance, Lincoln Premium said that enough farmers have expressed interest in signing the contract. The agricultural economy here is struggling, and many grain farmers believe that it is worthwhile to switch to raising chickens in order to obtain new income.

Marshall Lutjens's farm near Columbus, Nebraska, is considering signing a contract to raise chickens for Costco. His girlfriend Tatem Vance supported him and encouraged him to sign up. Fred Knapp/NET Nebraska hide caption

Marshall Lutjens's farm near Columbus, Nebraska, is considering signing a contract to raise chickens for Costco. His girlfriend Tatem Vance supported him and encouraged him to sign up.

"My biggest question is, if something goes wrong with the company, who will fill the barn? Because you invested a lot of money in the barn," said Marshall Lutjens, a young farmer from Columbus, Nebraska. ) Say. A recent open day celebrated the first chicken house built for the Costco project. "The only other thing I thought of was (raising) pigs because there are more companies," Lutjens said.

If anything happens to Costco, there is really no other poultry company around to buy chickens, but Lutjens is optimistic. "After today, I think I might receive a tip," Lutjens said. His girlfriend Tatem Vance encouraged him to "say yes."

For the farmers who signed up to raise chickens for Costco, I hope the members of the store will always desire more.

This story comes from Harvest Public Media, a reporting cooperative agency focused on food and agriculture.

Fred Knapp contributed to this report.

In the previous online version of this story, we ignored that some chickens processed at the Costco factory will be sold as parts, while others will be sold as roast chickens.