Happy Turkey Day
Served with a side of Independence?
Friends, it’s been a while since I darkened your inbox, because finding Farm 2.0 and travel carried away a few months. As I write this, I am jumping through the legal hoops to make a somewhat neglected plot of land my next farm (Farm 2.0). And no, it’s not one of those former large-scale poultry operations I was musing about in my last letter about turkeys. The shutdown of Tyson’s Virginia operations leaves poultry farms in this region with a very uncertain future — as you will soon see.
Thanksgiving is here and most of you are put turkey on your plate, with trimmings and flourishes. I hope you thanked that turkey and the people who bred it and hatched it and raised it and slaughtered it and cleaned it and packaged it and trucked it and sold it and disposed of the waste. It takes entire villages to put a turkey – or any other critter – on your plate. And this year, you probably paid about 4% less for that turkey than you did last year.
Faced with many different labels at the grocery store, how did you choose this Thanksgiving turkey? Ha, you say: It’s enough just to cart the thing home and cook it without researching the entire turkey industry! Perhaps my recent research can help you choose the next turkey. Christmas dinner is not that far away, judging from the decorations already up.
I began this journey with a look in my own grocery basket. I started buying Shady Brook turkey sausages several years ago because it was the only turkey sausage I could get that did NOT use pork or beef casings. My allergy to mammals (alpha-gal) does not translate into a loss of hankering for sausages. Unfortunately, most brands of turkey and chicken sausages are made by stuffing pork intestines with ground turkey or chicken. Those mammal intestines may put me in the emergency room. I was delighted to find that this Shady Brook brand had a non-mammal sausage casing. Their casing is calcium alginate, derived from seaweed. It holds the sausage together in the skillet just long enough to keep me from missing “real” sausage.
Those Shady Brook sausages created a halo effect in my mind. I recently realized that I automatically reached for other turkey products with the same branding and label. I had come to trust their ingredients list. Despite all my allergies, I hadn’t gotten sick eating their sausages. But the ingredients on their other turkey products looks the same as the ingredients in the cheaper store brand right beside them on same grocery shelf. So, is the Shady Brook turkey really better or safer than, say, store brands like Kroger? The store brands may cost fifty cents or even a dollar a pound less than the Shady Brook or other “branded” turkey. I started wondering what I might be really paying for with that extra fifty cents.
Depending on the grocery chain I visit (Kroger, Food Lion, Publix, etc), I usually see labels such as Butterball, Jennie-O, Honeysuckle White, and Honest Turkey as well as Shady Brook and “store brands” such as Kroger, Food Lion, and Publix. All these labels might create an impression that you, the consumer, have real choices among many suppliers competing with each other, and that poultry farmers have a lot of choices in how they raise those turkeys and which processor they sell the mature turkeys to. What is the reality behind the glossy plastic labels?
The Shady Brook and Honeysuckle White brands claim to be turkey “raised by independent farmers.” In their packages’ upper right corner, these two brands have a cute little picture of a Dutch-style red barn, the kind with the Gambrel roof that our toy farm set had. Remember those toy farm sets? I don’t think that only farm kids played “farm” with those. I bet some of you had a toy farm set, with plastic critters and that metal barn. Even plastic chickens and work horses. I recall at age five being disappointed that our new “real” farm had a more modern barn with a conventional roof instead of a gambrel-style roof. It was galvanized grey metal instead of red wood. And it housed a red Massey-Ferguson tractor instead of work horses. I think I was more upset about the lack of horses than the barn roof, but my parents recalled much later that I asked if I could paint the barn red. At least the chicken house was red. Or had been long before I was born, judging from the traces of reddish paint still clinging to the weathered boards.
Under that stereotypical red Gambrel-roof barn on the Shady Brook label is “Featured Farm: G&J Anderson.” A search for this farm on the web yields a Facebook page for Shady Brook Farms. Nothing else about this farm comes up besides the same words as on the label. It seems that this farm has been “featured” for a long time. You can find some “farm families” featured on the website www.shadybrookfarms.com, under the banner “Meet the Family Farmers Who Raise Your Turkey.” None claim to be “G&J Anderson.” There are six family portraits — all smiling white folks, some showing multiple generations, and all shown outdoors in green fields. The “familyfarms” — did you know the marketing department has made that one word? — and families are described. You are invited into the picture with “When you serve Shady Brook Farms® turkey, you’re a part of the family – you’re a part of how good feeds good.”
