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The Texas Observor
It was Monday morning and Barry Townsend headed to work with a bag lunch and his wife’s .38-caliber revolver. He slid into his red Ford F-350 pickup and began the drive from the Townsends’ farm outside Bryan toward New Waverly, where he worked as a machinist. Cindy hadn’t noticed her gun missing that morning. Before leaving, Barry simply told her, “I’m going to work.”
Barry Townsend was not just a machinist. He and Cindy also raised chickens for the Mississippi-based company Sanderson Farms. They were one of about two dozen families that the company had recruited in a 100-mile radius around Bryan to work as contract growers. The work was hard, and the hours much longer than the Townsends had anticipated. Every year, their expenses increased, and the money they earned was never enough. Their financial situation strained their marriage, and they argued often. Cindy occasionally wept at the thought of the bank foreclosing on their farm. Among the small community of chicken growers, it was no secret that the couple was struggling.
About an hour after Barry Townsend left his farm that morning, January 8, 2001, police responded to reports of gunshots at the Sanderson Farms regional headquarters in Bryan. Townsend, according to police reports, had requested a meeting with managers Kevin Crook and Larry Ryals. When the three men gathered in a small conference room, Townsend turned to Crook and told him to call Cindy and apologize. Crook was confused. “Barry, we don’t know what you mean,” he said. Townsend immediately became agitated and, cursing, insisted on an apology. Then he pulled the .38. Crook nervously agreed and picked up the phone. But he was too flustered and couldn’t dial the number. “I’ll dial,” Townsend said, moving the two men aside. He began pushing the wrong buttons and couldn’t get an outside line. “Push that button,” Crook said, gesturing as he moved toward the phone. Townsend was edgy and the movement startled him. He jumped back and shot Crook in the chest, killing him. Then he turned and shot Ryals, who raised his arm in self-defense. The bullet gashed through Ryals’ forearm and lodged in his shoulder; he would be the lone survivor. Barry Townsend put the revolver to his own head and pulled the trigger. He was 46.
After a month-long investigation, police closed the case and told local reporters it was unlikely that anyone would ever know what had caused Townsend to kill one man, wound another, and take his own life. Unofficially, however, a simple explanation coalesced: Townsend had been convicted of child molestation in 1998 for groping Cindy’s oldest daughter. According to conventional wisdom, Barry Townsend was a disturbed felon who, as one police detective told Cindy, “went berserk.”
But there’s also a more complicated tale being told in churches, across dining room tables, and on the poultry farms around Bryan—a story of modern-day sharecropping and indentured servants. Recently the Observer spoke with 11 current and former area growers contracted by Sanderson Farms. Many were fearful of retribution; those still under contract talked only on the condition that their names and identifying details not be published. All, however, described the same scenario: The company, working closely with five local banks, requires prospective contractors to obtain loans, often in excess of $400,000, to finance construction of chicken houses. Contractors put up their farms as collateral to secure loans. With their land at stake, they are then subject to total company control. They tell of low pay for long hours, intimidation, manipulation of wages, and health problems that some blame on exposure to additives in the chicken feed.
The Observer made five attempts to contact Sanderson Farms for its side of the story. Terry Thompson, the Bryan division manager, refused two interview requests. He stressed that neither he nor anyone in the company would comment. “That’s what I was told to say,” he said. A spokesman at the company’s Laurel, Mississippi, headquarters did not respond to requests for comment.
The poultry industry can be a filthy business. The major poultry companies harvest their chickens from industrial farms, lace the feed with growth-inducing hormones, insecticides, and anti-bacterial drugs; some companies inject their meat with phosphates and chicken broth.
By contrast, Sanderson Farms presents itself as a family run, health-conscious operation. Incorporated in 1955, it began as a feed supplier and has since grown into the nation’s fifth-largest chicken producer, a publicly traded corporation that reported sales of more than $1 billion in 2004. It’s still run by the founder’s son, Joe Sanderson, and promotional materials boast that the company has “the foundation of hard work and family values. Today, the ‘family’ includes 8,300 employees and over 600 independent growers.” The company advertises its hormone-free chicken meat as “all natural” and “100 percent chicken. Naturally.” Company billboards declare, “Our ingredient list: chicken.”
