Turkey Farm for Sale in Kentucky
Happy Thanksgiving for those of you in the US!
This week’s deal is a turkey/poultry farm located in rural Kentucky:
https://www.landandfarm.com/property/150_Acres_in_Hopkins_County-10765111/
We spent some time this week looking at the listings for poultry farms for sale.
This one stood out as being larger than most of the others.
The listing claims “income” of $1.2mm annually. Assuming that’s actual net income, an approximate 20% unlevered yield on purchase price wouldn’t be too shabby.
Unfortunately, this one, like every listing we saw talks about being under contract to Tyson foods as their sole customer. So, much like Fedex routes or Amazon contract driving, you have negligible pricing power and are at the whim of your sole customer.
Heads they win, tails you lose.
This also looks like a hard business vis-a-vis cash flow, remoteness from much of any civilization at all, and high capital expenditure requirements.
Other than all that, the deal looks great! :-)
How could we make it work? Given our problem is on the customer side, could we fix that? Perhaps by rolling up enough of these farms to get leverage on Tyson or another buyer?
Our gut is that play is way too far gone to make work. Tyson and its other brethren are just too powerful both economically and legislatively.
Enjoy your holiday!
Zack and Michael