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New rules laid to help chicken farmers
Week-old chicks at John Harson's farm in Haynesville, La.
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A flock of baby chicks raised at John Harson's farm in Haynesville, La. After a few weeks, they will be picked up to go to a nearby processing plant.
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Kai Ryssdal: About that grilled chicken you ate for lunch today. You know, most of us are a long way removed from the business end of the food chain in this country. And I mean the business, business end, not the how-a-chicken-turns-into-KFC end.
New Department of Agriculture rules went into effect New Year's Day. They're supposed to make sure chicken farmers get a fair shake from the giant poultry companies they have to do business with. Some of those chicken growers say the USDA help came a little bit too late. Kate Archer Kent of Red River Radio reports.
Kate Archer Kent: The market for chicken is built on trust. The poultry company delivers its fuzzy yellow chicks to the farmer when they're a day old. The farmer acts as a contractor to the poultry industry. He gives the fledgling brood just the right amount of food, water and warmth. Then, seven weeks later, the poultry company returns and trucks the chickens off to the processing plant. That cycle happens over and over. But sometimes the farmer gets an unsettling call. The current flock will be his last.
RHETT HANRY: It just knocked the wind out of you. You just can't hardly get back up on your feet.
Rhett Hanry of El Dorado, Ark., is a third generation poultry farmer. When Pilgrim's Pride closed its El Dorado plant last year, Hanry's farm, and 170 others, went dark.
HANRY: My chickens were two days old at the time. We were anticipating something, but nothing quite that drastic.
Hanry's high-tech barns were computerized to provide the perfect growing conditions. Neighboring farmers made similar investments, counting on a ready supply of flocks. Inside Kevin Hux's poultry barn, stray feathers and manure are all that remain. Hux installed rows and rows of new drinking nipples for what turned out to be his last flock. The $5,000 upgrade never paid off.
KEVIN HUX: They just had us keep spending and had us keep going. And they knew, they had to know, this didn't happen overnight. They had to know they were fixin' to shut down.
The USDA's new regulations may have helped farmers like Kevin Hux. Among the new rules: Farmers must have a contract before they build chicken houses. Companies can no longer add confidentiality clauses to those contracts. Those stipulations barred farmers from disclosing terms of the deal with lawyers or even family members. And the poultry company must give at least 90 days notice before cutting ties with the farmer. Poultry giants like Tyson's and Pilgrim's Pride defer to the National Chicken Council for comment.
Here's the council's Richard Lobb.
RICHARD LOBB: The things envisioned in the rule are primarily being done already by the companies and their contracts with the growers, so we don't expect this will be any big, radical change.
Lobb says the poultry companies support the USDA's action, with one caveat. He says giving a farmer 90 days notice before terminating a contract is excessive.
LOBB: The flock only lives for 42 to 49 days. That puts companies in a kind of tough position to notify the farmer that he is going to be canceled.
JOHN HARSON: Why don't we walk out in them.
These are the collective peeps of 20,000 baby chicks on John Harson's farm in Haynesville, La. He raises chickens for Foster Farms. Harson has been a grower for 30 years. He says his dealings with the poultry companies have always been amicable, as long as he understood the arrangement.
HARSON: The poultry company and my relationship is like a partnership, except that they own 51 percent of the stock. Whatever they say goes.
Farmers here are still hoping the local processing plant reopens. The normally stable chicken market was hurt during the recession. The National Chicken Council is forecasting a rebound as the economy recovers and people eat out more and order up the chicken cort en bleu.
From the Louisiana-Arkansas border, I'm Kate Archer Kent, for Marketplace.
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All the comments I've read this far are my exact concerns and experiences. My family and I are new to the poultry business. This is our 4th year into the business. It was my father's dream to be a poultry farmer due to his love for chickens and a life in the country. Although my parents were only too happy to use all their retirement and saving fund to help with the purchase of the farm, we still had to take out a huge loan from the local banks ($460, 000). Before making the purchase though, we met with our current poultry company to ensure that we had a bind contract between us and them to ensure delivery of our chicken. We also met with the bank several time to make sure that the poultry business was tangible and something that we could live on. The bank assured and reassured us regarding our concerns. They even help made projections for us regarding yield rates and income. One representative even helped us with plan as to what we needed to do to live comfortably. After two weeks into our purchase of the farm, we were devastated. The same poultry company, whom we had just met a week before, was now refusing to send us chick as we didn�t have the right upgrade. Having spent most of our funds, we were force to spend what we had left on upgrade just to get the birds. At this point, the bank representatives who were only too happy to see us just weeks before were hostile and rude. One bank representatives, Tina, treated us as we were beggar off the streets and didn�t want to have anything to do with us. If we weren�t members, she would have called the cops. My father�s dream became an unending nightmare. What the bank informed us about poultry business became lies. Continue harassments and mistreatments from our field men and poultry company. I agree with many of your comments, we need to band together and let banks and poultry companies know that we�re tired of living in poverty and their mistreatments.
