By Adam Rabiner
It’s not a spoiler alert that small family farmers are a dying breed around the world. What is less well known is the economic dynamics at play that are killing them off. Under Contract: Farmers and the Fine Print describes the plight of the family farm and shows the devastating psychological effects these closures have on individuals and families.
While small family farms once dotted the United States giving them a politically powerful voice, today they represent less than 1% of agricultural production and hold very little clout. Power has shifted to the big corporations. Under Contract, focuses on the poultry industry, but the forces at play are universal. The rural way of life for all farmers is under threat.
A traditional farmer’s life balanced risk and reward. Hard work with independence. Farmers controlled their inputs and made their own decisions. Today, however, about 97% of U.S. chicken farmers contract with large food companies such as Perdue, Tysons or Pilgrim’s Pride. These companies, known as integrators from the microeconomic concept vertical integration, own and/or control their supply chains and all steps in the production process.
Perdue will incubate and hatch its chicks in a company owned hatchery and deliver them to a farm where they are raised in 50 feet wide by 624 feet long houses. Contracts dictate: watering, feeding, brooding, sanitation, litter, vaccinations, house environment, lighting, pest control, and bio-security. Even though the contract names the farmers “independent growers,” they have little to no autonomy. The growers raise the birds for six weeks while the integrator has them for just two: the day of delivery and when they pick them up six weeks later for processing and packaging. This leaves the farmers feeling like employees or even serfs.
Yet while farmers take on the bulk of the work and risk, the integrators reap most of the profit. The reason for this is that the farm itself is the least profitable end of the business, and remains off the integrators’ balance sheets. If chicken retails for $2.00 per pound, only about $.05 goes to the farmer (you will see below, they must compete for this nickel). The uneven benefits are also due to the unfairness of the contracts which allow integrators to control farms, without actually having to own them.
The main aspect of the contract that farmers find unfair is known as “the tournament” which structures the payout farmers receive. While the integrators promised the farmers healthy paydays per flock (of 90,000 chickens) while recruiting them, in reality their pay fluctuates anywhere from $21,000 to as little as $12,000 per flock, depending on the market and the tournament, a complicated calculation based on the cost of the inputs and output. The tournament ensures a zero sum game where one farmer’s gains are another’s loss, while guaranteeing profitability to the integrator. According to one farmer, the tournament is like tossing meager meat scraps to a pack of hungry dogs. It is unfair and dependent on many factors, such as the health of the provided chicks or the quality of the seed.
Furthermore, the legal system is rigged. A farmer sued Tyson for $30,000 in losses he claimed was due to retaliation when Tyson failed to deliver a flock of chicks after he had complained that the company had previously incorrectly weighed his birds. He lost his case because he could not prove that all chicken farmers suffered from mistreatment, unfair competition, and discriminatory practices. Under Contract contends that The Grain Inspectors, Packers, and Stockyards Administration (GIPSA), the government agency overseeing the industry, is influenced by lobbyists and big money, poorly representing the interests of small family farmers.
Because of the tournament, farmers cannot count on a steady paycheck, and live flock to flock (typically six per year). About 69% of chicken farmers are heavily indebted to banks (about $5.2 billion collectively) which face no financial risk because their loans are guaranteed by the U.S. government. These easy to receive, risky, loans, range from $500 thousand to $2 million, preventing the farmers from just walking away. Often they have to face a heartbreaking choice, either to sell the farm which may have been in their family for generations, often just breaking even, or to declare bankruptcy. Those that stay in the game, always on the edge of bankruptcy, live close to the poverty line or rely on income other than chicken farming.
It’s not surprising to learn that suicide is not uncommon on the small American farm. Like the spate of taxicab and Uber drivers that have recently taken their own lives, or farmer suicides in India, the despair is linked to economic pressure and competition but also probably to the loss of control and self-direction. Contract farming has become Fordist and commodified, far less emotionally and psychologically rewarding than traditional farming. It is disheartening therefore to see that in search of global profits, the major companies are successfully exporting their integration model to third world countries. In fact, in the last decade India has gone from zero to 80-90% contract farming, where production has now risen to 9-10 million broilers every day. Many Indian farmers are illiterate and sign their contracts without reading them or being provided a copy. The price of meat, with the glut of supply, has plummeted, the market no longer profitable for the small farmer.
Under Contract calls on farmers, plant workers, consumers, and animal welfare advocates to unite to slow down the unbridled force of advanced industrial global capitalism.
