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The Zombie Chicken Business

In the U.S., a Sunday chicken dinner is as all-American as apple pie, but this dietary mainstay is an example of one of the biggest problems facing the food supply: the growing market concentration.

Unless you happened to purchase your chicken at a local farm, farmers market or food co-op, and can attest that it was raised on pasture, the way many people think their chicken is raised, it likely came from a major player in the industry, like Perdue or Tyson.

Tyson claims to be “one of the leading supporters of American agriculture,”1 for instance, but it’s not because they’re out in the field tending to their flocks. Instead, it contracts with more than 4,000 so-called “independent” farmers, who are tasked with raising the birds according to the parent company’s strict demands.

In fact, almost all chicken farmers (more than 97 percent) work under the thumb of a giant producer,2who controls their pay, their farming and ultimately their fate. In many rural areas, there’s only one (or may two) big chicken companies in town, and they have no choice but to enter into exclusive contracts that, for many, saddle them with debt and little recourse if the relationship sours.

Most US Chicken Comes From ‘Zombie’ Farmers

U.S. chicken farmers are forced to work like zombies, whose every move is controlled by their puppet master, Big Chicken. “They … act like a lord with serfs, or a landowner with sharecroppers,” The Atlantic wrote of the poultry giants.3

It starts out with farmers taking out loans in the hundreds of thousands of dollars, and often more than $1 million, to build a house for their chickens. They contract with one of the big poultry players, who then sends them their chicks, which the farmers raise for market according to the company’s rules.

The corporation then takes care of slaughtering the chickens, packaging the meat and selling it to consumers, who are none the wiser that their farmer middleman may have only been paid 5 to 6 cents per pound of meat. The farmers have very little say in how the chickens are raised. Jonathan Buttram, president of the Alabama Contract Poultry Growers Association, told The Atlantic that in these contract relationships:4

“The company has 99-and-a-half percent control over the grower … I’ll list what they tell you: what time to pick up the chickens, what time to run the feed, what time to turn the lights off and on, every move that you make. Then, they say we’re not an employee — we are employees, but they won’t let us have any kind of benefits or insurance.”

Farmers struggle with low pay, lack of autonomy and no job security. In 2001, former chicken farmer Alton Terry contracted with Tyson Foods to raise chickens, after taking out a $500,000 loan to build houses for the chickens. After a couple of years, Tyson told Terry to purchase more equipment, to which he refused, and the next year he believes the company gave him sick chicks, then canceled his contract.

With no other chicken companies in town, Terry couldn’t find another customer to buy his chickens, essentially putting him out of business.

“Terry sued Tyson in 2008, alleging the company canceled his contract because he rallied farmers in the area to lodge complaints about the company with their congressional representatives and the U.S. Department of Agriculture (USDA),” The Guardian reported. “[H]e said Tyson mistreated him with tactics such as weighing his birds incorrectly while not allowing him to watch the weigh-in, a violation of USDA rules.”5

Yet, Terry lost the case because he wasn’t able to show that Tyson had harmed the entire poultry industry, forcing him to pay the poultry giant’s legal fees and eventually declare bankruptcy, losing everything he had.

Tournament-Style Pay System Pits Farmers Against Each Other

At one time, there were 1.6 million independent farms in the U.S. Today, there are about 25,000 contract farms that raise most U.S. poultry, with many of them raising upward of a half-million birds annually.6

There are many downfalls to raising chickens this way, not the least of which is seeing the chickens living in inhumane, filthy conditions. “They pack these chickens in these houses so tight,” Buttram said. “It's nasty. It is hard to see.”7

Talk of committing suicide is par for the course for farmers facing high levels of debt with little hope of a way out. Part of the problem is that the farmers are paid using a tournament-style system that may deduct money from their paycheck based on others’ performance.

Tyson calls it a “performance-based incentive system that rewards poultry farmers who effectively convert the feed we provide into weight gain in the birds they raise.” Yet, part of the payment formula includes “the performance of their flock compared to those raised by other contract growers.”8 As the USDA explains it:9

“Contract fees are rarely a fixed amount per pound delivered; instead, fees are based on a grower’s relative performance compared to other growers who deliver chickens to the poultry company at the same time. 

This method is sometimes called a tournament method of determining pay because, like a professional golf or tennis tournament, a participant’s earnings do not depend on absolute performance, but on performance compared to other tournament competitors.

Fees are determined in the following way. The integrator measures the average cost of the inputs that the integrator provided to growers for chickens delivered to the processing plant in a week — the total value of feed, chicks and veterinary services provided to growers divided by the total weight of chickens delivered that week. The company develops this calculation for each grower. 

Each grower is then paid a base fee, and those growers whose costs are lower than the average for all growers receive a premium over the base fee; those whose costs exceed the average for all growers receive a deduction from the base. The amount of the premium or deduction reflects the size of the cost difference.”

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