The SBA defines small poultry farmers as farms that earn less than $750,000 a year. Upgrades can help farmers get chickens to weigh a little faster, but the beneficiary is the integrator. More efficient feeders, for example, mean lower feed costs for the poultry business. 4. Know your liability and insurance policies. If you have a breeding contract, you do not own the birds you are caring for. Tyson does. It delivers the birds, pays you to bring them to a certain weight with the food they provide, and picks them up when they are ready to harvest. However, if something goes wrong and you have a loss of death, you are the loser, especially with a significant loss of death. It also means that you cannot borrow money from the value of the herd to finance the initial costs. 1. Don`t be forced to sign something you haven`t read. “There`s a little less worry today than there was a decade ago,” McEowen says.
“That`s because there have been a number of contractual disputes that have gone to court, and Tyson and other poultry companies have become a little more cautious about the type of clauses they have included in these contracts. They used to go to a farm and bring the documents and hit them on the hood of a van and say, “If you don`t sign, I`ll offer the contract to your neighbor.” Many people signed and regretted it later. I was recently fortunate to be appointed Head of the Poultry Business for Tyson Foods. Learning about the chicken business is both humiliating and exciting, as my experience is in fresh meats, which include beef and pork. He had been raising millions of pounds of chicken since 1996, along with his father and brother. But Kemp said that while he`s been successful as a poultry farmer, raising chickens is “not all it should be.” This independent contractual structure for farmers is not only credited with saving farms, but it also helps those farms thrive in a once struggling industry. In fact, chicken farmers` credit default rates are among the lowest of any segment of agriculture. Chicken companies take away about 97% of the economic risk from producers, compared to independent producers who bear all the risks themselves. Some farmers with multi-storey farms have taken advantage of economies of scale to make their poultry farms the main source of income. 7.
Get the professional advice you need. Don`t sign a contact until you`ve had it verified by trusted professionals, McEowen advises. You should talk to an animal specialist about expected death and disease surveillance. You should have your lawyer checked to make sure you understand all your legal obligations under the contract. Farmers are paid under contract with a chicken company based on their performance in raising the healthiest chickens, which would be clearly stated in the farmers` contract. This performance-based or incentive-based structure is sometimes referred to as the “tournament system”. Farmers are paid both according to the quality and quantity of their flock and according to the efficiency of chicken farming. This does not and will never include the use of additional hormones and steroids to achieve this. In fact, federal regulations prohibit the use of added hormones and steroids in all poultry. You can read more about this in our Farm to Fork section.
For more than half a century, contract poultry farming has contributed to farm income, providing generations of farm families with a stable and predictable income throughout the year, isolated from many of the risks associated with commodity market volatility. The current system is beneficial for both businesses and farmers, who enjoy working with a company that can absorb most of the risks (chicken farmers get a “guaranteed market,” meaning they avoid the risk of not being able to sell their products or having to sell them at a loss). In the coming weeks, Mueller plans to sign a final contract with Costco. The black and white language of this document will largely determine whether his optimism is paying off or whether it is just wishful thinking. As a poultry farm owner, you will never beat a clock and you will have the satisfaction of running your own business and being associated with reliable and respected brands. The relationship between chicken companies and farmers is fully regulated by federal law. Livestock and poultry sourcing and marketing practices are regulated by the U.S. Department of Agriculture`s Grain Inspection, Packers and Stockyards Administration (GIPSA), which administers and enforces the Packers and Stockyards Act to protect farmers, ranchers and consumers. In 2014, there were nearly 2,000 people on waiting lists to be a contract chicken farmer. While all contract farmers receive the same quality of chicks, feed and access to veterinary care, farmers who invest in more advanced facilities and farmers who devote the most effort to best management practices are likely to produce better quality chickens more efficiently.
Feed costs – mainly corn and soybean meal – account for more than 70% of the cost of raising a chicken. These costs fluctuate widely, but contract chicken farmers are immune to volatile fluctuations in commodity markets. In the event of a flood, frost or drought, grain prices can easily double – driving up feed costs – but contract farmers still get the same wage rate in their contracts, and chicken companies would absorb billions of dollars in losses. During the same period, many independent cattle and pig farmers would be forced to sell animals earlier or significantly reduce their herds. In other words, farmers are assured of stable compensation for their efforts, regardless of what the feed or food markets do. Contract farming isolates the farmer from the risk of changing market prices for chickens and food ingredients such as corn and soybean meal, which account for the majority of the cost of raising chickens. Thus, farmers` remuneration does not depend on the cost of the feed or what the business costs. 3. Know the rules for a possible termination of the contract.
Some termination rules have not yet been decided by the courts, McEowen says. One of them gives Tyson the right to terminate a producer contract if a producer tries to organize with other producers to negotiate better terms. The 2002 Farm Bill contained language that prohibited an integrator like Tyson from including a confidentiality clause in the producer contract, making it illegal for a producer to disclose the terms of its contract to third parties. Another pitfall for producers is that Tyson could decide to close a processing plant and simply terminate contracts with producers in the middle of the season. More and more consumers today want to know the story behind our food. Starting on the farm and as a culinary creation on our tables, there is a way to maintain a robust and sustainable food system. To delve deeper into the story, we sat down with poultry farmer Stoni Jo, whose family business has contracts with Tyson Foods, to learn how her role as a poultry farmer contributes to the food system – and how she plays a fundamental role in preparing good food for family tables. .