Agriculture Reference
In-Depth Information
Variations of the flat-fee contract quickly came into use with the principal goal of moving risks and costs
of production onto the grower.
In addition, about half of the growers have only one or two integrators located near their farm. And
once a grower is associated with one integrator, it is very difficult for them to sign a contract with another
company, since there is an informal blacklisting of growers who advocate for themselves. This means that
growers have little choice but to accept whatever terms the companies offer.
Today, with most contracts being flock-to-flock, there is no assurance that a grower will ever get another
one to raise. Even when flock-to-flock contracts are automatically renewed, growers are dependent on the
companies to keep providing them with new ones, and they are paid via the unfair and nontransparent rank-
ing system.
Kate Doby, a grower from Cameron, North Carolina, lives on a third-generation farm. She and her hus-
band built two broiler houses and raised poultry until October 2008, when their contract was terminated.
Initially she was given a ten-year contract, which was the length of her loan. But before the end of the
contract, it was changed to a one-year term. When she was told to make an expensive upgrade before the
current loan was paid off, she refused. She testified at the GIPSA hearings: “The company tells the grow-
er, if they make these upgrades that they're going to get paid more under this ranking system. I asked the
company managers, I went to them, I said: 'You want me to do this. Show me on paper where I'm going to
make this money back to justify borrowing more money, when I still owe money on these houses?' They
couldn't do it.”
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Doby says that many growers “have borrowed a lot of money to make upgrades demanded by the com-
pany” and “precious farmland and homes were put up” for collateral. These growers are now finding them-
selves in financial trouble, because they are forced to go flock-to-flock, putting them at the mercy of the
integrator.
Taylor explains that the integrator serves as an “overlord,” directing the production process. After the
company delivers the feed and the chicks, the grower only gets paid for what is returned to the company
in meat. Dead birds are the property of the grower, and as the system has evolved, the tremendous amount
of waste generated on the farm has become the grower's liability as well. Taylor and a co-author explain,
“Once one enters the life of a grower, the trap is closed: high capital costs and large debt to enter the busi-
ness, no input or product price, no market in which to sell goods and no way out except bankruptcy if the
integrator 'dumps' the grower.”
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The average on-farm income for poultry growers—not counting any of their labor—was $10,000 for a
small operator with less than 266,000 birds a year and $20,000 for medium-size operations with between
266,000 and 660,000 birds per year. These meager earnings barely make a dent in the debt for the poultry-
house upgrades. Poultry growers lost money ten of the fifteen years from 1995 and 2009.
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Once in a while there is justice. In 2010 a jury in Oklahoma returned a $7.3 million verdict against
Tyson Foods for its “deceptive and coercive business practices.” Growers charged that Tyson used eco-
nomic clout to coerce them into growing chickens below the cost of production. The company attempted
to strong-arm them into making expensive upgrades, used a secretive system for calculating pay, and re-
fused to allow them to verify the weight of feed or mature birds. Originally, fifty poultry growers sued the
Court overturned the jury verdict and ordered a new trial based on Tyson's claim that juror questionnaires
were filled out improperly and that a mistake was made in interpreting the law.
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According to Taylor, “Contracts allow growers to subsist, but not to grow, profit or prosper. There is
no 'wealthy' subset of chicken growers. . . . Often the grower's ranking changes more because of factors
controlled by the integrator than by the grower's management.”
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