Op-ed: Monopolies Are Giving Chicken Farmers a Raw Deal. We’re Urging States to Act.
Monopoly in the meat industry has led to record profits, while farmers and shoppers are losing out. We’re asking state attorney generals to address unfair business practices.
By Patti Anderson and Mike Weaver, Civil Eats
May 2, 2022
Anderson is the Senior Program Officer for Food System Policy at the Johns Hopkins Center for a Livable Future.
Weaver is the president of the Contract Growers Poultry Association of the Virginias and a former contract chicken farmer.
In the past few months, chicken prices have been climbing to record highs. The average price for boneless, skinless chicken breast has nearly doubled since last year (to $2.64 per pound). News reports have offered a growing list of reasons to help explain the rise, including inflation, supply chain challenges, labor shortages, the Russian invasion of Ukraine, and the current outbreak of highly pathogenic avian influenza or “bird flu.” However, these factors don’t fully explain why consumers are paying more at the grocery store. And it’s clear that those in the chicken business have seized on the current climate to drive their profits up.
Tyson Foods, the world’s second-largest meat processor, reported that its chicken prices rose 20 percent in the first quarter of 2022—while profits rose by a staggering 48 percent during that same time. And Tyson isn’t alone: The industry overall is reporting unusually high profits. Last quarter, Pilgrim’s Pride, owned by JBS, saw profits increase by 124 percent.
But while these companies and their shareholders profit, and consumers spend more on food, there’s another group that is often overlooked and underpaid: the farmers who raise chickens for these big companies under the contract farming model. They’re getting a raw deal.
The National Chicken Council—the trade association for chicken companies—reported that farmers’ pay per pound of chicken decreased 3 percent between 1990 and 2020 when adjusted for inflation. Chicken farmers we’ve talked to say they gross about 24 cents for each four-pound bird they raise. That paltry amount has to cover labor, maintenance, fuel, electricity, and other overhead costs. Several contract chicken farmers have gone so far as to sue large poultry producers citing unfair, predatory, and anti-competitive behavior. Last year, Tyson and Perdue agreed to a $35 million settlement to a lawsuit alleging that the companies have pushed farmers into debt and locked in their compensation at unprofitably low rates.
So, what’s really going on here? It boils down to the concentration of the chicken industry and its reliance on the contract farming model. Just four companies—JBS (Pilgrim’s Pride), Tyson, Perdue, and Sanderson Farms—comprise more than half the U.S. chicken market. This concentration of power has allowed the companies to squeeze both the farmers and consumers to maximize their profits.
Americans’ chicken consumption has been rising steadily, and the vast majority—95 percent—of chicken in the U.S. is produced through the contract model of farming. This means that farmers enter into agreements with companies that own flocks of breeding chickens, hatcheries, feed mills, and processing plants. The companies send the farmers chicks, feed, and medicine and the farmers raise the chickens for about six weeks until they are ready for slaughter. Then they deal with the massive quantity of waste left behind and start the cycle over.
The farmer is responsible for building and maintaining the chicken houses (to the companies’ specifications), which is an expensive endeavor: Constructing two new chicken houses runs about $1.5 million today. But the debts don’t end there—company-dictated upgrades often cost five or six figures and can be an unexpected and unwelcome burden for farmers. This has created an untenable situation for some farmers we know who are struggling to pay their mortgages and worried about losing their home and farm.
Unfortunately, this is not a new scenario...
more, including links