Chickens being fed

Blog | April 22, 2016

Capitol Hill Quackery: Congress Attacks Poultry Growers (again)

by Alicia Harvie

In the long, twisted battle that is the fight for fairness for America’s poultry growers, there have been many opportunities for anger and tears, and far fewer for celebration.

This week only offered anger. For the umpteenth time, the House Appropriations Committee, which is tasked with authorizing the budget for our federal government, decided to push a sneaky “rider” into the budget process that would block the US Department of Agriculture (USDA) from issuing protections for poultry growers under contract with large companies like Tyson, Perdue and Pilgrim’s Pride.

We’ve spoken about this many times, most notably last year when Last Week Tonight with John Oliver covered the issue and when Farm Aid President Willie Nelson teamed up with Representative Marcy Kaptur to pen an op-ed about the battle in the Washington Post.

Our chicken comes with a hefty price for growers who are kept under the thumb of a powerful poultry industry.

In the U.S., 97% of our chickens are produced on contract farms, in a system completely rigged in favor of large corporate processors. Most poultry growers are required to take on massive amounts of debt to secure a contract, only to be left at the company’s mercy as they try to pay back their loans, often facing unfair market conditions, abusive practices and retaliation for speaking out in the process. See the following video of poultry growers who spoke out in 2010 about these conditions before the Department of Justice and USDA:

After a decades-long push to reform this system, the USDA, which is responsible for enforcing fair competition in agriculture and protecting the rights of farmers and ranchers, put more teeth into their rules and regulations in 2012, issuing what has been called the “GIPSA rules.” Since then, corporate lobbyists for the poultry industry turned to Congress, getting a series of amendments passed to defund, block or rescind the rules USDA issued. But last year was a turning point. After the increased press this issue received, corporate lobbyists stopped squawking and the USDA was finally free to get its work done.

But it ain’t over ‘til it’s over.

After hearing that the USDA intended to finish the process, Representative Harris (R-MD) and others, working on behalf of outfits like the National Chicken Council, pushed another rider. This time it barely squeaked by in a 26-24 vote, when a Representative changed his vote at the last second. That right there is a sign that folks are getting wise to the antics the poultry industry has been accustomed to enjoying with impunity. In fact, the National Farmers Union and many of Farm Aid’s closest partners have come out against the rider and it seems the USDA is still intent on finishing their rules to protect growers and level the playing field for farmers and ranchers in the increasingly consolidated and corporate-dominated marketplace.

Three Big Lies

Here we lay out the three biggest lies told at this week’s House session about the poultry industry.

Watching the session, I was struck by the infuriating lies spewed from the pro-industry camp. I mean, there were some doozies. Here are the ones that take the cake and what we have to say about them (with the help of some of our poultry farmer friends*).

You can watch highlights from the session, edited by our partner the Rural Advancement Foundation International – USA below, or watch the full 15-minute discussion here.

Lie 1: The tournament system is what keeps our poultry system the most efficient in the world.

Silly us. What were we thinking, saying there’s something wrong with this incredibly uncompetitive and corporate-dominated industry? An industry that literally pits farmers against one another with no transparency about the prices they’re being paid? Let’s just put aside that loaded word “efficiency” (in our experience, its often used as an excuse to push down prices to farmers and externalize costs like pollution, decreased property values, lower wages, etc.). Let’s see what growers have to say about the tournament system:

“[Representative Andy] Harris claims without a “tournament contract,” pitting grower against grower, there is no incentive for a grower to provide good animal husbandry, which in return reduces production efficiency. This is very far from true. There are poultry companies paying their growers on a square footage basis… The growers then compete against a company average for additional bonus money above their square footage pay. The growers… are able to budget their money, they know there will definitely be a hard number they can depend on as income. With a “tournament contract,” there is only one thing you can depend upon, and that is your pay can fluctuate several thousand dollars between flocks due to no fault of the grower.” – Reid Phifer, turkey and broiler grower

“Those who cheerlead the tournament system the loudest are those who don’t get paid through such a system. If it breeds efficiency as advertised the poultry companies should pay associates in the same manner. The reality is you can’t keep employees when you randomize their paychecks, but a farmer with a contract of adhesion you can.” – Craig Watts, former contract poultry producer

Lie 2: “There’s a waiting list of 2,000 for people who want to become chicken growers under the tournament system.”

Frankly, we have no idea where this number comes from and have yet to see a report corroborating it. Regardless of the number of farmers who may be on a waiting list, of which there surely are some, what’s more important is that this paints a very disingenuous picture of the industry. The implication is that the poultry industry is awesome and it totally rocks to be a poultry grower under contract and people can’t wait to get in on it.

So I asked some of our farmer friends what they thought.

