Big Chicken Owns Everything But the Farm

by Guest

Published: 7/20/16, Last updated: 5/24/19

Sally Lee writes for the Rural Advancement Foundation International’s (RAFI) blog, From the Farmstand. RAFI cultivates markets, policies, and communities that support thriving, socially just and environmentally sound family farms. Find the original post here.  

In 2015, people consumed 112,000,000 metric tons of chicken globally. That’s an unfathomable quantity. So here’s one way to visualize it: That amounts to the weight of two-thirds of all the cars on the road today in the United States — in chickens.

Ninety-seven percent of the chicken we eat is produced by a farmer under contract with a big chicken company. These chicken farmers are the last independent link in an otherwise completely vertically integrated, company-owned supply chain. Vertical integration is a term used by economists to describe the scenario where a company owns every link of a product’s supply chain from start to finish. So rather than buying feed produced by another business, big chicken companies own their own feed mills. Rather than contracting with an independent slaughter house, big chicken companies own their own processing and slaughter facilities. This pattern applies to almost every link in the supply chain: except the farms.

Chris Leonard, agricultural journalist and author of “The Meat Racket”, explained this phenomenon in a recent interview for the upcoming documentary Under Contract. “Everything in this business is built around ‘own it and control it,’ except the farm,” he said. “Why would this one piece remain off the balance sheet?”

The answer to that question has to do with risk. Farming is an inherently high risk endeavor. In addition to marketplace fluctuations for inputs like grain for feed and fuel for transportation, farmers also have to face the whims of mother nature. In the 1960s and 1970s many companies experimented with owning their own chicken farms, and most gave up. “They owned their own farms, and they employed contract employees,” said Leonard, “and while they experimented they found that the farm is the least profitable end of this business.”

The contract model of chicken farming came about instead. “At the end of the day came down to contract system allows them to control the farm without actually having to own it,” said Leonard. That’s why today big chicken companies own the value-added infrastructure; they own the brands and the products; they own almost all of the links in the supply chain, except the farms.

Power and Control in Chicken Production

Corporate concentration is out of control in the United States poultry industry. Just four companies control roughly 60 percent of the US poultry market: Tyson, Perdue, Sanderson Farms and Pilgrim’s Pride. For farmers, this means that in any given area they may have only one or two companies to choose from to raise chickens. Without competition, companies can take advantage of farmers by forcing them to accept unfavorable contract terms like expensive upgrades, low pay, and extreme secrecy disguised as confidentiality and biosecurity policies.

Check out this example of a nasty contract clause forced on farmers by Pilgrim’s Pride.

As for consumers, this marketplace domination creates a layer of deception at the supermarket. Concentration in ownership is disguised by the illusion of choice. It may look like you have lots of options in the meat department, but in reality the top four companies market under at least 30 different brand names.

Curious about the brands at your grocery store? Read more on Oxfam’s interactive site

The prevailing ownership structure has serious impacts on consumers, farmers, workers, and animals. That’s why we’ve created this infographic — to help more people understand where their chicken comes from and who holds the power.

It’s also why we’re producing a documentary film on the industry this year. Watch the trailer for Under Contract here.

Guest posts are contributed by (you guessed it!) guest contributors and the views and opinions expressed within them do not necessarily reflect the opinions of FoodPrint or GRACE Communications Foundation.

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