Fowl play: the chicken farmers being bullied by big poultry

Back in 2001, Alton Terry, his wife and two young children were living in San Jose, California, but they dreamed of a quieter, more rural life. Terry’s grandparents had been farmers, and that inspired him to move his family to Shelbyville, Tennessee, to start a chicken farm.

Like the majority of chicken farmers in the US, Terry entered into an exclusive contract with a big producer, Tyson Foods. “The first couple of years we didn’t have any problems,” said Terry, “but then Tyson started asking us to put in extra equipment that we had to pay for.”

Terry had taken out a $500,000 loan to build the chicken houses on his farm, and he wasn’t willing to fork out more money for equipment that he said wasn’t necessary, including extra feed bins and upgrades to the chicken houses.

“If we are independent contractors, then why does the company have the right to tell us what equipment to use?” said Terry. “We were independent in name only when it benefited the company.”

Terry claims Tyson retaliated by giving him sick chicks. In 2005, Tyson didn’t renew Terry’s contract. Finding another big customer was difficult because Tyson was the only chicken company in the area.

Terry sued Tyson in 2008, alleging the company canceled his contract because he rallied farmers in the area to lodge complaints about the company with their congressional representatives and the US Department of Agriculture (USDA); he said Tyson mistreated him with tactics such as weighing his birds incorrectly while not allowing him to watch the weigh-in, a violation of USDA rules.

He lost the case in 2010 after a federal judge declared that the law required him to show that Tyson’s actions had crippled competition for the entire poultry industry, not just him. The court ordered Terry to pay Tyson nearly $30,000 in legal fees. He was forced to declare bankruptcy.

“We lost the farm, our house, our horses and our dogs,” said Terry, who now works as a handyman and carpenter.

Seven years later, a set of federal rules has emerged that aims to strengthen protection for farmers. But the new rules, drawn up in the final days of the Obama administration, are in limbo. The Trump administration suspended the enactment of any new federal rules for two months after inauguration, and just last week, the USDA announced that the new rules would remain on hold for another six months.

The new rules – a culmination of decades of effort by farmers and their advocates – would no longer require farmers to prove harm to competition within the industry owned largely by a handful of producers. The four largest chicken producers in the country, which include Tyson Foods and Pilgrim’s Pride, control more than half of the chicken market and 57% of the turkey market, according to the USDA.

“It’s really a story of unchecked corporate concentration,” said Sally Lee, who works at family farmer advocacy nonprofit Rural Advancement Foundation International-USA and co-director of Under Contract, a documentary about farmers who suffered severe financial losses and emotional toll from what they said was unfair treatment by big chicken producers. “There are a few companies that control the market so they can exercise extreme power over farmers trying to work with them.”

Clawing for control

More than 97% of chicken farmers in the US work under contract with a big producer. A farmer can choose to work independently and sell chickens to a company for processing or directly to retailers and consumers, but these farmers are at an “extreme disadvantage,” said Lee, since most chicken processing plants are owned by producers.

The contract system offers chicken producers a consistent supply of products and guarantees a market for farmers, said Susan Schneider, director of the master’s program in agricultural and food law at the University of Arkansas school of law.

Starting a chicken farm isn’t cheap – one chicken house averages $250,000, and four houses are recommended to achieve a basic level of income. The startup cost sometimes requires farmers to mortgage their farms, Schneider said.

“Any objective legal analysis would find the typical poultry contract to be one-sided by design,” added Schneider.

Farmers also often find there are additional mandates – such as upgrading a chicken house – that weren’t included in the original contract. Investing in those changes could require farmers to take out new loans, and they often feel forced to comply or lose their only customer.

“The relationship between company and contract farmer has changed dramatically over time, to the point that the farmers are treated as employees in many ways, without receiving any of the benefits, yet retaining all the obligations and risk that independent contractors have,” Lee said.

Mike Weaver, a poultry farmer in West Virginia, said his base pay hasn’t changed since he entered the business in 2001.

“As long as they keep us in debt we have to keep raising their chickens. They don’t want farmers to pay off their farms,” Weaver said.

Worth Sparkman, a spokesperson for Tyson Foods, said the contract system is transparent and offers long-term stability to farmers.

“Our average contract farmer has been raising chickens for us for 15 years [and] the compensation we provide is set out clearly in contracts the farmers voluntarily enter into,” said Sparkman. “The farmers are free to discuss the terms of their contracts with whomever they want, including other farmers, and are also free to switch to other chicken processors who operate in their area.”

Unfair advantage?

Producers exert their influence in other ways, too. They supply farmers with baby chicks, feed and medication. A farmer typically has five weeks to raise them, after which the chickens are collected and weighed at a processing plant.

The farmers are paid according to a so-called “tournament system” that pits farmers against each other. The farmer that produces the most amount of meat with the least amount of feed comes out on top. A less efficient farmer will have money deducted from his base pay; that money is then be used to pay the farmers that produced more meat.

The problem, say the farmers, is that winning or losing is beyond their control. For example, they must take the chicks supplied by their producers and are out of luck if they receive a large number of unhealthy chicks.

“They say that if you work harder, you’ll do better, but that’s a lie,” said Weaver. “If you don’t get good chicks and feed from them, there’s no way you can make a good chicken out of it.”

The poultry industry says the tournament system is fair and ensures that the welfare of the chickens comes first.

“The performance-based contract structure of modern poultry production was instinctively designed to put the well-being of the birds as the top priority, as incentives are given to farmers who raise the healthiest birds, take risks and work hard,” said Tom Super, a spokesperson for the National Chicken Council, a trade association. “It incentivizes farmers to do their best, to compete, just like every other business in America or any other free market.”

The new federal rules, opposed by lobbyists for the poultry industry, included criteria for ensuring a fair tournament system.

It’s unclear whether the rules will take effect under the current administration. Republican members of Congress have generally opposed any effort to provide greater contract protections for poultry growers, said Schneider, and she doesn’t see that changing.

“The Republican-controlled Congress has restricted USDA’s efforts in the past, and I assume that this will carry over to the new Republican administration,” said Schneider. “If so, I think that it is very likely that the new rules will be withdrawn, amended, or simply not enforced.”

But Weaver said he and other farmers are optimistic that Trump will act in their best interests, since they helped him get elected.

“He claimed he’s going to stand up for the little guy, that’s why the farmers came out and voted for him and got him into office,” said Weaver. “These multinational corporations have had way too much power over farming for too long.”