In 1995, Sanderson Farms expanded its operations into Texas. It built a processing plant and egg hatchery in Bryan and began advertising in East Texas community newspapers to attract growers. There are three levels of growers in its operation: pullet or hen growers, egg producers, and broiler farms. Pullet growers raise the hens, which the company then collects and delivers to the egg-producing farms. Egg growers cull the eggs, which are hatched in the company’s Bryan hatchery. Those hatchlings are sent to the broiler growers, who raise the chickens that end up in the supermarket meat aisle. All major poultry companies -- what one grower labeled the “chicken Mafia -- use contract growers in this way. A few, such as Tyson and Pilgrim’s Pride, own some of their own pullet, egg, and broiler farms in addition to contracting with farmers. According to the industry trade group, the National Chicken Council, contract growers raise 90 percent of the chickens produced in the United States.
The ads that Sanderson Farms placed in local newspapers were emblazoned with testimonials from local farmers who already had contracts with the company. “Now I'll be able to have a good retirement,” said a man identified as David Boyd of Brushy Creek Farm. In another ad, a farmer contended that the chicken business was “an investment for my children too.”
Nevada and Karen Bedwell, married 35 years, found the advertisements alluring. They liked the idea of owning their own business. Nevada worked as a manager at the supermarket chain HEB, and contracting with Sanderson Farms as egg producers seemed an ideal second income, a job that Karen could do on her own.
In 1997, the Bedwells met with company managers. They say that they were given a three-page projection of income and expenses and told that they could expect to gross $121,590 a year, based on a fee of $0.37 per dozen eggs. (Other growers interviewed by the Observer say they received similar documents projecting income and expenses.) Expenses would total $26,700. Sanderson Farms would divert 60 percent of the remaining income to the bank to repay the loan that the Bedwells would have to take out to build the chicken houses. That would leave them with $36,890. Not a bad deal, they figured. Moreover, once they paid off the bank loan -- which they say company representatives told them they could do in 12 to 13 years -- the egg operation would make the family serious money.
They were given a list of five local banks and loan officers they were permitted to borrow from. The Bedwells selected Farmers State Bank, based in Center, Texas, and began meeting with Greg McCoury, who handled all Sanderson loans for the bank. They wanted to build four chicken barns, two for Nevada and Karen, and two for their daughter and son-in-law. The Bedwells say that McCoury told them that they would need a loan of more than $900,000. Normally, a family of their means - Nevada makes about $50,000 a year at HEB - would never secure that kind of loan. But they had no trouble qualifying because the loan was insured through the Farm Service Agency, a division of the U.S. Department of Agriculture that assists low-income farmers in obtaining agricultural loans. (McCoury did not respond to four phone calls seeking comment.) After they built the barns to company specifications, the Bedwells say, Sanderson Farms presented them with a contract to sign. They were not pleased with what they read. The contract required them to adhere to farming guidelines that Sanderson Farms established “from time to time” and to strictly follow “all written and oral instructions.” Although the three-page earnings and expense projections indicated that they would be paid $0.37 per dozen eggs, the Bedwells now discovered that the “payment schedule may be amended from time to time” and that Sanderson Farms reserved the right to cancel the contract at any time. If the Bedwells became dissatisfied they couldn't sue; the contract stated that their only legal recourse was arbitration. Not only did the contract close the doors to the courthouse, it also made arbitration an unlikely possibility. While court filing fees are relatively inexpensive, registration for arbitration can run as high as $10,000 to $20,000.
The Bedwells say they were given one afternoon to accept or reject the contract. At that point, four chicken houses were sitting on their land, and they were responsible for more than $900,000 in debt. They had no choice. “Once they have those houses built, they've got you,” says Nevada Bedwell. “They're in control.”
