Farmers tell feds considering antitrust action that big poultry companies control industry

Farmers tell feds poultry companies control them

NORMAL, Ala. — Alabama chicken farmer Garry Staples told federal officials Friday that there’s no open market in the poultry industry.

The 57-year-old farmer from Steele raises birds for Pilgrim’s Pride, one of the nation’s biggest poultry companies. But like other farmers who raise most of the chickens Americans eat, he doesn’t own the birds he raises, nor does he determine what food they eat or medicine they get. Pilgrim’s Pride controls that.

Staples joined dozens of other chicken farmers who traveled to Alabama A&M University for a hearing the U.S. Departments of Justice and Agriculture held on competition in the chicken industry. Although they raise birds for different companies, the farmers said they have little power to negotiate with the businesses that control an increasingly consolidated industry.

Staples and other farmers said they have been putting up with more demands and smaller payments from the poultry companies. In some regions, farmers only have one or two potential buyers, so it’s hard to make demands. Staples owes more than $1 million on his farm, and he doesn’t want to upset Pilgrim’s Pride.

“The chicken companies know they don’t have to treat you fairly,” Staples said.

Richard Lobb, a spokesman for the National Chicken Council trade group, responded that Friday’s hearing was skewed with testimony from unhappy farmers and many are satisfied with contracts that allow them to sell a steady supply of chickens.”

“The processing plant has to have birds coming in. They’ve got to continue working with farmers in that area to secure a supply of birds. (Companies) are not going to cut off their nose to spite their face,” he said.

Friday’s hearing was the second of five workshops that the Obama administration will hold this summer and fall to examine competition in agriculture, where seed, cattle, chicken and hog markets are dominated by a few large corporations.

U.S. Attorney General Eric Holder and Agriculture Secretary Tom Vilsack, who both attended the hearing, said stepped up antitrust enforcement in agricultural businesses is a top priority for the Obama administration. If that happens, farmers might earn more, but food prices might also increase.

Holder suggested during a news conference that the Justice Department hasn’t been vigilant enough in pursuing antitrust cases against big poultry companies.

“There is a new attitude in the antitrust division,” Holder said. “Everyone should understand. There is no hesitancy on the part of this antitrust division, in this administration, to take action where we think it is needed. This antitrust division is open for business again.”

Kay Doby, a former chicken farmer from North Carolina, said government intervention is long overdue. Companies lure farmers into borrowing money to build chicken houses, then threaten to cancel their contracts if farmers complain about pay or refuse to invest more money to upgrade the buildings, she said.

“This system takes hardworking farmers and makes them indentured servants on their own land,” Doby said. “I can’t tell you how many times I’ve heard that our contract would be canceled if we did such and such.”

Friday’s hearing was packed with farmers, lobbyists and agribusiness representatives who are keeping a close eye on the hearings, eager to see what new rules or federal lawsuits might result.

It’s not clear that stepped up antitrust enforcement would do anything to change the broader food system. Chicken companies have developed their contracting system over decades, and it has survived antitrust lawsuits and challenges in the past.

Vilsack said the USDA could use its regulatory power to complement the Justice Department’s antitrust efforts. The department is getting more money to hire lawyers and investigators and has formed a joint task force with the Justice Department to coordinate antitrust enforcement.

The industry says existing antitrust law is adequate and opposes more regulation, but the political pressure to do something seems to grow at each hearing.

Staples, the 57-year-old Alabama poultry farmer, said he feared Pilgrim’s Pride would retaliate against him for his testimony, a notion that made the Army veteran choke up during his testimony.

“I appreciate y’all coming,” he said to Holder and Vilsack. “And I hope y’all helps.”