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WASHINGTON-The House voted Wednesday to give small chicken farmers more power in their dealings with large poultry companies.
The provision was tucked into the $290 billion farm bill, which the Senate is expected to as soon as this week.
The legislation governs all aspects of the nation's agriculture policy but is mostly known for the crop subsidies it directs to farmers and nutrition programs.
President Bush has threatened to veto the legislation over concerns that subsidies to wealthier farmers are too generous. But the overwhelming support in the House - it passed 318 to 106 - means lawmakers will be able to override his veto.
The administration and advocates for the poor had fought to reduce subsidies given to farmers growing corn, wheat, sugar and other crops.
In part because of high demand for corn-based ethanol, farmers are enjoying record profits. And economists blame subsidies in this and other countries for helping to drive food prices to record highs globally, causing problems in the Third World.
The poultry measures, which have attracted far less notice in the farm bill debate, would affect the contracts small chicken growers sign with big poultry companies like Tyson and Perdue. Almost all the chicken served at fast food restaurants or found on supermarket shelves with those brand names is raised by a large network of independent growers.
The growers go deeply into debt to build houses in which to raise the chickens. The profit margins are extremely thin. And, many growers complain, the relationship vests too much power with the powerful poultry companies.
Companies can generally cancel contracts at any time with little notice, leaving farmers scrambling to avoid bankruptcy. If a dispute arises, the contracts generally ban a farmer from going to court, instead mandating binding arbitration.
The provision that passed Wednesday would ban mandatory binding arbitration, allowing poultry growers to retain their option of going to court to settle disagreements.
Becky Ceartas, program director for the Rural Advancement Foundation International, a Pittsboro, N.C., non-profit that works on behalf of small poultry growers, said that growers are not eager to sue the companies.
But the threat of a large court settlement, as opposed to smaller awards more common in binding arbitration in poultry cases, will force companies to take grower complaints more seriously, she said.
Lobbyists for large poultry companies opposed the move.
"We continue to think that binding arbitration is in everyone's best interest, but Congress will do whatever Congress will do," said Richard Lobb, spokesman for the National Chicken Council.
Raising chickens is an extremely capital intensive business. Growers shell out hundreds of thousands of dollars to house the birds and keep them cool in the summer and warm in the winter.
The health of each grower's flock is ranked against other local growers. If growers fall too far in the rankings, they risk being dropped by a company. To prevent that, the growers spend thousands each year to update costly equipment, cutting into thin profits.
Some growers say they went into the business knowing they would have to spend a lot up front but did not know how cash intensive it would be in subsequent years. The provisions that passed Wednesday would force poultry companies to estimate future spending.
"Hopefully, that will give growers a better idea of exactly what kind of financial commitment they're getting into before they make that first investment in a poultry house," Ceartas said.
That notice is largely unnecessary, Lobb said.
"A good grower knows that continuous investments are just part of the business. If Congress wants to put that notice in black and white, that's all right," he said.
Though grower advocates called the inclusion of the provisions a win, they conceded that the final version was far friendlier to large poultry producers than earlier versions.
For example, an earlier version in the Senate would have forced poultry companies to compensate farmers when they demanded equipment upgrades.
Sean Mussenden can be reached at smussenden@mediageneral.com or 202-662-7668.
The provision was tucked into the $290 billion farm bill, which the Senate is expected to as soon as this week.
The legislation governs all aspects of the nation's agriculture policy but is mostly known for the crop subsidies it directs to farmers and nutrition programs.
President Bush has threatened to veto the legislation over concerns that subsidies to wealthier farmers are too generous. But the overwhelming support in the House - it passed 318 to 106 - means lawmakers will be able to override his veto.
The administration and advocates for the poor had fought to reduce subsidies given to farmers growing corn, wheat, sugar and other crops.
In part because of high demand for corn-based ethanol, farmers are enjoying record profits. And economists blame subsidies in this and other countries for helping to drive food prices to record highs globally, causing problems in the Third World.
The poultry measures, which have attracted far less notice in the farm bill debate, would affect the contracts small chicken growers sign with big poultry companies like Tyson and Perdue. Almost all the chicken served at fast food restaurants or found on supermarket shelves with those brand names is raised by a large network of independent growers.
The growers go deeply into debt to build houses in which to raise the chickens. The profit margins are extremely thin. And, many growers complain, the relationship vests too much power with the powerful poultry companies.
Companies can generally cancel contracts at any time with little notice, leaving farmers scrambling to avoid bankruptcy. If a dispute arises, the contracts generally ban a farmer from going to court, instead mandating binding arbitration.
The provision that passed Wednesday would ban mandatory binding arbitration, allowing poultry growers to retain their option of going to court to settle disagreements.
Becky Ceartas, program director for the Rural Advancement Foundation International, a Pittsboro, N.C., non-profit that works on behalf of small poultry growers, said that growers are not eager to sue the companies.
But the threat of a large court settlement, as opposed to smaller awards more common in binding arbitration in poultry cases, will force companies to take grower complaints more seriously, she said.
Lobbyists for large poultry companies opposed the move.
"We continue to think that binding arbitration is in everyone's best interest, but Congress will do whatever Congress will do," said Richard Lobb, spokesman for the National Chicken Council.
Raising chickens is an extremely capital intensive business. Growers shell out hundreds of thousands of dollars to house the birds and keep them cool in the summer and warm in the winter.
The health of each grower's flock is ranked against other local growers. If growers fall too far in the rankings, they risk being dropped by a company. To prevent that, the growers spend thousands each year to update costly equipment, cutting into thin profits.
Some growers say they went into the business knowing they would have to spend a lot up front but did not know how cash intensive it would be in subsequent years. The provisions that passed Wednesday would force poultry companies to estimate future spending.
"Hopefully, that will give growers a better idea of exactly what kind of financial commitment they're getting into before they make that first investment in a poultry house," Ceartas said.
That notice is largely unnecessary, Lobb said.
"A good grower knows that continuous investments are just part of the business. If Congress wants to put that notice in black and white, that's all right," he said.
Though grower advocates called the inclusion of the provisions a win, they conceded that the final version was far friendlier to large poultry producers than earlier versions.
For example, an earlier version in the Senate would have forced poultry companies to compensate farmers when they demanded equipment upgrades.
Sean Mussenden can be reached at smussenden@mediageneral.com or 202-662-7668.