Most people play this tune in D. A lot of flat-pickers might play out of C shape with the capo at the third fret, but if you take off the capo you open up new melodic opportunities. The main one we'll take advantage of here is hammering on from open D to the fourth fret. Normally this would require some cross-picking out of C shape, but now we can get a more accurate melody without the extra picking by using hammer-ons. Remember to check out the lick switcher to find some new and interesting variations of The Chicken Reel.
