Daily Yonder: Chicken Companies Will Pass Costs on to Farmers

Q&A: Corps. Will Pass Costs on to Farmers

Ag and Trade


Corporations would like to get the credit for reforming the poultry industry. But they’d like to pass along the costs of change to chicken farmers, says a commercial grower. What choice do chicken growers have? Under the current rules, only two: Take it or leave it, says contract grower Mike Weaver.

By Tim Marema

Chicken farmer Mike Weaver is president of the Contract Poultry Growers Association of the Virginias.

Humanely raised. Cruelty free. Human-antibiotic free.

Over the last year, we’ve heard a half-dozen major players in the poultry industry announce their intentions to change production methods because of concerns over human health and animal welfare. Most recently, for example, Walmart said it intends to purchase only “humanely raised” chickens.

While ag corporations, animal-rights groups, and health advocates have been in the media commenting on the changes, there’s one set of voices we’ve heard little from: Farmers.

Mike Weaver of Pendleton County in eastern West Virginia, is a commercial chicken grower and president of the Contract Poultry Growers Association of the Virginias.

Weaver contracts with Pilgrim’s food, which is owned by JBS, the largest meat producer in the world. Pilgrim’s supplies Weaver and growers like him with chicks and feed. The growers are independent contractors. They provide their own land, houses, and equipment to raise chicks to slaughter weight. The mature chickens go back to the poultry “integrator,” and growers get paid on a “tournament” system, which ranks growers’ performance and pays them accordingly. That’s the way nearly all commercial chicken production in the United States works, unless you buy poultry at the farm gate.

We asked Weaver how the push for changes in chicken production will affect small, commercial farmers.

Daily Yonder: Changes in how poultry is raised could mean an increase in production costs. How do you think poultry integrators like Pilgrims, Perdue, and Tyson will pay for this?

Mike Weaver: I’m sure the companies are going to try to throw as much of that cost off on us [growers] as they can. You mind what I’m saying. [Companies] will go to the growers and they will say, “Well, we have to do this antibiotic free.” That means growers aren’t going to be able to produce as many birds in each chicken house, so we need to [build more] housing. And to some of the companies, they will say, “If you don’t agree to build an additional house, we’re going to terminate you as a grower. You’re not going to get chickens anymore.” They will trick them into doing it. And some people will do it.

One of the reasons I speak out is that I don’t have to have their money to make a living. But a lot of us do. They are living chicken check to chicken check.

The reason I emphasize the treatment of the farmers is because that directly relates to how the chickens are raised. When it comes to what can be done to change the growing arrangement, the best thing they could do is start treating farmers better. The way farmers are treated should be illegal.

How are farmers treated?

Let me give you a really good example. When you go to KFC and buy a 12-piece chicken meal, that runs anywhere from 28 to 30 bucks. Out of that, KFC keeps about 22 dollars. The integrator, which is the poultry company KFC bought the chicken from, gets 5 to 6 dollars of that. And the grower who spent at least six weeks raising that chicken gets 30 cents. Now tell me how that’s fair.

And you pile that on top of the fact that it’s been going on 20 years since we’ve had an increase in base pay. That says a lot about the industry and what they think of farmers and how we are being abused by the big companies.

Back in the winter, Pilgrim [the company Weaver raises chicks for] paid their stockholders a 1.5 billion dollar dividend. … Now what does that tell you about the kind of money they are making, and not spending a penny on increasing pay for growers. And the growers are the ones who make that money for them. To make that kind of money and then the growers not get an increase in base pay, considering how long it has been since they’ve had one. Now tell me what kind of business sense that is.

If you don’t like the way your chicken company treats you, why don’t you negotiate better terms or raise chicks for a different company?

Well, I would if I had the choice, but I don’t. They are the only integrator in town. They have a compact between themselves that they don’t steal each other’s growers. It happens some, but they don’t do it much.

Photo by the National Sustainable Agriculture Coalition Congresswoman Chellie Pingree (D-ME 1st District), farmer Mike Weaver, advocate Benny Bunting, and author Chris Leonard participate in a briefing for congressional staff and press to raise the awareness about anti-competitive practices in livestock farming.