After their first year as contract chicken growers, the Bedwells were fairly pleased. They had cleared about $30,000. When they talked to Kevin Crook, then still division manager, during their year-end meeting, he told them, “You did well.”
“Yeah, we did good,” Nevada responded. “But just wait till next year, now that we know what we're doing.” No, Crook said. “You'll never do that well again.”
The Bedwells were baffled by his comment. But they soon discovered that Crook was right. In subsequent years, their income eroded precipitously. Their expenses were nearly double the $26,700 that the company had initially projected. Propane, used to heat the barns, became increasingly expensive. But the company wouldn't raise wages to compensate. Then there were the expenses that nobody had ever bothered to mention, such as the cost of water. Thousands of chickens can consume a lot of water.
Despite their hard work, they were losing money by the tens of thousands each year and had to rely on Nevada's HEB salary just to stay afloat. Their experience was not uncommon. Even the growers who say they're satisfied with Sanderson Farms, concede that they aren't making much money. One said he and his wife work all day in the barns, seven days a week and earn about $30,000 total. They had to drop their health insurance. Another detailed how one recent two-month stretch of intense work in the barns yielded $200 net profit.
“This is why they've got labor laws to protect people,” Nevada says. “But the labor laws don't [apply] here because you're supposed to be a contract worker. They've found that gray area outside the labor laws.”
When the Bedwells didn’t comply exactly with Sanderson Farms’ wishes, they would sometimes hear from their loan officer, who, they say, warned them that unless they followed the company's instructions, they risked losing their contract. “It's indentured labor,” says another grower.
“They've basically recreated the sharecropper system,” says Dudley Butler, who represents Mississippi growers in three lawsuits against Sanderson Farms. “We just don't think that's fair.”
Nor do Susan and Stephen Martin. In 1998, the Martins marshaled their life savings, retirement accounts and all, to pay $100,000 cash for a 76-acre farm outside the small town of Cameron. Then they used the property as collateral to borrow more than $400,000 from Farmers State Bank to build two of Sanderson Farms’ chicken houses. “We were taken in by [Sanderson Farms’] smooth sales pitch,” Stephen says. Their egg farm lost tens of thousands of dollars the first two years. By 2000, Susan decided it was time to fight for a raise.
She began calling other contract growers and helped organize meetings. The group hatched a plan to collectively lobby Sanderson Farms for a pay increase, but company officials flatly refused to meet with growers as a group. Managers would talk with farmers only individually, and the fledgling organizing efforts collapsed. Eventually, the company offered a raise of $0.02 per dozen. Far too little, thought Susan, who refused to sign in protest. The Martins were the only growers to refuse.
They now believe that the company then identified them as troublemakers and began looking for ways to muscle them off their land and replace them with more pliable growers. They contend that Sanderson Farms technicians and managers were constantly showing up at the farm unannounced, hoping to catch them violating company practices. On May 7, 2002, the Martins received a letter from then-division manager Randy Pettus on Sanderson Farms’ letterhead, threatening to cancel the Martins’ contract if they continued to lock their barns and didn’t provide the company with a key. The letter was copied to the Martins’ loan officer, Gregg McCoury, at Farmers’ State Bank.
The Martins also recall numerous threats to write them up for a “deficiency.” (After three grower deficiencies, Sanderson Farms can cancel the contract and the bank can foreclose on the land.) “Susan and I got on their bad side,” Stephen says. “They wanted us off.” What really infuriated him, he says, was the way Sanderson Farms managers would show up when they knew Susan would be working alone at the farm. They would surprise her, corner her, try to intimidate her.
On one occasion in 2002, a Sanderson Farms technician told Susan that too many of her eggs were underweight and that he might have to give her a deficiency. Fearing that she was about to lose her farm, she began sobbing. After the technician left, Susan couldn't stop crying. She was having a breakdown. She called Stephen, who rushed home from work to console her. Nearly three years later, the memory is still painful.