It’s not a spoiler alert that small family farmers are a dying breed around the world. What is less well known is the economic dynamics at play that are killing them off. Under Contract: Farmers and the Fine Print describes the plight of the family farm and shows the devastating psychological effects these closures have on individuals and families.
While small family farms once dotted the United States giving them a politically powerful voice, today they represent less than 1% of agricultural production and hold very little clout. Power has shifted to the big corporations. Under Contract, focuses on the poultry industry, but the forces at play are universal. The rural way of life for all farmers is under threat.
A traditional farmer’s life balanced risk and reward. Hard work with independence. Farmers controlled their inputs and made their own decisions. Today, however, about 97% of U.S. chicken farmers contract with large food companies such as Perdue, Tysons or Pilgrim’s Pride. These companies, known as integrators from the microeconomic concept vertical integration, own and/or control their supply chains and all steps in the production process.
Perdue will incubate and hatch its chicks in a company owned hatchery and deliver them to a farm where they are raised in 50 feet wide by 624 feet long houses. Contracts dictate: watering, feeding, brooding, sanitation, litter, vaccinations, house environment, lighting, pest control, and bio-security. Even though the contract names the farmers “independent growers,” they have little to no autonomy. The growers raise the birds for six weeks while the integrator has them for just two: the day of delivery and when they pick them up six weeks later for processing and packaging. This leaves the farmers feeling like employees or even serfs.
Yet while farmers take on the bulk of the work and risk, the integrators reap most of the profit. The reason for this is that the farm itself is the least profitable end of the business, and remains off the integrators’ balance sheets. If chicken retails for $2.00 per pound, only about $.05 goes to the farmer (you will see below, they must compete for this nickel). The uneven benefits are also due to the unfairness of the contracts which allow integrators to control farms, without actually having to own them.
The main aspect of the contract that farmers find unfair is known as “the tournament” which structures the payout farmers receive. While the integrators promised the farmers healthy paydays per flock (of 90,000 chickens) while recruiting them, in reality their pay fluctuates anywhere from $21,000 to as little as $12,000 per flock, depending on the market and the tournament, a complicated calculation based on the cost of the inputs and output. The tournament ensures a zero sum game where one farmer’s gains are another’s loss, while guaranteeing profitability to the integrator. According to one farmer, the tournament is like tossing meager meat scraps to a pack of hungry dogs. It is unfair and dependent on many factors, such as the health of the provided chicks or the quality of the seed.
Furthermore, the legal system is rigged. A farmer sued Tyson for $30,000 in losses he claimed was due to retaliation when Tyson failed to deliver a flock of chicks after he had complained that the company had previously incorrectly weighed his birds. He lost his case because he could not prove that all chicken farmers suffered from mistreatment, unfair competition, and discriminatory practices. Under Contract contends that The Grain Inspectors, Packers, and Stockyards Administration (GIPSA), the government agency overseeing the industry, is influenced by lobbyists and big money, poorly representing the interests of small family farmers.
Because of the tournament, farmers cannot count on a steady paycheck, and live flock to flock (typically six per year). About 69% of chicken farmers are heavily indebted to banks (about $5.2 billion collectively) which face no financial risk because their loans are guaranteed by the U.S. government. These easy to receive, risky, loans, range from $500 thousand to $2 million, preventing the farmers from just walking away. Often they have to face a heartbreaking choice, either to sell the farm which may have been in their family for generations, often just breaking even, or to declare bankruptcy. Those that stay in the game, always on the edge of bankruptcy, live close to the poverty line or rely on income other than chicken farming.
It’s not surprising to learn that suicide is not uncommon on the small American farm. Like the spate of taxicab and Uber drivers that have recently taken their own lives, or farmer suicides in India, the despair is linked to economic pressure and competition but also probably to the loss of control and self-direction. Contract farming has become Fordist and commodified, far less emotionally and psychologically rewarding than traditional farming. It is disheartening therefore to see that in search of global profits, the major companies are successfully exporting their integration model to third world countries. In fact, in the last decade India has gone from zero to 80-90% contract farming, where production has now risen to 9-10 million broilers every day. Many Indian farmers are illiterate and sign their contracts without reading them or being provided a copy. The price of meat, with the glut of supply, has plummeted, the market no longer profitable for the small farmer.
Under Contract calls on farmers, plant workers, consumers, and animal welfare advocates to unite to slow down the unbridled force of advanced industrial global capitalism.