Collateralized Farmers

In the course of his sensational exposé of Big Meat, of which I’m still in the midst, Christopher Leonard falls upon both a solution to a mystery central to influenza epizoology and a foundational admission on the part of the poultry industry.

It’s common knowledge that agribusiness are vertically integrated. All nodes of poultry or pig production are placed here in the States under each of the Big Five’s roofs. Cargill, Smithfield, JBS Swift, Pilgrim’s Pride, and Tyson raise their birds and hogs and beef from fertilization to freezer.

But that isn’t quite correct. “There is one link in the chain that Tyson [much as the other companies] has decided not to own,” Leonard writes,

one part of the rural economy that the company has pushed far outside the limits of its property. While most businesses are drawn steadily into the integrator’s body, the force of gravity has been reversed when it comes to the farms. The farms [on which poultry spend much of their albeit short lives] are exiled, shoved away, and dumped from the balance sheets.

Plumping up birds for sacrifice is contracted out to local freelancers as modern-day sharecroppers,

During the 1960s, Tyson Foods realized that chicken farming was a losing game. When Tyson executives examined operations at the company, they saw that farming was the least profitable, and most risky, side of the business… “You need to allocate whatever capital you have where it produces the most return on your investment.”

While cutting-edge machinery, as it were, for slaughtering and processing poultry saves thousands of hours of labor, owning the land and raising birds under difficult circumstances add limited value.

“You can’t crowd the chickens in [a four-hundred-by-forty-foot-wide chicken house],” Leonard quotes former Tyson attorney Jim Blair, “[When] there’s too much chickens you create disease and you lose efficiency. You can’t keep a curve on the growth of production in the chicken house.”

Ventilation, vaccines, and automated feed distribution only incrementally boost profits.

In effect, the companies are openly admitting squeezing thousands of animals together produces repeated and devastating outbreaks that undercut margins. As Tommy Brown, a former Tyson field technician Leonard interviewed, describes it,

The chickens seemed as delicate as a crop of indoor snow being grown in the Ozark summer. With just the slightest glitch, a broken fan or feed line or dirty water tank, the birds would expire fast as melting ice. More than anything, he thought, it took vigilance to raise chickens. This is what he preached to farmers. This was his solution when he entered a barn and saw that the feeder was broken and the birds were pecking each other to death.

The admission is spelled out in something more damning than a leaked document or by willing informers, Brown among them, however helpful these may be. It’s found in the structure of the sector.

Raising animals this way is so unsustainable that the companies ostensibly rearing them, control freaks extraordinaire, refuse to fold it into their incorporated operations. Instead, by a complex bureaucratization the companies maneuver contract farmers into taking on all the risk but without any of the authority,

Tyson has offlanded ownership to the farms, but it maintains control. The company always owns the chickens, even after it drops them off at the farm… So the farmer never owns his business’s most important asset. Tyson also owns the feed the birds eat, which is mixed at the Tyson plant according to the company’s recipe and then delivered to the farm on Tyson’s trucks according to a schedule that Tyson dictates… Tyson dictates which medicine the birds receive to stave off disease and gain weight…

As if this wasn’t command enough, Tyson plays the farmers off each other,

Tyson also sets the prices for its birds…subtract[ing] the value of the feed it delivered to grow the birds… But the farmer isn’t paid this flat fee. Instead, final payment is based on a ranking system, which farmers call the “tournament.” Tyson compares how well each farmer was able to fatten the chickens, compared to his neighbors who also delivered chickens that week.

That is, the diligence and vigilance Brown counseled farmers were never enough,

[Brown] also knew what the farmers didn’t: that no matter what they did, no matter how many hours they worked or what new equipment they bought or innovations they tried, it wouldn’t affect their profitability at the end of the day. That profitability was determined before the loads of baby chicks were placed on the bed of fresh litter. It depended on how healthy the birds were at birth, and whether Tyson delivered good feed or the dregs from the bottom of the feed mill silos…Older hens produced weaker chicks, while younger hens laid more vigorous broods.

Indeed, access to the best birds, feed and ranking appears a means by which to discipline farmers. As Andrew Jenner wrote this Feburary,

Fear of economic punishment for upsetting the company is pervasive among growers. Even worse is the prospect of being “cut off,” or dropped altogether by a company, which generally can terminate a grower’s contract at will with 90 days’ notice – potentially devastating to a grower with mortgage payments to make on his poultry houses.

As a result, very few growers are as willing to be as outspoken as [Pilgrim’s contract farmer and labor organizer Mike] Weaver about difficult circumstances they may be facing… As a case in point, Weaver says he used to regularly earn production bonuses by topping the weekly pool of growers. He says it hasn’t happened once in the past three years.

One Tyson office worker Leonard interviewed discovered some farmers repeatedly received the cream of the day-old chicks, from younger hens, while another batch routinely were sent the worst, from older hens,

The complainers [including those attempting to organize poultry growers]. It was understood within the office that those who complained would be marked. And it was as obvious as a list of names on a bulletin board who was who. Some farmers went with the program and ensured the system ran smoothly. And others, he believed, posed a threat by complaining, calling the office, or demanding more money.

Prices, feed, and birds aren’t the only inputs fixed. Even the financial risk of running a farm, superficially a matter between a farmer and his or her bank, is tightly controlled. “Farmers take out bank loans to finance the operations,” Leonard explains,

and rural banks have become proficient at helping the farmers become indebted. The banks have learned to break down a farmer’s debt payments into a schedule that perfectly coincides with the life cycle of a flock of chickens. The farmers pays the bank every six weeks or so, just when this paycheck arrives from Tyson. In many cases Tyson cooperates with the bank and draws the loan payment from the farmer’s pay, directly depositing it into the bank. So with every flock, the farmer is racing against his debt, hoping the birds Tyson delivers will gain enough weight to earn a payment that will cover the mortgage and bills from electricity, heating fuel, and water [for the birds]…

While a farmer’s debt is measured in decades, the contracts run a matter of weeks and are reissued flock-by-flock, to be terminated at the company’s whim.

The epizootic thunderbolt is that pathogens likely evolve in response to the company town.

We hypothesized here influenza strains have evolved virulence schedules convergent with agribusiness production. Flus may ‘grow’ cohorts of infected chicken not for market but the next barn of susceptibles in the value added chain.

We can now add another perversity. Agribusiness grow farmers as so much trap crops sopping up structural diseases with externalized debt. The market protects influenzas and other pathogens inherent in raising so many birds so fast and so close by dumping the costs of the outbreaks on contingent labor.

The damages smallholders shoulder extend beyond financial ruin. Stressed U.S. farmers, like their Indian counterparts, are killing themselves at a prodigious rate.

“[The 1980s] economic undertow sucked down farms and the people who put their lives into them. Male farmers became four times more likely to kill themselves than male non-farmers,” Newsweek recently reported, “Since that crisis, the suicide rate for male farmers has remained high: just under two times that of the general population.”

One Response to “Collateralized Farmers”

  1. Reblogged this on AgroEcoPeople and commented:
    Amazing analysis of the contract farming industry, banking off of Chris Leonard’s recent work.

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