“Then I called the doctor,” Susan says, sitting in her living room recalling the incident.
She starts to talk about the first time that her doctor prescribed sedatives. She begins to cry and walks into the adjoining study. Then she returns, tissue in hand, and continues.
“Stephen got Sharon [their youngest daughter] to come back from college to help me out in the barns,” she says. “I was so knocked out the next few days just because of the medication. And Sharon was afraid that she wouldn't be able to go back to school.” Her voice breaks and she dabs her eyes. Stephen jumps. “The bottom line is, they care more about their damn birds than they do about the people working for them.”
What ultimately pushed the Martins off their land and out of the chicken business was their deteriorating health. The Martins say that no one in the family had major health problems prior to working in the chicken houses. In the summer of 2000, Susan was diagnosed with cysts on her ovary and intestines that required surgery. She later found another cyst behind her knee and, in February 2002, yet more cysts in her armpit. Stephen, meanwhile, began to suffer from depression that the family's doctor later linked to low testosterone levels. Susan suspected that the family's work in the chicken houses had caused its health troubles. Workers in chicken barns often experience respiratory problems from chicken droppings that disperse into the air. Some of the Martins’ chickens even sprouted cysts and other deformations on their legs.
The Martins’ doctor told Susan to investigate what Sanderson Farms might be putting into its chicken feed. In July 2002, Susan took two samples of chicken feed to Dr. Gerald Kilgore, a veterinarian in Rosebud, Texas. Kilgore sent the feed to Industrial Laboratories in Fort Worth. The tests showed that both feed samples contained fairly high trace levels of arsenic.
In early 2003, Susan found another cyst, this time on her breast. She would never know what was causing her health problems. After undergoing surgery in March, she never went back to the barns. In a letter to Sanderson Farms, her doctor wrote, “Mrs. Martin's health may be negatively compromised… working in a chicken barn.”
The company took over the chicken houses, staffing the farm with its own workers. Without their poultry income, the Martins’ teetering finances finally collapsed. They attempted to file a lawsuit against Sanderson Farms to save their farm but ran smack into the arbitration clause. Susan wrote the American Arbitration Association, asking for a waiver of the $22,000 registration fee. She received a reply indicating that would not be possible.
The Martins concluded that their only option was to declare bankruptcy. “The only way we could get our lives back,” Stephen says, “was to commit financial suicide, which is what we did.”
Farmers State Bank promptly foreclosed on the land, and the Martins moved to a house in Cameron, about 10 miles away. Sanderson Farms eventually found another family to take over the barns.
The poultry industry is one of the most highly concentrated and vertically integrated in the United States. It pioneered the use of contract agricultural growers, which has spread to other commodities, from pork to peanuts. As the practice has expanded, there have also been attempts to curb abuses and help contract chicken growers. Dudley Butler, an attorney in Benton, Mississippi, has filed three lawsuits against Sanderson Farms in the past three years on behalf of growers. In one case, Butler's client is suing the company for wrongful termination. (His contract was cancelled the day after Christmas 1997.) The company tried to invoke its arbitration clause, which Butler terms “one of the most onerous I've ever seen.” A district judge agreed, describing the arbitration clause as “unconscionable” in his ruling against the company. Sanderson Farms has appealed the case to the Mississippi Supreme Court.
Butler’s other two cases are class-actions on behalf of Mississippi growers, who allege that the complex system that Sanderson Farms uses to pay growers is fundamentally unfair. Essentially the company has a fixed pool of wages and employs a ranking system to determine who gets how much money. Farmers are ranked according to who grows the biggest birds (or the most eggs) with the least feed. Farmers at the top of the rankings receive more money; those at the bottom receive less. In court documents the company contends that the system rewards farmers for operating efficiently. Butler says it simply pits one grower against another in a system in which the company calls all the shots.