“Many people see this as a way to “being their own boss,” with the freedom of not working for someone else, but instead, working for themselves… Not only will you not be your own boss, but instead pay to take orders from an overpowering company. The contracts these people are supposedly standing in line to sign will not cash flow, and this is the reason companies such as Tyson are affording the grower what is known as “upfront” money. Tyson in our area is giving a new four house farm $20,000 per year for 10 years, in an effort to prove to the lender that the contract will cash flow.” – Reid Phifer, turkey and broiler grower

“Perdue came in, and they offered a steady pay check…You had to take a loan against your house and your farm and everything, and you had to put up family land and that was very scary…They tout them now, these contracts, as an investment. Not as a farming operation or a livelihood. They’re an investment. But the value of that investment goes down over time. You’re gonna keep a constant debt load. They know what you need to break even as time goes by and they’re gonna keep you as close to that break even point as they can.” – Genell Pridgen, former contract grower*

“Those folks obviously don’t understand the tournament system. If it was so good, all 40,000 current growers would be building new houses. The companies have all been begging for new houses for the past five years with few being built. That is mostly due to folks who may be contemplating building talking with current growers, most of whom would advise against it… They have lied to those 2,000 about how much they will make on their chickens. The latest prospectus for our area clearly indicates that they claim growers will make at least $30,000 more a year than reality indicates.” – Mike Weaver, President of the Contract Poultry Growers Association of the Virginias

This point about the cash flow is critical. In fact, the federal government offers loan guarantees of up to 90% to banks to issue loans for new poultry houses. That means the banks themselves have very little risk when they dole out a loan to a grower and that we taxpayers are basically buttressing up a crumbling system that doesn’t generate cash flow for farmers.

Lie 3: “94% of contracts are re-signed each year and of the remaining 6%, 3% just go to other growers. 94% are happy.”

This is just patently false. Poultry contracts are not re-signed on an annual basis. For the most part there is one contract that can be terminated at any time by the company, with the understanding that the grower is working “flock to flock.” Contract farmers raise the company-owned chicks and then they’re picked up by the company for processing several weeks later.

Again, the implication is that growers are content, so much so that the vast majority of them sign up to keep going every year. Let’s just put aside the fact that growers aren’t re-signing contracts – that’s not how the industry works – and consider why it is that a poultry grower may stay in a contract even if its not working out for them. Here are some perspectives from growers:

“Growers have no choice; they have everything they own tied up as collateral when structuring their loan to build houses. These contracts are the same ones that will not cash flow without the upfront money being offered by these mega production companies in an effort to get their chickens grown as cheaply as possible.” – Reid Phifer, turkey and broiler grower

“They’ll give someone a contract for 10 years on it. But…the first time they have to make an amendment to the contract, there’s no time on it anymore. You’re back to ‘flock to flock.’”– Mike Weaver*, President of the Contract Poultry Growers Association of the Virginias

“I am not aware of any poultry contract that is renewed on an annual basis. Contracts are mostly flock to flock…you sign one and it remains in effect until there is a change. I operated several years under one contract more than once.  This baseless statement makes everything sound warm and fuzzy, but is not accurate.” – Craig Watts, former contract poultry producer

“Some people may say ‘that’s the way life is.” [There’s] more to it than that. I understand that people go to the bank to buy property and call it home, and they feel like they are bound to the job that pays the bills. But you know what? You can quit that job and find another job and pay your bills. But once you get into this industry and you have a million dollars invested in a chicken farm, there’s not a lot of other things you can use a chicken farm for but to grow chicken.” – Eric Hedrick*, contract poultry producer

And for good measure, here are a few perspectives on how deceptive the industry can be in working with or recruiting folks into the industry.

“What should have been the first signal was when I signed that contract on the hood of the truck. 1994 is when I went from 2 houses to 4 houses and the expenses way more than doubled, but the money [in] didn’t double. That was my “Oh crap!” But then you’re knee-deep in it. You just have to try to make the best of it.” – Craig Watts*, former contract poultry producer

“We must remember, these companies are in the business to make money and keep their shareholders happy. They are not in the business to help anyone but themselves; helping growers is not part of their production equation. Growers are mere tools used to get their product into their processing plants as cheaply as possible. If this were not the case, they would own the grow-out houses themselves. They know and realize there can never be hired labor that will put for the same effort as a person having all their assets tied up in their family’s business.” – Reid Phifer, turkey and broiler grower

* These quotes are from interviews in Under Contract, an upcoming independent documentary film produced by the Rural Advancement Foundation International (RAFI) and is expected to be released in fall 2016.

The bottom line?

Our chicken comes with a hefty price for growers who are kept under the thumb of a powerful poultry industry. Many have suffered in silence for too long. They need you to stand up. We’re not giving up on this fight and we know you won’t either. At the moment, the USDA still intends to finish their rules. We’ll let you know when the moment strikes how you can help our poultry growers.

In the meantime, here’s a list of the Representatives who voted against farmers, courtesy of our friends at the National Sustainable Agriculture Coalition. Do you live in one of these Representatives’ districts? If so, perhaps you’d like to write a note telling them how you feel? Visit the House website to send a note that you’re deeply upset they voted against farmers:

anti_farmer_26_representatives

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