Studies have shown chickens fed DE have an increase the amount of eggs, decreases the mortality rate, keeps mites away, helps to dry up droppings, helps with flies and decrease worm loads in the GI tract. It also found that hens fed DE in their diets laid eggs with more albumin and yolk . I also love that my hens are getting the valuable trace minerals. In the feed, it keeps insects from spoiling the feed too.
In the newly cleaned coop I sprinkle it into the corners, edges, in the nesting boxes and onto the floor prior to adding a fresh new layer of bedding. We never have had a pest problem inside the coop and we live in a very wooded area! This product as been a terrific addition to my backyard chicken experience. I love that something easy and natural is so beneficial.
As a word of precaution, DE should only be used in well ventilated areas and should be avoided getting it into your eyes, nose and throat. As you research DE, you will surely come across literature that discusses the health risks associated with accidental inhalation. The condition is called Silicosis. Silicosis is a medical condition of the lung that occurs with regular repeated inhalation over a period of many years. Silicosis can also be caused from the use of sand (silica dust) in the coop and run. So please take precautions when using sand or DE.
Update 6/11/2013: Please click here to read an article that I wrote for Community Chickens on DE- chock full of even more information, including precautions that you should take if using DE with your flock.
Poult Sci. 2011 Jul;90(7):1416-26. doi: 10.3382/ps.2010-01256.
Effect of diatomaceous earth on parasite load, egg production, and egg quality of free-range organic laying hens. Bennett DC1, Yee A, Rhee YJ, Cheng KM.
RESULTS OF THE USE OF CODEX FOOD-GRADE DIATOMACEOUS EARTH WITH POULTRY, C.S. Mangen, DVM, San Diego, California