I decided to make an egg farm by placing chickens inside a fenced area upon hoppers. After realizing that the chickens would try to stand on the grass edges of the fence I decided to put two high wooden blocks instead of fences. After spawning about 20 chickens the server began to use 20 to 60 percent of the processors and there was visible lag at set intervals. During the lag animals would stutter and blocks would take a moment to pop up when destroyed.

As soon as I killed the 20 chickens everything was fixed again and there were no problems.

To Recreate:

X = two high blocks like dirt or wood
O = Hopper connected downwards (Used as floor)
@ = A hopper connect downwards with two blocks on top of it to complete the "fenced" area
C = Chest
XXX
XOX
XOX
XOX
XOX
XOX
XOX
XOX
X@X
CC

Spawn chickens inside of the area and after 20 to 80 chickens the server should begin acting unhappy. I currently have 45 cows with no problem and I have had over 200 chickens before in the same chunk without server lag. My thought is that it has to do with a routine attempting to route the chickens but with no viable routes.