Poultry Ranking System Isn't Fair
Poultry growers say the first step toward resolving competition issues in the poultry industry is to rework the ranking system – or throw it out completely.
Pam Golden
Published: May 25, 2010
When the U.S. Departments of Justice and Agriculture asked poultry growers how to improve the industry, the loudest complaint was over a ranking system that smells – well - rank.
The rate poultry growers are paid is determined by a ranking system that compares their flocks to those of other growers. On the surface that would seem fair. In practice, however, growers report that it's grossly unfair.
When U.S. Department of Agriculture Secretary Tom Vilsack asked what the federal government needed to do to improve competition and grower conditions in the poultry industry last week, growers topped the list with eliminating – or at least greatly changing – the ranking system.
North Carolina's Kay Doby, a third-generation farmer whose poultry contract was terminated in 2008, said: terminate the ranking system prohibit mandatory upgrades at grower's expense, and enforce the Packers and Stockyards Act. of 1921.
"There is a myth that the system eliminates grower's risk. It doesn't," Auburn University Extension Ag Economist Robert Taylor said.
Some call it a ranking system. Some call it a tournament system. "I call it a lottery," Taylor said. "It could be a rigged lottery. A grower cannot verify any of the numbers used to calculate pay,"
Taylor and others note that growers can't verify neither the ingredients nor the weight of feed brought by the integrator with which they've contract, cannot reject a poor flock when it arrives and cannot set deliver and pick-up dates for flocks. All of these are issues that impact the quality of the flock a grower producers.
When upgrades are mandated, Doby said, the poultry integrator frequently offers a slight increase in pay. "That extra never will cash flow to pay that expense," she says.
Georgia attorney Cindy Johnson agreed.
"You just can't get out of debt for the upgrades," Johnson said. "If integrators want to experiment with new technology, then they should pay for it."
Yet a grower with a debt on his poultry houses, however, is hard put to turn down a new contract – even when they're offered years before the existing contract expires. Companies can force the new contract because of the advantage to them that's written into it, Taylor said.
Whether the contract is flock-to-flock, five, 10 or 15 years, he said, "I have yet to see a contract that required an integrator to bring more than one flock of chickens."
What growers most need is a verifiable base pay system and an end to grower-paid upgrades on poultry houses, said Mike Weaver, poultry producer and president of the Contract Poultry Growers Association of the Virginias.
The base pay, Weaver said, "has got to be an amount that allows us to pay our bills and make a reasonable rate of return."
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