“We like to call it the gladiator system,” says Laura Klauke of Rural Advancement Foundation International (RAFI-USA), a non-profit based in North Carolina. “The growers are totally dependent on the company in terms of what kind of poultry they get. Who decides who gets what chicks? The company. Who brings the feed? The company. Whose figures do you have to trust because you have no way of verifying them? The company.”
Because so much of what goes into production is controlled by the company, the ranking system then provides Sanderson Farms (and the rest of the “chicken Mafia,” which also relies on the ranking system), a tool with which to manipulate growers’ earnings. The difference between making $20,000 to $30,000 - enough to get by -- and losing tens of thousands of dollars is simply the quality of the birds and feed that the company delivers. As one grower explains, you can work as hard as you can, run a farm perfectly, and still lose money if the company sends you poor flocks, and inadequate or insufficient nutritional seed. “You can't make chicken salad out of chicken shit,” he says.
Three states-Georgia, Kansas, and
Illinois- have passed legislation to remedy at least some of the problems
faced by contract growers. Butler, along with RAFI-USA and several other
farmers’ advocates, hopes that Congress will eventually pass the Fair Contracts
for Growers Act, which would protect the right of farmers to sue in the
event of a dispute. However, various agribusiness lobbies, including the
National Chicken Council, have thus far blocked the bill. Even it were
passed, says Klauke, its scope is limited. For contract growers, she concedes,
it's unlikely that there will ever be a “legislative silver bullet.”
Down On The Farm:
Modern Day Sharecroppers
The Dismal Future Of Farming
Published in TomPaine.com January 23, 2002
Karen Charman is an investigative journalist specializing in agriculture, health and the environment.
When Tom Greene agreed to grow chickens for ConAgra, Inc. eleven years ago, he thought it would be the fulfillment of a longtime fantasy to make his living working his own land. He and his wife, Ruth, had just bought the 90-acre farm they had dreamed about as a young couple 20 years before.
But these days, their four long, corrugated tin chicken houses are operated by somebody else. In January 1999, Greene, a former military public affairs officer, helplessly watched as his chicken farm went under the auctioneer's hammer because of a dispute with ConAgra.
Greene explains that he, along with 38 other farmers in Enterprise, Alabama objected when ConAgra demanded that they take out loans to invest in costly new equipment. They also balked at signing a contract that would forfeit their right to sue the company in the case of a disagreement.
Greene says he and his neighbors already had as much debt as they could manage. In order to get into the business, farmers must borrow a lot of money -- about $125,000 per chicken house -- to build facilities according to the poultry company's specifications. Since most chicken companies encourage growers to build four or more chicken houses, that represents an initial investment today of at least $500,000.
Like their heavily indebted counterparts throughout the industry, Greene and friends were not in a position to negotiate. That's because the chicken houses that they sunk their financial futures into have one purpose: to grow chickens. Without a steady supply of birds, farmers can't pay their mortgages. When Greene refused to change his mind, ConAgra terminated their business relationship, and he lost his farm.
Growers find themselves trapped in debt-laden relationships that turn them into serfs at the mercy of the companies that make a fortune on their backs.
Most chicken growers are reluctant to talk publicly for fear of reprisals, but many complain of predicaments like Greene's. They say the corporations that control the chicken industry hook new growers on the promise of making a good, steady income at home. Instead, growers find themselves trapped in debt-laden relationships that turn them into serfs at the mercy of the companies that make a fortune on their backs.
Nobody knows how many poultry growers have lost their contracts because only the companies have that information, says Mary Clouse, who runs the Contract Agriculture/Poultry Project at the Rural Advancement Foundation International (RAFI). Poultry companies say the number is very low.
Modern Day Sharecroppers
The way it works is that farmers provide the land, buildings, and their labor. The companies supply -- and retain ownership of -- the chickens, the feed, and any medicine the birds might need.
Growers are paid for growing the heaviest and healthiest birds on the least amount of feed in the six weeks they have the birds. The companies determine how well growers achieve those goals and pay them accordingly, using a complicated formula that ranks each grower's performance against the others who had birds picked up for processing that week.
