The state Department of Health said a strain of salmonella that's infected more than 300 people in 37 states was found in a duck pen at Privett Hatchery in Portales.
No deaths have been reported, but 51 people have been hospitalized, according to the Centers for Disease Control and Prevention. Children ages 10 and younger account for nearly three-fifths of those who've become ill.
People buy baby chickens and other poultry to keep as pets and to raise the birds for eggs or meat.
Paul Ettestad, state public health veterinarian, said the hatchery was most likely the source of the outbreak. However, he said questions remain because federal officials have found that the people sickened with salmonella had purchased baby poultry at 113 feed store locations that were supplied by 18 mail order hatcheries in several states.
The CDC said more testing is ongoing.
Privett Hatchery said in a statement on its web site that it's cooperating with state and federal officials, and that some of the salmonella cases may be linked to its operation.
The department said the hatchery has agreed not to sell any poultry from the pen where the salmonella strain was found, will administer a vaccine to its birds and include a brochure on the safe handling of baby poultry in all of its shipments.
According to the CDC, the salmonella cases have occurred across the country - from California to New York - since March. Colorado has reported the most cases, 37, followed by Texas with 32.
Salmonella infections can happen when baby chicks are brought inside a home and children handle them. People should thoroughly wash their hands after touching live poultry or anything in the area where they roam, the department said.