We have no say in our contracts. It’s take it or leave it. They bring you a contract. If you sign it, you continue to grow chickens. If you don’t, you’re terminated.

There’s very few of us out there who don’t have to have that chicken check. And the companies abuse that terribly. They will go to growers who they know can’t possibly be close to paying off their mortgage – or even when they are close to paying off their mortgage – they will go growers and say, “Well, you’ve got to make improvements here.” And force them to go back into debt so that they can continue to control them. That’s part of their master plan is to keep growers in debt so that they’ve got to keep growing their chickens.

How could a chicken integrator force a farmer to go into debt?

Let me give you a really good example of how companies treat growers when they want changes made. [An integrator in the Shenandoah Valley] told their growers, “If you have a conventional house, you have to put in tunnel ventilation, you have to put cool cells in your house.”

One of the growers who is a member of our growers’ association told me that he went to his bank and told them:

“Here’s what the company wants, and here’s what they will pay me. I got an estimate, here’s what it’s going to cost me. … I want you to figure out how long it’s going to take me – what length of loan am I going to have to get – to pay this back.”

She [the banker] figured it up for 10 years and said, “Nope, won’t do it.”

Well, how about 15? “Nope, 15 won’t do it.”

Well, let’s look at 20? “Twenty still won’t do it.”

So even after 20 years of this “pay raise” – they want to call it – he couldn’t even pay back the money that he would have to borrow to make improvements. And that’s typical of the requirements that these companies impose upon people.

The majority who end up doing it have to do it, or the companies tell them, “You have to do this or you’re not going to get chickens anymore.”

John Oliver did a segment on his HBO show “Last Week Tonight” on contract chicken growers. Is that going to help raise awareness of the issues you’re concerned about?

It already has. At the roundtable in Washington D.C. [a
policy briefing sponsored by Reps. Marci Kaptur (D-Ohio) and Chellie
Pingree (D-Maine)], when I spoke, the first thing I asked was “How many of you saw the John Oliver show.” And about 90 percent of them raised their hand. There’s no question that the program helped. Besides the exposure on HBO, the episode is online and it had over 2.2 million hits on YouTube last time I looked [It was 3.3 million as of July 1. – Ed.]. This is the best media exposure we’ve had about the plight of the poultry growers. The reception we got in Washington was the result of John Oliver’s show, and the work of Marci Kaptur. Had it not been for her getting this roundtable together, it never would have happened.

What can consumers do to help chicken farmers?

They can tell their congressmen to stop being prostitutes to the poultry companies and quit taking their money and quit passing laws that screw the farmers. Tell them that this business of big companies taking advantage of farmers and poultry growers is wrong and it’s got to stop.

Chicken farmer Mike Weaver talks to a Congressional briefing in Washington, DC, about the treatment of poultry farmers by the livestock industry.

Are you talking about the 2008 rules for the Grain Inspection Packers and Stockyards Administration, which were supposed to require more competition in the livestock industry? (Congress has used the appropriations process to block those rules.)

GIPSA is part of it. It’s a big part of it. If it turns out that all of the GIPSA rules would be reinstated because of Rep. Kaptur’s work, then that would be wonderful. That would put us in a position where the tournament system – I call it the ranking system – is eliminated. That pits us all against each other, neighbor against neighbor, and the real travesty of it is we have to compete against each other based in their inputs [e.g., chicks and feed] that we have no control over. Their own studies have shown that the quality of the chicks and the feed are more than 90 percent of making a good chicken. They bring us their feed and their chicks and expect us to make a good chicken out of it. And they use that to retaliate against growers like me. They bring me bad chicks. They know I can’t make a good chicken out of it.

Are you saying a corporation retaliates against you for speaking out about the way the poultry industry operates?

It started not long after the workshops that the USDA put on around the [new GIPSA rules]. I was a panel member on one of the poultry ones down in Alabama. It wasn’t long after that that my production started dropping way off. My income from poultry has dropped probably $30 to $40 thousand a year since then. I have no way of proving that, but I can prove that after [speaking on that panel] my production and thereby my income dropped drastically by 25 to 30 percent. Another grower had a similar drop, and she was in one of the workshops, too. I don’t think that’s a coincidence. Prior to that I was the number one grower for the week many times. But I haven’t been for three or four years now.