Growers Explain Injustices in Poultry Industry

Tomorrow, in Huntsville, AL, the United States Department of Agriculture and the Department of Justice will hold their second hearing on concentration and competition in agriculture. The topic, this time around, is issues in the poultry industry.

This afternoon, at a press conference sponsored by the Campaign for Contract Agriculture Reform, poultry growers explained the injustices they face. Some of these growers will be testifying at the hearings tomorrow. Many more growers are attending just to show support, or to speak during the public comment period. Every grower at these events is taking a personal risk to be there. As Kay Doby, former Pilgrims Pride contract poultry grower and former President of the North Carolina Contract Poultry Growers Association, explained:

[An] ugly reality in poultry is that growers are often intimidated by company personnel.  Growers that are here today know they are taking a big risk by being here and especially speaking about how things are done in the contract poultry business.  I had a grower tell me that he was complaining to company personnel about the quality of chicks he received and the answer he got was, “You know you should just be glad you got a job.”

RAFI has been working with contract poultry growers since our beginning, fighting with them for fair conditions and fair contracts. These hearings are a historic step in that fight. The Administration is listening, and growers are stepping up to make their demands heard.

As Andy Stone, Tyson contract poultry grower and board member of the Mississippi Agriculture Producers Association, said:

“The situation in contract poultry growing is out of control.  The companies have so much power that growers always end up at a disadvantage. It’s time for the government to step up and rein in these companies so that growers are treated more fairly. That’s why the hearing tomorrow is so important.”

Today’s press conference provided an overview of some of the things that will be covered at tomorrow’s hearing. The growers described the insecurity that they face:

“When I started growing chickens in 1995, I bought land and moved sixty miles from where I grew up. I moved to the broiler capital of our state. I did this, thinking that if I had a reason to switch from one integrator to another, I could. After a few months into the business I realized that the integrators have an unwritten pact with their “sister” integrators – “You don’t take our growers, and we won’t take your growers.”… This insecurity hangs over my head each day that I grow chickens. You might could argue this and say, “No one’s job is secure in today’s economic environment.” But the situation is not the same. Their job is a job. Mine is a job with a huge debt attached to it. -Andy Stone

When I retired from teaching in 1993 and built two 500-foot chicken houses I signed a contract for the 10-year length of the loan for the houses.  A few years into it the company brought out another version of the contract and said I needed to sign it to continue to get chickens.  A year later they produced yet another version with only a one-year guarantee.  You think, well that is OK because they will bring you another one next year.  Well they did bring me another one and that one was a flock to flock contract.  So basically I was thousands of dollars in debt with no job security.  Growers enter in this business with a long term commitment – of debt – but the companies do not commit to us for longer than the 6 to 8 weeks it takes to raise a flock. – Kay Doby

Growers talked about the expensive upgrades they are forced to make to their chicken houses:

Growers are asked to do expensive upgrades on the houses before the first loan for building them is paid off.  I know because I was one of those growers. The threat is put before you if you do not do this they will not bring you any more chickens to grow. This is extortion plain and simple.  It is a fact that there is nothing else you can grow in these specialized houses that will generate enough money to pay the loan payments… Companies will tell growers that with these upgrades they will be set for life to grow for them.  Growers that have made these mandatory upgrades in order to keep growing birds are now finding themselves in financial trouble.  Many have to go get a public job to keep from going under. Some are refinancing the loans for a longer period in order to make payments and have some income to live on. Ten and fifteen year poultry house loans are turning into 30 year loans, with no more than a flock to flock payment guarantee. -Kay Doby

Growers talked about the payment system that allows anti-competitive practices. Growers are paid based on a ranking system. Growers who produce a better bird-to-feed ratio are paid more. However, the things that determine that ratio – the quality of feed, the health of the chicks, how old the birds are when the are picked up, how long the birds wait on the truck before being weighed – are out of the grower’s control.

This system is controlled by the company and by its unequal inputs.  It is a system that is unfair in every way, because the lack of transparency gives the company the ability to terminate or penalize growers based on false claims of poor performance that are in fact out of the growers control, and the information to challenge the claim is completely shielded by the company. I understand why the company finds this system attractive. But what I don’t understand is why our federal government allows it to continue. -Kay Doby

Today was about farmers sharing their stories. The policies and payment systems being discussed in Alabama have real impacts on farm families around the country. Mike Weaver, Pilgrim’s Pride contract poultry grower and President of the Contract Poultry Growers Association of the Virginias, explained:

Many growers have already filed, or are on the brink of, bankruptcy due to insufficient increases by the processors in an amount that will allows us to pay our bills.  Growers have trusted companies to treat us fairly and keep us profitable at least through the life of our mortgage loans so we won’t lose our farms and homes.

Kay Doby told reporters:

If you listen carefully you will hear a recurring theme from all growers of how they are working for a system that is unfair.  A system that promises job security in the beginning, but then immediately takes away that security in the form of a contract that is one sided and can be changed or taken away after the grower has borrowed hundreds of thousands of dollars to build poultry houses to a certain company’s specs. This system takes hard working farmers and makes them indentured servants on their own land… Farmers who own land that is often passed down through generations should not be indentured servants to poultry companies.  This was not the way it started in the beginning.  Growers were treated fairly and made a good life for themselves and their families.  The small poultry companies were bought and sold, and the conscience and soul of the small companies were lost in those transactions.  The growers are the losers. Because the power of the poultry companies is so extreme, and the lack of competition in the poultry market so severe, we need the federal government to take action to restore fairness for contract poultry growers.

There are things the Department of Justice and the USDA can do right away to make things better. There are some things that Congress has to do as well.  These proposed changes will  be discussed tomorrow, with Attorney General Holder and USDA Secretary of Agriculture Tom Vilsack listening.


UPDATE: 5/21/10

Here is some of the news coverage:

Poultry farmers want government-mandated reform, The Huntsville Times

Poultry growers call on government for reform, The Huntsville Times

Poultry growers in the U.S. want processors to pay more, groups say, Bloomberg BusinessWeek

Farmers tell feds poultry companies control themAssociated Press (with coverage on ABCForbes,

Chicken farmers describe a system of extortion and economic slavery,Huffington Post

Attorney General Eric Holder talks poultry at Alabama A&T, WHNT 19 News

Huge panel puts poultry industry in the spotlight, WAAY TV

DOJ hears from poultry farmers in AlabamaMain Justice

US Attorney General says agriculture issues “a top priority,” The Huntsville Times

Photos from The Huntsville Times

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