Politico: Turkey farmers face squeeze from distributors, just in time for Thanksgiving

By Christine Haughney | 11/20/2017

The days leading up to Thanksgiving would seem like an especially busy time to ask turkey farmers to embark on major construction projects on their farms.

But a regulatory decision made by Agriculture Secretary Sonny Perdue last month opened the door for turkey farmers and other contract growers to be hit with new, burdensome and costly demands from the corporate interests for which they produce livestock. In the case of one group of turkey farmers in Pennsylvania, who work for Plainville Farms, they were given more restrictive contracts just a few hours after Perdue’s decision on the so-called GIPSA regulations went against contract farmers.

Letters that were shared with POLITICO show that Plainville presented its farmers with a five-page amendment to their contracts that resulted in costly upgrades and cuts to performance incentives. In at least one case, the new contracts have nearly blocked the sale of one turkey farm.

“That was my retirement,” said Ike Horst, who is scheduled to close on the sale of his farm in Franklin County, which raises 22,000 organic turkeys a year, in January.

He noted that his turkeys, more than the fruit he also grows, originally helped attract a buyer to his farm. It’s now unclear if the sale will go through because Plainville is requiring the buyer to install upgrades including fans, tunnel ventilation and a stationary generator, if it wants to continue supplying to the company.

The changes are especially cumbersome for farmers in these colder months because the improvements will require relocating turkeys while contractors install fans and upgrade electrical wiring.

Several turkey farmers working for Plainville Farms who were interviewed for this article — most of whom asked to remain anonymous because of fear of retribution from Plainville — seem even more worried about what the future may hold.

The reasons for their worry lie in complexities in how Perdue dispensed with a controversial question of agricultural policy related to the USDA’s Grain Inspection, Packers and Stockyards Administration, commonly known as GIPSA. Last month, Perdue withdrew an interim final rule that would have lowered the bar for producers of poultry and other livestock to sue the meatpacking or processing companies with which they have contracts. In addition, Perdue also declined not to proceed with a draft rule to shield contract growers from unfair practices. The department has not said how it would handle a third draft GIPSA regulation, pertaining to poultry grower ranking systems.

“We’re fairly convinced that if the secretary of Agriculture hadn’t done away with the GIPSA rules that we were trying to get implemented, the companies wouldn’t be doing things like this,” said Mike Weaver, a West Virginia poultry grower and president of the Organization for Competitive Markets, who has been contacted by Plainville’s turkey growers about their fears. “We think this has emboldened the companies to abuse the growers.”

Plainville is not a large-scale, mass-market distributor, but one that supplies the high-end organic food segment. Plainville Farms specializes in antibiotic-free and organic turkey meat for which consumers pay a premium. But Plainville’s farmers don’t get much of that premium: Farmers interviewed for this article said the new contracts cut what they receive on turkeys to 11 cents a pound from 13 cents. Cook’s Illustrated reported that these turkeys sell more than 10 times more for $1.19 a pound.

If the GIPSA rules had gone into effect, there would have been the potential for growers like Horst to sue and recoup their costs.

To the farmers, it’s also unclear why Plainville would be making these cuts when its parent company, Hain Celestial Group Inc., which promotes itself as a healthy food company and owns brands like Celestial Seasonings Tea, reported in its latest quarterly earnings a 131 percent increase in profit.

When called, Mickey Baugher, vice president of operations for Plainville Farms, replied via a LinkedIn message that “our decision to modify the terms of our grower agreements were not influenced by any changes in GIPSA rules.” He noted that even with the updated contracts, growers make 20 percent more than the average industry grower. He added, “We do not believe that any modifications to our grower agreements will have any effect on the quality of our turkeys.”

The letter he sent to turkey growers also stated that “the decision to reduce grower pay was not made quickly or lightly” and that “having the best housing in the industry will benefit the welfare of our turkeys.”

Distributors and large poultry growers have been supportive of doing away with the Obama-era GIPSA rule. The GIPSA rule, if allowed to go into effect, “would have opened the floodgates to frivolous and costly litigation,” said Mike Brown, president of the National Chicken Council.

Mike Lilburn, an Ohio State University professor and unit supervisor of the Poultry Research Center, also explained that turkey farms are now raising larger turkeys much faster and the birds require newer ventilation systems.

“It has to be done for the grower to be competitive and it has to be done for the company to be competitive with other companies out there,” Lilburn said.

Several turkey farmers interviewed for this article, however, said that there were better, more cost-effective solutions. Horst, who has been raising turkeys since 1995, said that instead of installing expensive fans, he has let his turkeys go outside. “The best thing is natural air.”

Weaver, who has worked on improving poultry protections for years for farmers, expects that the tensions between growers and distributors is just the beginning of other battles.

“The abuses occur every day,” Weaver said. “These companies are shameful.”