But chicken growers say their performance is out of their hands, because they have no control over the quality and quantity of the birds, feed, and medicine they receive. They also claim the companies manipulate the ranking system to further erode their pay, a widespread allegation that the companies deny.
"There's no reason a company would discriminate or unnecessarily reward somebody for more than they deserve," says Bill Roenigk, vice president of the National Chicken Council, the industry's trade association in Washington, D.C. He adds that the ranking system is based on the same market-oriented, competitive model as the free market, because "those who work the hardest deserve to be paid the most."
However, several lawsuits have confirmed growers' claims that chicken companies, including ConAgra, have for years engaged in dirty tricks to cheat the farmers, such as delivering unhealthy birds, shortchanging growers on the quantity and quality of the feed, tinkering with the scales, and keeping the birds in hot parking lots for hours before they are weighed to make them drop weight.
How much of a difference can that make to a grower? According to Mary Fortenberry, a poultry grower in Pinola, Mississippi, the top pay and bottom pay scales can vary around $1,500 per batch of chickens -- up to $9,000 per flock on her six-house farm.
Farmers generally do well when they first sign up. But as their houses and equipment age, they find themselves losing ground.
Between 1991 and 1995, poultry growers pocketed an average of $11,000 to $25,000 annually, according to a USDA survey. Data from Bill Heffernan, a rural sociologist at the University of Missouri who has studied contract poultry growers for more than 30 years, and Mary Clouse of RAFI, puts it at about $3,000 to $4,000 a year per chicken house -- a meager return. Heffernan says these figures don't include labor or other costs growers have to pay.
Farmers generally do well when they first sign up. But as their houses and equipment age, they find themselves losing ground to growers with newer facilities. After about five years, companies commonly require new equipment that can cost $50,000 per house. That adds, say, another $200,000 in debt to a farm with four chicken houses. Some critics claim the debt is a way to further entrench their dependence.
Over time, the contracts have become increasingly tilted to favor the companies. Since the farmers don't own the chickens, they can't sell them on the competitive market; the contracting company is their only potential source of payment.
The chicken contract is an MBA's dream: the suppliers' costs are more or less fixed, while farmers assume the risks -- disease, weather, and nature -- related to raising the birds. Some people refer to the farmers as animal babysitters. "They are merely company employees," Heffernan says, "but without benefits."
Many farmers used to do business on a handshake, but as corporate concentration increased, the business culture changed dramatically.
"It's like being a gerbil in a cage," says Rickey Gray, an assistant to Mississippi Agriculture Commissioner, Lester Spell, Jr. "The growers are going as fast as they can, but they're not getting anywhere. All in all, it's like a modern day sharecropping system."
A Problem of Consolidation
Over the last two decades, the poultry industry has gone from having a multitude of small, independent processors who competed for growers to one dominated by a handful of giant corporations, such as Tyson Foods, Gold Kist, Perdue Farms, Pilgrim's Pride and ConAgra. Heffernan, an expert on corporate concentration in agriculture, says the top four companies now control 55 percent of the market, with 30 percent belonging to Arkansas-based Tyson alone. A few dozen smaller companies share the rest.
Currently, companies operate on the Chesapeake Bay's Delmarva Peninsula and in pockets mainly throughout the South. Only one company typically operates in any 25-mile radius, Heffernan explains, further limiting the growers' options. Where there is more than one company in an area, he says, they observe an unwritten rule not to pick up growers who have worked for other companies. So once the farmers have signed with a particular company, they can consider themselves married to it.
Many farmers used to do business on a handshake, but as corporate concentration increased, the business culture changed dramatically. Without competition for the supply, Heffernan says individual growers have proved no match for the chicken companies who set the terms of the contract, almost always on a take-it-or-leave-it basis.
The poultry companies dispute these claims, saying that most complaints come from jealous growers who covet the additional pay of their harder-working neighbors. "The great bulk of the grumbling goes on from low-paid growers," says Michael McAlpin, president of the Mississippi Poultry Association, which represents the state's poultry companies.
