Contract Poultry Farming
By Carole Morison
Virtually all poultry raised
in the United states is done so by family farmers under contract with
corporate agribusiness in a system known as vertical integration.
Contract production is preferred by agribusiness giants as it reduces
their capital cost to get the product to table.
Poultry companies are commonly
called integrators. Vertical integration is where the integrator
controls every aspect of the operation from the embryo to the market
shelf (the combining of production , processing , and distribution into
a single entity). Under contract poultry production, growers (poultry
farmers) provide the land, buildings, equipment, utilities, and labor in
raising the birds to a marketable age, while the companies supply the
chickens, feed and medication. The grower is also responsible for dead
bird disposal and manure disposal.
This financial venture has
become so profitable that the top five broiler companies now process
more than 226 million pounds of poultry meat per week. Studies by the
National Contract Poultry Growers Association show that these companies
enjoy a 20% to 30% return on their investment while the most contract
poultry farmers can hope for is a 1% to 3% return despite the fact that
the growers invest over 50% of the entire capital needed in the
industry. Studies by Louisiana Tech University and the National
Contract Growers Institute (NCGI) revealed that over 71.6% of the
nations poultry farmers earn a below poverty level income from their
poultry operations and by USDA standards would qualify for food stamps
if they weren’t to proud to ask.
A Delvarva study of poultry
grower pay by NCGI covered a ten year time frame and revealed that
average pay to poultry growers per chicken raised was 16 cents per
bird. In conclusion, growers are making the same amount of pay per
bird as they did 10 years ago.
Compared with traditional
agricultural markets, vertical integration of poultry is unique in that
with a few exceptions, most agricultural laws do not apply. This is due
primarily because companies retain ownership of chickens, feed and
medications which disqualifies the grower from traditional federal
disaster and farm programs.
The pay for a contract farmer
is based on what growers call “artificial competition shrouded in
secrecy.” All inputs (chickens, feed, medication) to the farm which are
used in the process of figuring grower pay are controlled by the
companies. Growers are basically paid on pounds of meat moved from the
farm of which the inputs to the farm are deducted. They have no control
over the breed or condition of the chickens placed on the farm, the
method or ingredients used in the formulation of the feed delivered to
the farm or any medications which might be used on the farm. In order
for growers to be truly competitive, they would have to receive
identical inputs which is virtually impossible.
Poultry production contracts
are prepared by the poultry companies and offered to growers on a take
it or leave it basis. The contract is good for only one flock of
chickens (6-10 weeks) and can be changed at any time if the company so
desires. Once the grower has invested in poultry houses, they have no
choice but to sign the contract. If they do not sign the contract, the
company will not place chickens on their farms. This results in the
loss of the farm and the families home. As poultry houses are single
purpose buildings, the growers have no choice but to sign the contract
or face bankruptcy.
In Alabama, 39 poultry growers
refused to sign a new contract which included arbitration as a means of
settling disputes. These growers felt that their constitutional rights
were being violated by being told they could no longer exercise the use
of our judicial system. As a result of their refusal they no longer
have chickens on their farms. Many of these growers have sought to sell
their farms, and the sale has been blocked by the poultry company
telling prospective buyers that they will never place chickens on the
farm again. June 24, 1996, the first notice of foreclosure was served
to one of these Alabama growers, and will continue on a regular basis
until all 39 farms have been foreclosed on. One of these growers was
the President of the National Contract Poultry Growers Association in
This is only one example of
the absolute control poultry companies have over contract growers, and
is nothing more than an updated version of indentured servitude. Some
poultry growers across the country, who have been active in trying to
bring change in the poultry industry have either had their contracts
terminated or conclude they are being financially ruined by manipulation
of farm inputs by the companies.
When the chickens are ready
for market, the companies send catching crews out to the farm to catch
the chickens. They are then sent to the processing plant, and the
trucks carrying the chickens are weighed on the scales at the processing
plant. Several lawsuits across the country have been filed and some
settled, for mis-weighing of chickens at processing plants. Several
lawsuits across the country have been filed and some settled for mis-weighing
The vertically integrated
system evolved over 40 years and agribusiness giants view the poultry
industry as a model for efficient and profitable food production. This
system is rapidly being adopted in other areas of our food production
system. According to Farm Aid, over 500 family farms are lost per day.
As the industrialization of agriculture expands, this trend will
continue and at a more rapid pace.
is the plan the multi-nationals have for all of agriculture in the U.S.