I have been growing chickens for five years. I bought one house and built two new ones. All the comments that I have read sound just like what i hear from all my neighbors who grow chickens, and also sound like all my complaints. If we could get paid even one more cent per pound then maybe we could make a decent living.
i am a poultry farmer, and here lately
i feel we have been harassed by Tysons foods whom we are contracted with they want us to make all these up grades when we just bought the farm 4 yr ago and was told everything was up to theri standards. now we are being told that we have to make a 200,000 plus up grades in order to have the contract there is no bank that would loan us any more money on them when we have no equity in them as of yet..I don't know what we are going to do this is not fair.I wish there was something we could do if all the farmers could band together and refuse this may count for something i would like to hear and ideas anyone may have..i wish you all well.
Most of the Things that are going on in the Poltry business is our fault. ( I have been raising birds for 19 years). If the Growers all over the country, not in one area, WOULD or COULD stand together, and form some type of Aliance (union) we could get a Contract that was good for both parties. I know that is a hard thing for farmers to do, with the amount of debt at stake, but when it happens like it did to us, You have no recource any way. The Politicians are not the way to go, They could care less, It puts no money in there pocket either way.It is the finacial instiute's. No long term contracts, no House's and no CHICKEN COMPANY'S.
The poultry companies have done nothing but intimidate the grower for too long, it makes no difference if your performance is the top they don't want you to get ahead financially. They control the birds you get, the feed you use and micromanage your farm and you have no say in the way you raise the birds. If you have an idea for better performance you can't use it unless it's something they have read in a book or they had a dream that this wild idea they come up with is the best new thing. If we growers could get the companies to pay for the upgrades they are always wanting, that practice would change fast. I just spent $3000 dollars for new lights that we used 3 batches and now they are not required. A change in management and it was a new day with new rules and crazy demands.
The broiler manager decides who gets what birds from where, he also grows for the same company he manages. We have to grow against the managers and you know they hand pick what they get. Can anybody say conflict of interest? We need help from the government to give us a fighting chance to make a fair return on our investment and bring some equity and fair treatment for the small businessman in this industry.
from a grower who wanted to comment but afraid to post because his name would be printed. Fear of retaliation....
If upgrades were not losers, companies would not have to threaten growers to implement them, growers would be lined up and clamoring for them. In fact, absent the financial pressure to buy things that don't work, innovative growers have been known to spend money on things that kept them at or near the top of the performance sheets; go figure. Growers who perform thusly are shunned, ostracized, and "brought down a peg or two" with bad birds or bad feed. I know. It happened to us, and I can prove it with records and testimony from former employees of the company.
There is another aspect to forced upgrades that I have not seen discussed anywhere else. Since the upgrades are mandated then regularly discarded for newer bells and whistles, there is little or no incentive for suppliers to provide excellent equipment with a long useable life. It got so bad around here, that the banks started refusing to finance more upgrades until the last upgrades were paid off. That is when the companies hit on the idea of using the equity of retiring growers to finance their "wish list".
In other words, a grower selling his farm would have to use most if not all of his equity to add equipment to his houses that the company demanded before it would supply birds to a new owner. Such equipment demands are not made on the rest of the grower network, just those selling. In a normal situation, added cost results in added value, and can be passed on to a new buyer, but since these upgrades don't cash flow, and the newly "born again" banks are suddenly demanding a genuine cash flow, the sell price cannot be raised, and the equity goes up in smoke. An unholy conspiracy if there ever was one.
The exiting grower will spend his equity...retirement...nest egg, you name it, to buy more useless do dads .... that the company does not feel are valuable enough to impose on the rest of the grower network. A grower with perhaps decades of loyalty and performance, will be scrapped..literally, for some new guy off the street. It's not right, it's not ethical, and it's probably not legal; we may be about to find out. This is beyond shameful, right up there with the ego and greed driven failure of PP. I am normally opposed to forfeiture in the criminal justice system because of the opportunities for abuse. In the case of the chicken companies, their hangers-on, goons, and bought politicians...I'm all for it, and the more abuse the better.
Richard Lobb wants us to believe that the poultry companies giving growers 90 day notice will be a burden on the company!! Give me a break. How stupid do you think we are? The companies have a plan for the eggs hatched before they are laid. On the other hand if they don't JBS will probably be giving them a call.
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