The Jamaica Broilers Group (JBG) has entered an agreement to sell the assets of its Iowa, USA, hatchery for US$23 million, in a move that’s expected to drive down costs and eventually lead to a simpler logistics process.

The Iowa Hatchery is one of six facilities operated by the JBG in the United States, its second largest market behind Jamaica, in which it primarily deals in fertile hatching eggs and chicken meat sold under the Best Dressed Chicken brand.

Aside from the Iowa Hatchery, JBG operates another hatchery in Pennsylvania, a feed mill in Georgia and the Best Dressed Chicken processing plant in South Carolina and breeder flocks in Georgia and Arkansas primarily.

The dispersed operations, however, make for a challenging workflow.

“In Jamaica, JBG has its hatchery, feed mill, processing plant in the parish of St Catherine. Additionally, most of our farmers are also in the parish of St Catherine. And so you will realise that there is a cluster of activity in a small geographic area. In the US, it’s the contrast,” JBG’s Vice-President of Finance and Corporate Planning Ian Parsard told the Jamaica Observer.

He added that the issue is compounded by logistics costs and complications with securing drivers to haul the goods.

“That has really resulted in the cost of moving goods to go up significantly, so we are exploring consolidating the integrated operation more around the vicinity of the processing plant in South Carolina,” he said.

“Instead of hauling eggs from Arkansas to Iowa, for example, and hauling chicks from Iowa to South Carolina, we could look at setting up a hatchery or a feed mill in South Carolina. Everything would be in a tight geographical area,” Parsard added.

He said the pending transaction will allow JBG to shave off between US$1 million to US$1.5 million in operation costs annually.

The Iowa facility and the assets were purchased in March 2016 from Welp Inc and were held through the JBG’s subsidiary, International Poultry Breeders Hatcheries, Inc. JBG is at an advanced stage for the sale of the facility’s assets, but the business itself will remain under the ownership of JBG.

“It means that we still have an ongoing relationship with the new owners of the assets. We are a significant producer of fertile hatching eggs and so they will continue to purchase fertile eggs from us to run through the hatchery,” Parsard said.

The poultry producer may also explore contract hatching services with the new asset owner until its ready to make its next move. Effectively, the assets sale is expected to have little to no impact on the runnings of JBG’s US business.

Business in the US continues to grow for the JBG. Over the nine-month period up to January 2024, JBG reported segment results of $2.9 billion for the US operation, compared to $2.7 billion for the prior year. Business in Jamaica also grew to $5.9 billion against $5.49 billion over the prior year.

Meanwhile, group earnings sank to $1.29 billion for the quarter up to January compared to $1.48 billion over the prior year.