August 2010 Articles

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"Common Ground"

“Common Ground” - can this be attained between Independent Poultry Producers (contract growers), the National Cattlemen Beef Association (NCBA) and the National Pork Producers Council (NPPC) concerning the newly proposed rules through the USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA). These newly proposed rules which were released on June 22, 2010 are intended to increase fairness in the marketing of livestock and poultry. Secretary of Agriculture, Tom Vilsack, in an interview with The Associated Press, stated “I think it’s fair to say that what we’re proposing is aggressive, but the reality is, the Packers and Stockyards Act has not kept pace with the market place. Our job is to make sure the playing field is level for producers.” In an interview with the New York Times, Secretary Vilsack stated, referring to the Agriculture market, “As this market has become more consolidated and vertically integrated for efficiency’s sake it lends itself to unfair practices and practices that are not particularly transparent.” Independent Contract Poultry growers can readily relate to these statements made by Secretary Vilsack. The poultry industry is now basically a totally integrated industry which is controlled primarily by a few large companies that exercise strict oversight and dictate all of the farm management decisions to their contract growers. This is not entirely different from the original vertically integrated poultry operations that began in the 50’s and 60’s. Company management has always provided growing guidelines and oversight of the growing process, however, investments required by contract growers were not as large nor as frequent and the growing process was not as complex as it is today. The contract growers cost of operation has increased drastically and their profit margins have decreased accordingly. In addition, an investment in a poultry farm, whether built or bought, was once looked upon as an investment that would generate a decent return while in operation and then could normally be sold to recoup a large portion of investment cost if an individual decided to retire or get out of the business. This scenario doesn’t exist too often today. Today’s poultry operations can be classified in one of two way—either experimental (new houses or houses to which large updates have been made) or obsolete (large investments in updates need to be made). After being in the poultry business individually for 30 years and having been a lender handling poultry loans for 30 years, I feel qualified to say that a new farm or one that has recently been updated would probably be classified as experimental for 2 years and after that it would become obsolete in today’s changing industry. I am not trying to discredit the poultry industry with these remarks-the poultry industry has been very good in years past to both contract growers and integrators alike, but in today’s environment a different picture is painted. Today’s environment is one of huge investments and a domineering integrator that exercises little communication with or little regard for the contract grower. Instead of viewing the contract grower as the lifeblood of a company producing good products for the consumer, the contract grower is looked upon as a component of the production chain that can be manipulated to the benefit of the company’s bottom line without consideration for the contract grower’s bottom line. This is why Secretary Vilsack’s statement to the New York Times concerning unfair practices and practices that are not particularly transparent rings true to the contract poultry grower. This is also why there was so much excitement and optimism during the poultry committee meeting held in New Orleans, as part of the annual Louisiana State Farm Bureau Meeting, in late June of this year. Producers saw the positive impact these proposed regulations could have for the contract poultry grower, however, we didn't understand the problems or presumed problems this may have on the beef and pork industries. It was a given that the poultry integrators would oppose these regulations, but the opposition by NCBA an NPPC was not foreseen. Here we go again—commodity group against commodity group but I am confident “Common Ground” can be achieved and must be achieved . I have been in contact with personnel with NCBA and they concur that my statement of commodity against commodity is valid. They want to do all they can to prevent commodity against commodity. They are presently working with American Farm Bureau to prevent this and to see how we can help each other. I have not contacted the NPPC personally, but I am confident by working through our state Farm Bureau, state Cattlemen’s Association, and through Louisiana Department of Agriculture and Forestry, we can achieve “Common Ground”. The comment period has been extended to November 22, 2010. Until then, much work must be done to help insure regulations are put in place to benefit the “Contract Poultry Grower”. Van Bennett