Very little of how the turkeys are raised show up on the website. There are a few short videos, mostly talking heads of the farmers and how dedicated they are to raising good, healthy turkeys for the world. Well, a large poultry operation is a LOT of work, so of course they are dedicated. The shots of the farmers inside their poultry houses include parents smiling at a toddler cuddling a baby turkey. The poultry houses are clean and show large expanses of empty floor. Plenty of room. Of course, the birds are all chicks in these shots, so that could be normal population density for that stage.
What’s wrong with this picture? Well, nothing obvious at that website. But if you happen to take a look at www.honeysucklewhite.com, you will find the same six farm families, with the same marketing slogans. You will also find the same red barn on the label in the grocery store, with G&J Anderson as the “featured farmer.” The main difference is the dominant color of the label: Red for Shady Brook Farms and Blue for Honeysuckle White.
Both Shady Brook and Honeysuckle White are Cargill “brands.” So is Honest Turkey, although that is a sort of child-brand of Honeysuckle White. Cargill is the third-largest turkey processor in the US, after Butterball and Jennie-O. Apparently, Cargill has cut the budget in the marketing department. You’d think that the third-largest turkey processor in the US would be able to find at least another six photogenic farm families to profile on a second “branding” website. And another farm to “feature” on their label. Either that or these six farm families are very, very busy. I wonder why the farmers’ spouses are bragging about their off-farm jobs in these website videos. I suspect those off-farm jobs are paying for the family’s health insurance. But that’s another whole article. Or six.
Turns out that the Kroger “store brand” ground turkey is packaged in the identical plastic tub, with exactly the same amount of protein and fat, as the Shady Brook ground turkey. Just no hype about “independent family farmers” on the label. It’s also a Cargill product, which is in the very fine print. Kroger brand price? Fifty cents less per pound than the Shady Brook Farms at the Kroger in Chesterfield, VA.
Nowhere does Cargill define “independent” in the phrase “independent family farmer.” When you dig around on Cargill’s other business websites, you find them referring to their 600-plus “contract growers.” Isn’t it interesting that Cargill doesn’t use the term “farmer” to describe the people raising your turkey anywhere but in their consumer marketing? They are only farmers – nay, FAMILY farmers – on the website and package label. Well, I suppose turnabout is fair: the “contract growers” call the processors “integrators.”
The term Integrator is quite descriptive. A company—integrator--like Cargill specifies every detail of the farmer’s facility and care of the birds that go through their processing plant. This makes some sense because the birds never leave Cargill ownership. Cargill supplies the feed and medication. All the grower is doing is providing the facility (generally having incurred a large debt incurred to meet Cargill’s specifications), the water, the labor, and a place to put the poultry litter. Yes, the feathered cuties poop, and poop a lot. That manure (called “litter” when it comes out of a poultry house) has to be composted and disposed of somewhere. The only thing “free-range” in a modern poultry operation is the litter. Some of that litter ranges quite far. Due to the buildup of phosphorus from poultry litter spread on fields in the Shenandoah Valley, farmers outside the Valley can get free poultry litter trucked to them to use as fertilizer.
A contract grower’s contract varies a little with the particular poultry integrator, but they have the same general terms. The integrator periodically delivers some number of new-hatched poults or chicks to the grower on a start date with detailed specifications for their feeding and care and a pickup date for the finished birds. The grower has to get some percentage of those birds to a minimum slaughter weight at the pickup date. The integrator provides all the feed and medication for the birds, so the input budget is set. Cargill also produces animal feeds, so they are able to supply the feed directly from their feed plants. Some other integrators without in-house feed plants buy feed wholesale in bulk for their growers. The grower is paid a pre-determined amount for the mature birds no matter what the market price is on the pickup date. The grower works very, very hard but she has economic security. Or so she thinks. Or hopes?
My brothers looked at becoming contract poultry growers around 2000. They struggled to find the data they needed for this decision. After doing the math on the hours required to take care of those birds, and all the costs of the facility, they concluded that they’d be working for less than the minimum wage. A lot less. In 2001, just after my brothers did their business case (and trash-canned the idea), the USDA confirmed their numbers. The USDA found that 71 percent of contract growers live below the federal poverty line, which was then $20,780 for a family of three. Ah, the Shady Brook Farms spouse’s off-farm job was not just about the health insurance – it was about paying the family’s other bills, too. Ironic that a farmer’s spouse would have to work off-farm to afford to buy food for their family, isn’t it?
