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An in-depth look at contract poultry production

posted on December 8, 2000

The poultry industry is now the target of legislation that would give the USDA greater authority to take action for violations of the Packers and Stockyards Act. Unlike the red meat industry, the Poultry sector is largely immune from USDA action. But mounting complaints about the conduct of the industry could push the legislation into law. Much of that push may well come from an area where the industry is highly concentrated. John Nichols reports.

An in-depth look at contract poultry production

Carole Morison is one of 2,600 farmers producing poultry in a region known as "The Delmarva Peninsula ."

The narrow strip of land is comprised of the state of Delaware and the eastern counties of Maryland and Virginia... and it's home to a prolific poultry industry.

600-million broiler chickens are raised and processed here annually, yielding 3 billion pounds of food and providing direct employment for more than 17,000 people.

But Morison claims it's nearly impossible for growers to make money in today's vertically integrated world of contract poultry production.

Carole Morison: "The industry has changed through the contracts that the poultry farmers are given by the poultry companies to raise the chickens. When we first started, we were making enough money to support a family, and to live on the farm and work. Fourteen years later, we don't make enough money to support a family. Only 0 - 3% return on our investment in the poultry industry."

Morison raises 700,000 birds annually on contract for Perdue Farms, the region's dominant producer.

The company is a prime example of vertical integration, with its own hatcheries, feed mills and processing plants.

However, like the other poultry companies on Delmarva, Perdue relies on contract growers to house the birds during their seven week life span.

Under the terms of Morison's contract, Perdue provides the chicks, feed and medicine. Morison supplies everything else, including buildings, electricity, and water.

The growers also assume much of the risk… live chickens belong to the company, but all the manure and any birds that die are the farmer's responsibility.

Perdue officials declined to be interviewed by Market to Market… referring us instead, to a trade association called "Delmarva Poultry Industry, Inc.", which represents a handful of companies in the region. Bill Satterfield is the Executive Director.

Bill Satterfield: "Growers know going in, what the system is. It's not like the rules have changed suddenly and this competitive contract is now being thrown out, take it or leave it. It's a system that's been around for forty years or more.

It's big business and like any business, those that are going into it, need to know, what the expectations are, what the contractual requirements are and what sort of business they are getting into. So, they need to do the homework and it could be that some of the people who are not happy with the businesses they're in, really didn't understand and jumped in before they got the full picture. "

Carole Morison: "I knew the terms of the contract. Every grower knows the terms of the contract. The first contract we signed 14 years ago, was ….the one that we have now, is nothing like that contract. I believe we've had 4 contracts since the first one that we signed and with every contract, there's an added cost added in, that's going to be deducted from the farmer before he gets his final settlement and a flock of chickens."

The industry refers to the rules governing the relationship between producers and growers as "competitive contracts."

Feed conversion is calculated on company-owned scales and farmers are rated according to their efficiency.

But Morison claims when she spoke out against Perdue and other poultry companies, she was delivered birds that were mortally ill.

Carole Morison: "As they were delivering the chicks, they were dying, that's a real good indication that you have a real sick bunch of chicks. It's called competition by the companies however, one grower gets a batch of chicks that are healthy and another gets a batch, the same day, that are sick, where's the competition? They weigh the birds on their scales and then we're paid by pounds of meat and we have to take their word for it. Growers many times over have felt that they have been cheated on weights but there's no way to verify that the weights are accurate."

Dale Boyce: "They weigh them when they process them and it's just fair for everybody."

Dale Boyce has been in the poultry business 40 years. currently, he heads Delmarva Poultry Industry's grower committee.

Dale Boyce: "I've heard it said, that companies pick and choose what baby chicks you're going to get. And if you're in a hatchery, and see how quickly birds come off those carousels, and are put in boxes to be shipped out, I don't think that there could be any way possible that they could pick and choose what I'm going to be getting or what someone else is going to be getting. I don't think it's possible to do that."

Bill Satterfield: "We have about 2600 farm families growing chickens in this area of the country. The vast majority, vast majority are glad they are growing chickens."

A 1998 University of Delaware study, funded by the Delmarva Poultry Industry, yielded some interesting statistics.

While a majority of the growers surveyed expressed some degree of job satisfaction, 57.4% believed their company would retaliate if they raised concerns.

Bill Satterfield: "Well I haven't run into that 57.4%. "

John Nichols: "It's in the study."

Bill Satterfield: "I can't disprove what's on the study but I haven't run into those people. "

Jim Lewis: "When they say, there's just a few growers out here, disgruntled and not good growers, sometimes, that's just a lie. I'll tell you what happens with the companies, as soon as the grower begins to speaks up and speak to injustice, they then become troublemakers, they become disgruntled and they're poor growers. I've seen growers go from the #1 grower to #10 grower, just overnight, because they spoke up."

Reverend Jim Lewis is an Episcopal Priest whose mission is to improve the lives of chicken farmers, and poultry industry workers.

He claims the vertically integrated poultry business is a greedy industry... putting profits before the welfare of its workforce.

Rev. Jim Lewis: "It squeezes a lot of little people out. It treats people as if they were dispensable/disposable. It gathers so much power that it controls the life of a community, in a way that brings fear to the community here and if you come at it in any way."

Several years ago, Lewis established the "Delmarva Poultry Justice Alliance..." a non-profit organization seeking to give workers a voice with the companies.

Next week, we'll take a closer look at the alliance. we'll talk with workers from a Perdue processing plant.... and we'll examine the industry's safety record, which many claim is cause for concern.

For Market to Market, I'm John Nichols.


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