CLINTON, Ky. - As banker Robert F. Williams strides through Dorrill Berry's 28,000-bird chicken house, clucking poultry part like the Red Sea before him.
The four-week-old chickens squawk, scamper, and peck at feed from red bins lining the floors of the 40-by-516-foot building they call home from the time they are brought in as tiny chicks until six weeks later, when they're hauled off to be "processed."
And Mr. Williams' rural bank is partly responsible for every one of them.
The chicken business in this sparsely populated corner of Kentucky is being driven by a giant poultry corporation - Seaboard Farms, a large poultry and pork producer that opened a chicken processing plant in nearby Mayfield in 1990.
But small-town bankers like Mr. Williams are carving up the business for themselves. Here, instead of being sized out of agribusiness, community banks are an integral part of it.
"It has given us a product that generates income (for farmers) that we did not have before," said Mr. Williams, executive vice president of $35 million-asset Clinton Bank. "We're a community bank, and we're big on family farms. The smaller farmer is getting squeezed. He needs another source of income."
In five years, this part of western Kentucky has gone from virtually no chickens to 417 broiler houses operated by 156 farmers. Seaboard chickens are in nine counties in Kentucky and two in nearby Tennessee. These fowl generally end up on the menus of restaurants like Kentucky Fried Chicken and Popeye's Famous Fried Chicken.
When Seaboard targeted the area in the late 1980s, lack of poultry knowledge among both farmers and lenders initially made banks uncertain about financing the business.
"I think every lender to some extent was a little skeptical," said Mr. Williams, whose bank now has about $1.75 million in poultry-related loans. "There basically was no track record."
However, area lenders credit Seaboard for educating them about the industry. Bankers also investigated the niche on their own, talking with counterparts in areas that already financed the business.
Small commercial banks were the first lenders to get involved in financing chicken houses for the Mayfield plant, said Chris Maynord, general manager of Seaboard Farms of Kentucky.
"With our commercial lenders, it's been a good partnership," he said.
Other lenders such as Farm Credit entities became more involved during an expansion in 1993, he said.
In the contract business, the processor signs farmers to a contract - in this case, for eight years - and pays farmers per pound of birds they send to be processed.
Seaboard supplies the chickens, feed, and medication, and it offers support staff. Producers provide the land, buildings, labor, equipment, and utilities. Community banks provide the construction and operating loans to the producers.
A chicken house costs about $100,000 to build. Most participating farmers in western Kentucky have put up a pair of them during two expansions, financing nearly all their costs. The 10-year loans are nearly all guaranteed by the Small Business Administration or the Rural Housing and Community Development agency, formerly the Farmers Home Administration.
"For a young person today to get into farming is very tough," said Bruce Kimbell, vice president of $35 million-asset First National Bank of Clinton, which has about $4 million in poultry loans. "This was a way for a young producer or someone who could not expand."
Chickens have added diversity to an area where agriculture previously was limited mainly to corn, soybeans, and wheat, as cattle operations dwindled in recent years.
For example, Mr. Berry's farm, Chicks R Us, has four broiler houses, all under contract with Seaboard. He once grew only crops, but he got into the chicken business in 1991.
"I needed something to supplement my income," he said.
In today's health-conscious society, poultry is big business. U.S. chicken consumption has increased 35% since 1985, according to the National Broiler Council.
"Consumers tell us they're buying more chicken for health reasons," said William Roenigk, the council's senior vice president. Their meat also is a good value, he said.
As a result, annual chicken output continues to climb. "To meet that increased production, we're going to need more plants and more houses to produce the pounds of chicken that we need," Mr. Roenigk said.
"In my mind, there is not the risk in the poultry business that there is in farming," said Mr. Williams, who has been at Clinton Bank more than 25 years.
Largely, that's because farmers know they have a market and a price for the chickens they raise. Where they can get into trouble is if large numbers of birds die - as many have nationwide in this summer's sweltering heat - and they deliver fewer pounds to the processor.
Still, that's different from a once-a-year crop. A market cycle is six weeks, with cleanup time in between. Even "if I have a total wipeout, I'm in a whole new ballgame in six or eight weeks," said Ricky Deweese, a customer of Mr. Kimbell at First National of Clinton who operates four houses.
Also, lenders know that Seaboard is behind the producers. "You're lending to Seaboard to a point because the producer is just a contract grower," said Mr. Kimbell, who spent six years with the Farm Credit System before joining First National in 1989.
Thus, in evaluating chicken house credits, lenders can focus on the individual manager. "The thing you always look at is the person," Mr. Williams said. "It seems a fellow would almost have to make an effort to go under in it."
Though Seaboard would not comment on growth plans, Clinton's bankers hope to snare additional chicken loans from an anticipated expansion by Tyson Foods in Tennessee.
"We feel very comfortable with our poultry portfolio," Mr. Kimbell said. "We're looking to be aggressive with Tyson."
First National already is running ads in local newspapers seeking new business: "Attention Future Tyson Growers! First National Bank of Clinton plans to participate in financing farm facilities for Tyson growers."