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Americans eat a lot of chicken, more in fact than any other meat. The U.S. produces nearly 9 billion chickens for meat – “broilers” – each year. Farmers also raise another 270 million chickens each year for egg production. But this large-scale production also comes at a great cost. Both the broiler and egg industries are highly concentrated, and among all livestock farming, the industrial concentration of chicken and egg production is widely regarded as perhaps the worst for the farmer, the worker, the animal, the eater, and the environment.

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Today, four companies control 53% of the chicken industry: Pilgrim’s Pride, Tyson, Perdue, and Sanderson. But this number greatly understates the actual degree of concentration in much of the industry. Roughly half of chicken farmers live in regions dominated by only one or two processing companies, hence they have little, if any, bargaining power. As a result, these local monopolists remain free to impose highly onerous terms on any farmer wishing to do business with them.

Today’s chicken production would barely have been recognized as “farming” in the mid-20th century. Until the 1950s, 95% of chicken farmers sold their animals freely on the open market. They bought their seed and chicks from a variety of suppliers, and sold their chickens to whoever offered the best price at market. The interests of farmers and other small businesses were protected by a piece of legislation passed in 1921, called the Packers and Stockyards Act (sometimes nicknamed the “Farmer and Rancher Bill of Rights”). The Act required meatpackers to pay farmers a fair price for their product, and required big processors to offer the same terms to all farmers selling the same goods.

After World War II, processors began to introduce a new model for the chicken industry. Farmers could now enter into a contract to sell a particular flock of chickens on a particular date to a particular processor. This model made it easier for both the farmer and the processor to manage their work and their capital, and soon became very popular. Farmers remained largely free to choose which company to contract with, and often moved their business from one processor to another. By 1958 about 90% of farmers had transitioned from the traditional open market to a contract model for selling their chickens.

But in the 1980s, a revolution in antitrust enforcement opened the door to two big changes to the chicken business. First, a series of mergers and acquisitions resulted in processors that were bigger than ever before. Second, those processors began to vertically integrate into the business of breeding chicks, and trading in feed, drugs, and other inputs. This newfound power made it easier for companies to impose a contract model on farmers. The new contract model stipulated that farmers should buy all their feed, drugs, and chicks from a particular processor, then sell their fully-grown chickens to that same processor.

In recent years, many of the larger chicken processors have adopted what they call a “tournament system” to determine how much they pay farmers. This system is designed to allow companies to pit farmer against farmer in competitions to see who can grow a flock of chickens most efficiently. Farmers who do a better job of turning chicken feed into chicken flesh – known as “feed conversion” – are supposed to be paid more per pound for their flocks, while those who don’t do as good a job are paid less.

But there are multiple problems with this tournament system. For one, the differential in feed conversion between the top farmer and bottom farmer can be just a few percentage points, while accounting for a much higher pay differential. For another, such a “zero-sum” pricing system violates the basic rules of all traditional markets, which call for a farmer’s earnings to be determined in open competition, not by just a single company.

More fundamental yet, the “tournaments” are not audited in any way. This means that the company is free to deliver different quality feed and different quality chicks to different farmers. It also means that no one, not even the farmer, is allowed to watch over the company when it weighs the grown chickens. Farmers are not even allowed to compare what they are paid with one another, as the terms of most contracts prohibit the sharing of any information. And many of the farmers who have complained publicly about the tournament system allege that the big processors have responded by arbitrarily punishing them, through the opaque and unfair payment processes.

The tournament system can take a psychological as well as financial toll on farmers. In 2015, a farmer in Charleston, South Carolina allegedly killed over 300,000 of his neighbors’ chickens after Pilgrim’s Pride cut his contract due to supposedly poor performance in the tournament system. The sheriff investigating the case acknowledged that the stresses of the tournament system might have contributed to the farmer’s discontent.

Chicken farmers have long pushed for reform or for abolition of the tournament system. In response to their frustrations, the Obama administration arranged for Agriculture Secretary Tom Vilsack, Attorney General Eric Holder, and Christine Varney, the head of antitrust enforcement, to tour the country in 2010 to listen to farmers’ complaints about the abuse of power in the agricultural economy. Many chicken farmers testified during those hearings, based on their faith that the Obama Administration would protect their rights. But under pressure from lobbyists for the meat industry, the Obama Administration later abandoned its efforts to protect farmers in their contractual relationships with packers.

Massive consolidation in the chicken industry has also greatly affected the welfare of workers, the animals themselves, and the environment. As chicken companies seek greater output, they push workers to process chickens at a more rapid pace. The maximum “line speed” – the rate at which chickens can move down the processing line – has doubled in the past 35 years, from 70 birds per minute in 1980 to 140 birds per minute today. As Oxfam details in their recent report, Lives on the Line, workers in chicken processing plants suffer from extremely high rates of injury, must perform repetitive motions at a relentless pace for hours on end, and sometimes are forbidden from even taking a bathroom break. In 2014, workers and their advocates did win a victory when they blocked efforts by the chicken processors to raise the USDA line speed guidelines to 175 birds per minute.

The growing size of chicken farms also results in other problems. The median size of a chicken farm grew by 21% from 2002 to 2011, to 628,000 birds. A typical broiler chicken house contains up to 30,000 birds. Those chickens have little, if any, access to the outdoors, and the air in chicken houses is polluted with ammonia and feces. In such an environment, chickens are far more likely to contract diseases, including ones they can pass on to farmers and/or eaters. Each year, millions of Americans contract E. Coli and other bacteria from consuming contaminated meat. In 2010, Consumer Reports found that 8 out of 10 chickens purchased at a supermarket were contaminated with salmonella or campylobacter, the most common food borne bacteria to cause illness.

Another problem is that processors often require farmers to dose chickens on industrial farms preventatively with antibiotics to fend off infection. This practice has been widely condemned for dangerously reducing the efficacy of many of the most important antibiotics used to treat human illnesses. The Center for Disease Control estimates that around 23,000 people die each year from antibiotic-resistant infections.

Industrial chicken farming also creates massive environmental problems. The chicken industry in Fresno, California, for instance, produces over 17 million broilers annually. These birds in turn generate six times more waste than all the people of Fresno. That waste is often spread on crop fields as untreated fertilizer, which can run off into rivers, lakes and other bodies of water. The Chesapeake Bay, for instance, is highly polluted with excess nutrients from Maryland and Delaware’s chicken farms, where the 523 million chickens raised each year produce 42 million cubic feet of waste per year.  

For more information, read “Obama’s Game of Chicken” by Lina Khan in the November/December 2012 issue of Washington Monthly.

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