So if the farmers get such a raw deal, why don't they revolt? Though the companies vigorously deny it, there is plenty of evidence that they retaliate against growers who dare to organize for fairer rules.
Take the case of Larry McKnight, a former chicken grower from Forest, Mississippi. McKnight, who happened to be president of the Mississippi Contract Poultry Growers Association, lost his contract in 1996 during the middle of an intense fight in the state legislature. The battle was over proposed legislation to give chicken growers basic rights like being present when their chickens were being weighed and letting their lawyer, accountant and spouse look over their contract. Poultry growers are normally forced to sign on the spot without any outside counsel.
"We had 150 to 200 growers showing up at the capitol every day lobbying for our bill," he says. "But when word got out that my contract had been terminated, the lobbying effort dwindled down to nothing, because they were absolutely scared they'd be next."
McKnight, 50, a soft-spoken, articulate man with a patient demeanor, grew chickens on two farms in central Mississippi for 17 years. He lost both and now works for the state.
Considering the force of the poultry companies' opposition, one might have thought the growers were trying to put them out of business. But according to the Mississippi agriculture department's Rickey Gray, the proposed legislation would merely have put into law what the companies had agreed to the year before.
Mississippi chicken growers are battling a political and economic Goliath.
"The fact that the companies fought so hard indicated that they had no intention of following what they originally agreed to," says Gray. "It showed really bad faith and confirmed a lot of the concerns the growers had been making us aware of."
Growers in Mississippi -- as in all poultry growing states -- remain without adequate protection from state laws against unfair practices by the companies.
Poultry companies, however, have had a much easier time at the state capitol. In 1995 they got legislation passed that prohibits the Mississippi agriculture department from getting involved in contractual arrangements between growers and the companies. According to Gray, similar legislation exists in Georgia, Alabama, Maryland, West Virginia, and Louisiana.
Mississippi chicken growers are battling a political and economic Goliath. With annual revenues of $4.5 billion, poultry is the state's largest agricultural commodity and accounts for 25 percent of Mississippi's economy. It also directly or indirectly employs one-fourth of the state's workers.
RAFI's Mary Clouse recognizes the industry's tremendous clout: "Those legislators are in an awful bind," she says. "If lawmakers do anything to anger the companies, they always threaten to move out of the state to, say, Utah where it's 'friendlier' than Mississippi."
Such race-to-the-bottom competition among states illustrates the need for effective federal regulation to protect farmers. As early as the 1930s, the U.S. Congress recognized that individual farmers could not match the power of large agricultural commodity buyers. It passed the Capper-Volstead Act to allow farmers to organize to negotiate price and terms of trade without violating the nation's antitrust laws.
So far, the laws on the books haven't helped poultry growers. The Grain Inspection, Packers and Stockyards Administration of the U.S. Department of Agriculture -- widely known as Packers and Stockyards -- has provisions that prevent poultry growers from being discriminated against, but growers and farm watchdog groups say they are ineffective and not enforced. Larry McKnight, the Mississippian who lost his farm, learned this when he lodged a complaint with Packers and Stockyards against Lady Forest Farms.
The Memphis branch office of Packers and Stockyards found that Lady Forest had no justification for terminating McKnight's contract and recommended immediate reinstatement. But the branch office's findings were inexplicably reversed in Washington, D.C.
Later, McKnight confronted James Baker, who directed the Washington office, while Baker was in Mississippi speaking at a farmers' meeting. "He admitted [his department] had dropped the ball in my case but said it didn't want to get bogged down in the legal process," McKnight recounts. "That's a strange thing for a watchdog agency to say."
A Packers and Stockyards spokesperson said the agency could not respond to McKnight's allegations at this time. But even if Packers and Stockyards did want to follow up, the most it can legally do is recommend that a grower be reinstated. Any actual enforcement would have to be pursued by the Department of Justice, adding years to the process.
