Davis Lee understands the challenges of the poultry industry. He raised chickens as a boy growing up in North Carolina in the ’40s and ’50s, and today one of his business ventures is the poultry processor AlaTrade Foods. He knows that, when the weather turns cold, you have keep your chickens warm or you’ll lose a lot of chickens — and your livelihood.
So, when Lee heard a chicken grower complaining about heating costs, the farmer’s plight hit close to home. Lee started thinking about the problem. Then he came up with a better way to heat chicken houses — better for the grower, better for the chickens and even better for the environment.
Now another one of Lee’s companies, Lee Energy Solutions, makes furnaces that heat poultry houses by burning wood pellets.
It all started five years ago. Lee had stopped by a convenience store near his Arab-area home. He was sitting in on the morning gathering of mostly retired men. A grower with four chicken houses told about taking $18, 000 out of his savings to pay for enough fuel to fill his propane tanks half full for each house.
“I knew it was a killer, ” Lee says. “At the time, the chicken business was not so good. Because of ethanol production, corn prices have gone higher, and 70 percent of chicken feed is corn, so he was losing money.”
Lee had been in the poultry industry for 50 years, so he knew the young man would not receive any assistance from the poultry integrators, the big chicken processing companies like Koch Foods, Tyson Foods, Perdue Farms and Pilgrim’s Pride.
“It just boiled on me. Here was this young man with a big problem and no solution in sight.”
That young man and his problem stayed in Lee’s mind even after he arrived at his office.
“When I got to work, one of my sons, who had been doing some international trading said, ‘Pops, what do you know about wood pellets? I’ve had some calls from Europe wanting to find wood pellets for their power plants.’ I told him, ‘Son, I don’t know anything about wood pellets.’”
Lee decided they should find out, so they attended a conference at Hilton Head, S.C. That’s where they learned about the Kyoto Protocol, an international agreement linked to the United Nations Framework Convention on Climate Change. Parties to the agreement, including the European Union, are committed to reducing greenhouse gas emissions. So, European countries have been converting their coal-burning power plants to a cleaner, wood-burning process.
Meanwhile, one of Lee’s salesmen returned from a sales trip with an interesting report. He’d seen corn-burning furnaces used to heat turkey houses farther north.
“I told him we don’t have enough corn in Alabama to eat, much less burn, ” Lee says. “But we have got lots of wood to burn, so I wondered if the heater could be converted.”
Lee contacted the heater’s manufacturer in Iowa and told him he wanted to reverse-engineer it to see if he could burn wood to heat chicken houses.
That’s exactly what Lee did.
But then Lee realized that, if the heater was successful, he’d need a steady supply of wood pellets to fuel it. That led him to build a pellet mill in the Crossville community of DeKalb County.
The shift from coal to wood has created a 20-million-ton market in Europe, says Ken Muehlenfeld, director of the Forest Products Development Center at AIDT (Alabama Industrial Development Training). He says the market is expected to grow, with old facilities being converted and new facilities under construction.
“They produce a lot of wood pellets there, ” he says, “but they don’t have the resources readily available to produce more. The power plants are not able to source with plants locally, so they are looking globally to fill the need.”
That’s good news for Lee Energy Solutions and other Alabama suppliers.
“The U.S. Southeast is the prime target, ” Muehlenfeld says, “because we grow a lot more wood than we’re using, and we have a good infrastructure to deliver to ports, load on ships and a politically stable currency, and all of those are good things. We are harvesting trees here, compressing them into pellets and shipping them across the ocean to supply power for the European grid.”
European governments demanded that their power producers convert from coal to wood, Muehlenfeld says, and they’ve provided the subsidies to make the conversion economically viable, spending hundreds of millions of dollars in the process.
“It creates another market for timber in this country, ” he says. “Timber land has lost a lot of pulp and paper industry.”
Lee says his company has also found a market in Europe, but providing pellets for chicken houses at home is his top priority. His solution for that young grower’s dilemma is not only good for the growers, it’s also good for the state’s economy, good for the environment and good for the chickens.
Poultry, Lee points out, is Alabama’s largest agricultural product with some 8, 000 chicken houses in the state. Propane heats 85 percent of those houses; the others use natural gas. He aims to supply enough pellets to replace the BTUs using propane.
“I had done all the math on how many pellets it would take to do it, ” Lee says. “I saw the real potential for an alternative heating source for chicken houses, but I knew it would depend on how much it would cost to convert the houses to wood-pellet burning, with a little propane for backup.”
Lee has calculated that the average poultry grower would see a 35- to 40-percent return on investment with a pellet-burning furnace. Each wood-pellet furnace, fully installed, costs $17, 000. He says that 35 tons of pellets for $180 a ton ($6, 300) replace 6, 500 gallons of propane at $1.50 per gallon ($9, 750).
Lee Energy Solutions has about 100 furnaces in the field now. So far, Lee says, the growers are satisfied and happy with them. To help growers get started, he says 90 percent financing is available.
Lee adds up the environmental tab, too.
Wood is carbon neutral, he points out, and using it instead of gas could reduce carbon emissions by 25, 000 tons per chicken house each year. Each chicken house uses 100 barrels of crude oil for the 6, 500 gallons of propane needed. If all 8, 000 chicken houses in the state switched to wood, that would be 2 million tons of carbon not released into the atmosphere.
“That’s 800, 000 gallons of crude oil that wouldn’t have to be bought!”
Lee also thinks on a nationwide scale.
“We are just under 100, 000 chicken houses in the U.S. It takes 100 barrels of oil to heat each one, with propane at $100 a barrel.” It adds up fast.
Lee considers the health of the chickens, too. The wood-pellet furnaces generate dry heat, instead of the wet heat that comes with propane. That means dryer conditions inside the chicken houses, which means a lower ammonia level, less smell and healthier chickens.
“We’ve done studies. Five days after a baby chick arrives, in a propane-heated house, you’ll see the chicks huddled around the brooders for warmth. In the one with wood furnaces, they’re running around everywhere.”
And that makes Davis Lee a happy businessman.
“To me, it’s the best project I’ve ever started, ” he says. “It not only benefits the poultry industry, but any large building — from automobile dealerships to furniture stores — any large area that needs heating.
“I love the pellet business almost as much as the poultry business because of the profit potential. But what this will do for the state and the country — that’s what is really important to me.”
Wendy Reeves is a freelance writer for Business Alabama. She lives in Huntsville.
text by Wendy Reeves • photos by Dennis Keim