Eric Hedrick, a contract chicken farmer in West Virginia, produces 1.3 million pounds of chicken every 35 days on his farm. As a contract farmer, once Eric has raised the chickens, the major food corporation that he is in contract with will collect, process and distribute the poultry.
What Is Contract Farming?
Contract farming is a binding agreement established between a farmer and a contractor, which can be another person or a company such as a major food corporation. The agreement is established before the crop is planted or the livestock is raised, specifying how much of the product the company will purchase and at what price. You might be thinking that contract farming sounds like it has the potential to be mutually beneficial - the contractors purchase a steady yield, and the farmers have a market for their product. However, because of the structure of the industry, agribusinesses set the contract conditions and thus often take advantage of farmers, prioritizing their own economic benefit over the farmers' livelihood.
Contract Farming in the Poultry Industry
This sort of exploitation is particularly prevalent in the poultry industry, where 96 percent of chickens are raised under production contracts. This means that there are set terms for how the chickens are raised, which inputs the farmer and contractor provide and how the farmer is ultimately paid. On the contrary, marketing contracts, more common for crops, define how the farmer is paid, but leave the processing entirely up to the farmer.
"When we build these chicken houses we take everything that we have, or ever will have, and put it on the dotted line."
Under production contracts, farmers undertake significant monetary risks because they are responsible for all of the inputs as well as fronting any loss of product due to poor quality or animal fatalities. Eric Hedrick emphasizes this inconceivable reality: "When we build these chicken houses we take everything that we have, or ever will have, and put it on the dotted line." Chicken houses (an industry term for barns) are a substantial investment, often requiring farmers to take out loans in order to cover the large sum. Farmers end up developing a financial dependency on these contractors because once the houses are purchased, it is nearly impossible for them to walk away from these unfair contracts. This process ultimately diminishes farmers from stewards of the land to managers of an industrial practice.
How Do We Reach Justice for Farmers?
Farmers have virtually no ability to negotiate with the contractors. The USDA is responsible for protecting farmers from unfair contracts and exploitive business practices; however, for four years Congress has prohibited the USDA from doing so. Eric Hedrick confesses, "I think the biggest thing that has let us down is the government... it is a political issue." Moving forward, it is critical that the USDA finalizes rules for GIPSA, the agency responsible for creating regulations to protect poultry farmers from abusive contracts. The House Appropriations Bill for the fiscal year 2017 was passed with a GIPSA rider, making this an even more pressing issue.
The Rural Advancement Foundation International (RAFI), among other groups, is working to remove the rider from the 2017 federal budget. To achieve this end, RAFI is garnering public attention and spreading awareness through their upcoming documentary film Under Contract. To learn more about contract farming, and to discover how you can help support farmers like Eric, check out the video above and be sure to see the documentary when it is released.