Contrast this poultry-grower business and our family’s independent sheep operation. Looking at our sheep operation’s balance sheet, you could argue that the below-minimum-wage poultry-grower compensation might be better than what we were netting out for our lamb! We owned our ewes and their lambs, made our own decisions on feeding and managing them, bought the feed, lambed the ewes, and sold the lambs. No one told us how to do all that and on what schedule. We made all the decisions on the animals’ care. We also took 100% of the risk. A disease or weather disaster or feed shortage or market glut of lamb could put us out of business. That’s the blessing and the curse of truly being an independent family farmer. The contract grower system feels like a lot lower risk going in, which is why my brothers thought such a poultry operation would complement the sheep operation and reduce the overall risk. The integrator pays you the agreed-upon price by weight for the mature birds no matter what the market price is at the time the birds reach a certain age. The grower gives up his freedom to decide how to raise those birds for economic security. The grower believes that he is getting a secure income to pay the farm mortgage and the bill for the poultry facility. The problem is, the risk is never zero. Or not even reduced – just transformed. By the time you build that poultry-house to a specific integrator’s specification, you have a much larger mortgage than you started with. And you are locked into the deal for as long as 20 years. If the integrator controls all the inputs, how much influence does the grower have over the product (the number of surviving birds and their weight and quality)? Is this “independence” or an illusion?
Cargill says that the USDA has approved its use of the words “independent family farmers” on its turkey label. Whatever the USDA says, the Small Business Administration (SBA) has withdrawn its approval. In 2018, the Office of the Inspector General determined that Cargill’s “contract growers” were actually “subsidiaries” or “affiliates” of the integrators for federal lending decisions. The SBA began excluding poultry growers from federally-backed small business loans intended for small independent businesses. This exclusion occurred after contract poultry growers got three-quarters of all the SBA’s agriculture-related loans for many years. The average loan to a poultry grower before that was $1.25M! In other words, the gigantic integrators -- Cargill had $135 billion in sales in 2021 alone – have been setting these grower contracts up to get a taxpayer subsidy of their grower facilities.
When the market no longer supports the integrator’s total capacity, the integrator may reduce the number of growers it essentially employs by a number of tactics. These tactics may include assigning fewer or poor-quality chicks to a grower or providing less feed per bird or lower quality feed. The integrators deny that they do this, but simply reducing quality control on the feed supply could get the same result, albeit with random targets. Turkeys are what they eat. Any individual grower has no way of knowing what they are getting compared to another grower, thus feeding the distrust and conspiracy theories. Another trick is requiring expensive upgrades to the grower’s facility (all at the grower’s expense) that the grower can’t afford. I saw one case where the integrator required each grower to pay the integrator over $300,000 for a new information technology system. That kind of IT just didn’t make sense for a farm. It also was not possible for many farmers, so the integrator ended up with fewer growers – in a turkey market glut, too. That’s quite a coincidence, isn’t it? Sometimes new laws or regulations require facility modifications outside of control of anyone in the supply chain (I will devote a whole article on this soon, promise).
Since the early 1990s when the poultry industry consolidation picked up steam, some integrators created a “tournament system” where the higher-performing growers are paid more out of a fixed pool of funds while lower-performing growers are paid less. The lower-performing growers may not be paid enough to stay in business. Growers are ranked against and compete with their neighbors to stay afloat, but they do not know what the rules of the competition really are. When government regulations have been proposed to increase transparency in these relationships or eliminate this tournament system altogether, large integrators make large campaign contributions to defeat these reforms. Growers have also been pressured to oppose these proposed regulations. When his integrator asks a grower to send a letter to his congressman or to a regulatory docket voicing support for what the integrator wants, what is he going to do? Without a steady supply of good chicks or poults from that integrator, the grower won’t be able to meet the integrator’s “standards” and the integrator gets out of the contract. It’s extremely unlikely that a grower who has been abandoned by one integrator will be able to hook up with another. Suddenly becoming totally independent is not realistic in the modern poultry industry – small entities have no direct access to retail markets. Or to the most critical input: chicks. Soon, the grower can’t meet the payments on the now-empty poultry facility. Shortly after that, the entire farm is for sale. The SBA loans are guaranteed to the lender by the government, but that only saves the bank. It doesn’t save the farm. Is it any wonder that farmers are twice as likely to commit suicide as the national average? Poultry grower websites feature articles on helping fellow growers through mental health crises.