McKnight later sued Lady Forest for violations of his rights under the Packers and Stockyards Act and the Agricultural Fair Practices Act. Although the company claimed he was terminated for poor performance, McKnight proved them wrong.
His victory, however, was bittersweet. While he got the satisfaction of knowing the courts recognized his grievance, punitive damages are not allowed under either law, and all he was awarded was $50,000 plus his attorney's fees. McKnight says he is still paying debts incurred by the loss of his poultry contracts.
Contracts of one kind or another have been used in various sectors in agriculture for years. The poultry industry, however, was the first to perfect this type of production contract, which gives the companies complete control over the product the growers produce.
Steve Etka, of the Campaign for Contract Agriculture Reform, says these one-sided contracts, known legally as "contracts of adhesion," are attracting increasing interest from other quarters in agriculture. "There are a lot of agribusiness sectors seeing the poultry model and the ability of the companies to shift risk and costs from themselves onto the grower," he says. "From a straight bottom-line standpoint, it looks pretty attractive."
There is also growing concern in the Midwest that production contracts will sweep through the giant corn, wheat and soybean sectors.
Already, similar provisions are creeping into hog and cattle contracts, says RAFI's Mary Clouse. In North Carolina, tobacco contracts jumped from 20 percent of the state's production in 2000 to 80 percent last year, and this year she expects them to be 100 percent. The same thing is happening in Kentucky, and Clouse says peanut production appears to be next.
There is also growing concern in the Midwest that production contracts will sweep through the giant corn, wheat and soybean sectors. In those cases, Heffernan says companies like Cargill, ConAgra and Archer Daniels Midland will own the seed and provide the inputs of fertilizer and chemicals required to grow the crop.
Just as the chicken growers don't own the birds, Heffernan predicts soybean and grain farmers won't have clear title to the crop. That means they won't be able to engage in the time-honored practice of using the crop as collateral on a loan, he says. Equally ominous is that like chicken growers, grain farmers won't know anything about the genetic background or even the identity of the material -- including the various fertilizers and pesticides -- they are putting on their land.
That will likely increase the difficulty citizens and communities have in dealing with the growing crisis of agricultural pollution, whether it is contamination from escaping genetically modified pollen, fertilizer runoff, pesticide spray drift, chemical tainting of groundwater, or the unfathomable quantities of bacteria-laden animal manure from cattle feedlots, hog operations and chicken farms that are fouling the land, air, and water throughout the nation.
In anticipation of the new wave in contract production, Iowa Attorney-General Tom Miller drafted legislation to protect producers -- a farmer's bill of rights, of sorts -- endorsed by attorneys general from 15 other states. Though the bill has been introduced into all corresponding state legislatures, none have passed it.
"Is this what we want agriculture to look like in the future?"
A version of the producers' bill of rights was introduced into both the U.S. House and Senate during debate on the Farm Bill. But the legislative session ended before finalizing the bill in 2001. The fight is expected to begin anew after January 23, 2002 when the Senate reconvenes.
Unless there's a speedy U-turn away from the government and economic policies that have fostered the enormous clout agribusiness corporations now have, only huge mega-farms operating under contract will survive predicts Fred Kirschenmann, director of the Leopold Center for Sustainable Agriculture at Iowa State University.
Concern used to be focused on the growing size and power of companies on the production side -- seed and chemical suppliers, food processing and manufacturing companies. But Kirschenmann and others say greater concentration in the retail sector is now driving this, as the food manufacturers attempt to match the power of their own rapidly consolidating product buyers.
"The business interests of these consolidated firms are clearly not going to be the environment, health, or rural communities," he says. "They are simply going to be getting the raw materials as cheaply and as efficiently as possible." To accomplish this, he sees a few very large industrial complexes that produce these materials dominating the American countryside.
As the wave of production contracts, which bring us ever closer to this vision, begins crashing through our food sector, Kirschenmann suggests we ask ourselves: "Is this what we want agriculture to look like in the future?"
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