MODERN-DAY SERFS - Foodopoly: The Battle Over the Future of Food and Farming in America - page 117

A poultry grower from Alabama, Scott Hamilton, explains how the loans work: “A grower does not
even see a written contract until after they've gone to the bank to get the loan to build the houses on their
land. The bank often makes the loan based on a letter of intent from the poultry company.” 8
Growers accept this arrangement because they are usually desperate to make a living on their farms.
Potential growers are hoodwinked by the company into believing that it is a viable business opportunity.
The FSA has played a role in legitimizing the abusive contracting practices of the industry by encouraging
farmers to get into the business and facilitating the loan process. For farmers in certain areas of the country,
like the Deep South or the Delmarva Peninsula (shared by Delaware, Maryland, and Virginia), growing
poultry is often a last-ditch effort to save the family farm.
Once the farm is put up for collateral, the grower is in “debt bondage,” according to the Rural Advance-
ment Foundation International (RAFI), a public interest organization that provides assistance to poultry
growers. RAFI says that growers sign one-sided, abusive, take-it-or-leave-it contracts.
A typical poultry farmer takes out a bank loan for $1 million or more to invest in specialized poultry houses
and machinery. This debt is financed over a decade or more. The farmer's house and land are collateral for the
loan. The contract, however, may be good only for the life of one flock—four to six weeks. Farmers must accept
any new contract that the company presents, even if the terms are unfavorable. The alternative is termination,
bankruptcy, and the loss of their farm and their home. Unfair and abusive contract terms are now commonplace
in the industry. 9
Taylor concurs, based on the many contracts he has analyzed. He says that it took growers about ten
years to trust that he wouldn't tattle to the integrators, but eventually he began to find poultry contracts
slipped under his office door, providing him with an important window into the industry's economics. He
says that once growers pay down their loans, the integrators force them to make expensive upgrades. Keep-
ing growers in debt is part of the leverage that companies have over growers. Growers who decline to up-
grade are almost always terminated as growers. 10
According to Taylor, the structure of the industry “is plantation-like,” and poultry growers are “serfs
with a mortgage.” He explains that the poultry industry is the most “vertically integrated” sector in all of
agriculture—a system in which the companies have ownership and control over every step of the chicken
supply chain, from genetics to the branded store package. 11
He says poultry production is “lopsided and deceptive,” the most asymmetric of any industry. Integrat-
ors have learned to put nothing in writing. They tell growers about gross revenue, but not all of the asso-
ciated costs. Because the companies have all of the data on the economics and the growers have none, the
growers are paid unfair prices—basically raising chickens for free.
Taylor says most growers have little knowledge about how much or how little they make on their poultry
operations. The only information on costs and returns is garnered from the Alabama Farm Analysis As-
sociation, an association that charges growers an annual fee of $1,200. They are told to save all of their
receipts and other information from the integrator, which are reviewed by young agricultural economists
who go through the information and allocate costs. If proper managerial accounting is done, and even a
portion of their labor is included at a modest charge, they are losing money. 12
Taylor is no stranger to controversy. When he was at Texas A&M in the 1980s and evaluating corn
ethanol for the U.S. Office of Technology, he was lambasted by Texas state legislators, but he stood his
ground. A tenured professor today, he is helping growers face down an extremely powerful industry that
he says is profiting by lying and taking advantage of growers. Integrators control all of the informa-
tion—monthly information on pay for growers, production, mortality, and the weight of birds.
One of the ways the industry cheats growers is by paying them based on a ranking system that makes
them compete with other growers in putting weight on the birds—a process known as “feed conversion.”