In June 2022, the USDA’s Agricultural Marketing Service proposed some new regulations under the 1921 Packers and Stockyards Act to increase competition in the meat industry. Check out Doc. No. AMS–FTPP–21–0044 Transparency in Poultry Grower Contracting and Tournaments for insight into how government regulations are developed with public inputs. It’s also a comprehensive summary of how the poultry integrators control the growers and regulatory proposals for what can be done about it. The docket is 52 pages. Anyone can comment. There were hundreds of comments on this one. Interestingly, the wording of comments from “proud member(s) of the poultry grower industry” writing to oppose the changes and “government bureaucracy and meddling” is very similar. It’s all from the same template – probably supplied by their integrator or its industry association. Of course, many of the comments supporting the changes also sound alike, probably starting from templates supplied by Farm Action, a farmer advocacy group formed to increase poultry contract grower compensation transparency and eliminate the tournament system in grower payments. Or perhaps Family Farm Action Alliance, another group fighting consolidation in agriculture. Poultry growers recently joined forces with cattle, hog, and other farmers caught in contracts with large packers and processors and integrators. This alliance is the Campaign for Contract Agriculture Reform (CCAR) and it’s pushing hard for transparency in contract agriculture. The CCAR comments on this docket were very informative. I learned a new word: Monopsony. That’s where you have only one buyer for your product. It describes the situation most US poultry farmers face now. In some states, numerical measures of the vertical and horizontal consolidation of the poultry industry exceeds the anti-trust enforcement thresholds by a factor of 2 or 3!
The USDA announced the final transparency ruling language just days ago. The version I have is lacking the date it will become effective and it’s not yet in the Federal Register. Looks like the USDA found the CCAR comments very persuasive. Fingers and wattles crossed for the final step, as similar proposed changes have been derailed twice before this century. It looks like a big win for transparency. Integrators will soon have to provide a great deal more information on how they make compensation decisions in the grower contracts, to enable the growers to make sound financial and risk decisions in turn.
Interesting that grower-centric news websites like Modern Poultry are headlining this as great news while integrator advocacy groups like the National Chicken Council say the regulation is “costly and unnecessary.” The NCC press release says: “This is the latest example of Bidenomics pushing increased regulations, red tape and costs onto businesses causing record inflation and input costs, and threatening food security and potentially raising grocery bills even further for Americans.” So much for keeping politics off of the Thanksgiving menu! I guess they make the connection with “Bidenomics” due to a July 9. 2021 Executive Order on Promoting Competition in the American Economy. This order includes a section on agriculture and the monopsony many US farmers and consumers are caught in now. One of the big complaints I’m seeing from the integrator side is the need to “modify 25,000 grower contracts in two months.” That number – 25,000 – tells us a lot about the vertical and horizontal integration of the poultry industry. The integrators are also worried about growers filing lawsuits based on what they learn.
I tend to be skeptical of (and sometimes downright hostile to) claims that adding regulations will “fix” farming; however, this one can provide farmers with the information they need to bet the family farm. Literally, because betting the farm is what you are doing when you go into the poultry business nowadays! I have this new block of regulations filed under “sunlight is the best disinfectant.” And “David meets Goliath.” Sadly, this is too late for many farmers, including the ones selling those “turn-key poultry operations” in Virginia. I reached out to a regional integrator to get a copy of a candidate grower contract for some farms for sale in this area – and got no response. I suspect that integrator knows all the former poultry farms on the market because they put them there.
What will you see in the grocery store after these regulations take effect? Near-term, I expect the integrators will find a way to pass any gains made by farmers on to consumers. Eventually, I expect consumers to have more real choices of truly independent brands. And more truthful labels. The theory is that restoring competition will eventually lower prices, but I’m having a hard time imagining a price lower than the $1.99/pound for the turkey we just cooked here. It’s taken decades to get into the mess, so don’t expect overnight miracles.
So while we are waiting for things to get better for farmers, we still have to eat. There are good health reasons to eat turkey, and not just on holidays. But unless you can afford ‘artisan poultry’ or have your own flock in the backyard, you are probably stuck buying your turkey from an integrator for quite a while. Now that you know the current “independent family farmer” branding from large integrators is a marketing myth, you can cross that guilt-trip off your shopping list and focus on some other criteria in choosing your turkey. In my next letter, I’ll explore some other decision criteria to help you spend your hard-earned grocery dollars on the turkey instead of some story.
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Federal Register Transparency in Poultry Grower Contracting and Tournaments Proposed Rule 2022-11997.pdf (govinfo.gov)