Agriculture Reference
In-Depth Information
retail chicken prices dropped 30 percent to 40 percent, compared to price increases of 75 percent to 90
percent for red meats during the same period. 27
One tactic for lowering the cost of production was to operate in economically disadvantaged parts of
the country. The industry came to be centered in two regions: the Delmarva Peninsula and the South. Del-
marva had hosted a small chicken industry since the 1920s, when an entrepreneurial woman from Ocean
View, Delaware, started a small brood of 500 chicks and by 1926 was raising 25,000 meat chickens. Other
farm families saw her success, and soon a small industry grew up in the region that has flat land and a good
climate for growing the grains needed for feed. 28 By the time of the A&P contest, Delmarva had a thriving
poultry industry, and the University of Delaware had developed a poultry program.
In the South, by the 1950s, the cotton industry had moved westward and soybeans had become the crop
of choice. Mild weather and the “excess labor” due to the Eisenhower-era agriculture policies made it an
ideal location for the growth of the industry. The South had a ready pool of farmers willing to put in long
hours for low pay and workers desperate enough to work in the hazardous and unpleasant slaughter facil-
ities.
Passage of the Poultry Products Inspection Act of 1957, which required inspection of broilers sold
across state lines, further increased pressure on small operations. Large capital investments were needed
to meet the requirements of the new law. Only the companies that could increase production by installing
automated processing systems could cover the costs of the new food safety investments.
By the 1970s companies with the primary business of selling feed had gotten out of the broiler business,
and integrators like Tyson, which focused on all stages of production, came to dominate the industry. With
the advances in bird genetics, feed conversion, and other new technologies needed for confinement, the
stage was set for highly capitalized firms to acquire their competitors.
But even with the technological advancements, one of the primary ways that these vertically integrated
operations became profitable was by shifting costs to the grower. So over the course of several decades, the
contracts became more ruthless. The first type of contract used created an arrangement where the integrator
provided credit to the grower, who supplied the enclosed barn, equipment, labor, fuel, and feed. Once the
broiler was sold, the grower paid back the company and kept whatever profit was left. Different types of
contracting arrangements followed, including flat-fee contracts that required the grower to provide hous-
ing and labor, while the integrator provided feed, medicine, and chicks and retained title to the broilers.
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