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WASHINGTON--When William Hammer stopped raising chickens for a big poultry company two years ago, it wasn't the long hours or smelly working conditions that finally drove him out.
It was the unstable nature of the financial relationship between contract chicken farmers like himself and big poultry producers who dominate the industry, he said.
Contract farmers like Hammer, who raise almost all of the country's chickens, must invest hundreds of thousands of dollars to build chicken houses, often going deep into debt.
The profit margins are thin. And they operate without a long-term contract from poultry producers like Tyson or Purdue, instead signing short-term pacts that - in most cases - can be cancelled with little notice.
"I enjoyed the work. I've got no complaints about that," said Hammer, of Taylorsville, N.C. "They say, here's the contract, sign it, or you aren't getting any chickens from the company to raise. And if you have half a million invested in your farm, what are you going to do?"
Now, the U.S. Senate is pushing to give contract farmers a bit more say in their relationship with poultry giants, something the farmers say is sorely needed.
The Senate and House both passed last year different versions of the Farm Bill, a package that covers everything from crop subsidies to nutrition programs.
Lawmakers from both chambers are meeting this month to reconcile differences before passing a final version, which will then head to President Bush for approval.
The Senate version included a provision that would change the way disputes between growers and poultry companies are settled.
Many of the contracts say disputes must be settled in binding arbitration hearings instead of taking the matter to court, a venue that would make it easier for farmers to prove their case, said Becky Ceartas, program director for the Rural Advancement Foundation International, a Pittsboro, N.C., non-profit that works on behalf of small poultry growers.
"Most of the time, farmers do not want to sue their companies. Most have a very good relationship," she said. "Guaranteeing access to the courts will level the playing field."
The Senate bill would force companies to give farmers the option of going to court to resolve disputes, instead of mandating binding arbitration.
The House version does not go as far. It would give the Agriculture Department more oversight of poultry contracts and it would allow farmers to take only small
disputes, typically of a few thousand dollars, to court.
Since farmers spend hundreds of thousands of dollars to build growing facilities, Ceartas and other advocates say the House version is inadequate.
Large poultry producers favor the House version, said Richard Lobb, a spokesman for the National Chicken Council, and industry trade group, because it puts a premium on arbitration.
"We generally think arbitration is a good thing, because it avoids the high costs of litigation. It's widely accepted as a way to handle disputes that aren't cosmic in scope," he said.
The Senate version would also increase government oversight of contract poultry contracts and force companies to give growers 90-days notice before cancelling a contract, if the grower has spent more than $100,000 on chicken houses or other equipment.
A typical contract currently demands far less notice, farmers and industry officials said, which leaves growers with little time to find an alternative source of short-term income.
It would also force companies to compensate farmers who spend tens of thousands of dollars upgrading equipment and building new chicken houses at the company's request.
Keeping chickens alive is no easy task. Their enclosed houses must maintain a livable temperature year round. If the temperature spikes too much in summer, or falls too fast in winter, entire flocks can die within minutes.
Many companies request - or demand - upgrades from farmers to reduce the chances of such die-offs. But some farmers complain that the additional compensation the company provides does not cover the actual cost of the new equipment.
Kirk Mathis, who raises tens of thousands of chickens for Tyson at his farm in Roaring River, N.C., recently added "cool cell" tunnel ventilation technology to three of his houses, at a cost of $50,000, and plans to add it to two more soon.
In the typical industry arrangement, growers' pay depends on their ability to raise the healthiest, largest birds in the least amount of time using the smallest amount of feed possible, compared with other local growers working for the same company.
Upgrades help growers stay on the front end of the payment grading curve. When farmers get close to the bottom of the list, the chance of their contract getting renewed next year decreases.
"They can let us go at any time. If you want to be in this business, you have to sign on the dotted line," Mathis said.
(Sean Mussenden can be reached at smussenden@mediageneral.com or 202-662-7668)
It was the unstable nature of the financial relationship between contract chicken farmers like himself and big poultry producers who dominate the industry, he said.
Contract farmers like Hammer, who raise almost all of the country's chickens, must invest hundreds of thousands of dollars to build chicken houses, often going deep into debt.
The profit margins are thin. And they operate without a long-term contract from poultry producers like Tyson or Purdue, instead signing short-term pacts that - in most cases - can be cancelled with little notice.
"I enjoyed the work. I've got no complaints about that," said Hammer, of Taylorsville, N.C. "They say, here's the contract, sign it, or you aren't getting any chickens from the company to raise. And if you have half a million invested in your farm, what are you going to do?"
Now, the U.S. Senate is pushing to give contract farmers a bit more say in their relationship with poultry giants, something the farmers say is sorely needed.
The Senate and House both passed last year different versions of the Farm Bill, a package that covers everything from crop subsidies to nutrition programs.
Lawmakers from both chambers are meeting this month to reconcile differences before passing a final version, which will then head to President Bush for approval.
The Senate version included a provision that would change the way disputes between growers and poultry companies are settled.
Many of the contracts say disputes must be settled in binding arbitration hearings instead of taking the matter to court, a venue that would make it easier for farmers to prove their case, said Becky Ceartas, program director for the Rural Advancement Foundation International, a Pittsboro, N.C., non-profit that works on behalf of small poultry growers.
"Most of the time, farmers do not want to sue their companies. Most have a very good relationship," she said. "Guaranteeing access to the courts will level the playing field."
The Senate bill would force companies to give farmers the option of going to court to resolve disputes, instead of mandating binding arbitration.
The House version does not go as far. It would give the Agriculture Department more oversight of poultry contracts and it would allow farmers to take only small
disputes, typically of a few thousand dollars, to court.
Since farmers spend hundreds of thousands of dollars to build growing facilities, Ceartas and other advocates say the House version is inadequate.
Large poultry producers favor the House version, said Richard Lobb, a spokesman for the National Chicken Council, and industry trade group, because it puts a premium on arbitration.
"We generally think arbitration is a good thing, because it avoids the high costs of litigation. It's widely accepted as a way to handle disputes that aren't cosmic in scope," he said.
The Senate version would also increase government oversight of contract poultry contracts and force companies to give growers 90-days notice before cancelling a contract, if the grower has spent more than $100,000 on chicken houses or other equipment.
A typical contract currently demands far less notice, farmers and industry officials said, which leaves growers with little time to find an alternative source of short-term income.
It would also force companies to compensate farmers who spend tens of thousands of dollars upgrading equipment and building new chicken houses at the company's request.
Keeping chickens alive is no easy task. Their enclosed houses must maintain a livable temperature year round. If the temperature spikes too much in summer, or falls too fast in winter, entire flocks can die within minutes.
Many companies request - or demand - upgrades from farmers to reduce the chances of such die-offs. But some farmers complain that the additional compensation the company provides does not cover the actual cost of the new equipment.
Kirk Mathis, who raises tens of thousands of chickens for Tyson at his farm in Roaring River, N.C., recently added "cool cell" tunnel ventilation technology to three of his houses, at a cost of $50,000, and plans to add it to two more soon.
In the typical industry arrangement, growers' pay depends on their ability to raise the healthiest, largest birds in the least amount of time using the smallest amount of feed possible, compared with other local growers working for the same company.
Upgrades help growers stay on the front end of the payment grading curve. When farmers get close to the bottom of the list, the chance of their contract getting renewed next year decreases.
"They can let us go at any time. If you want to be in this business, you have to sign on the dotted line," Mathis said.
(Sean Mussenden can be reached at smussenden@mediageneral.com or 202-662-7668)