The American Prospect
Shane Tawr doesn't remember exactly why he first decided to try his hand at chicken farming. Tawr had a government job in Milwaukee but wanted relief from the city's bustle. He decided in 2004 to head down to the Ozarks, buy a chicken farm, and work for himself, just as many of his Hmong ancestors had done in Laos.
The Hmong, who came to the United States in large numbers as political refugees after the Vietnam War, settled mostly in urban communities in California, Wisconsin, and Minnesota. Some raised chickens and tended small vegetable gardens, but many worked jobs that kept them near the poverty line. In the early 2000s, chicken producers such as Tyson, which is based in northwest Arkansas, began courting the Hmong, and advertisements about chicken-farming opportunities appeared in Hmong-language newspapers. Roughly 500 Hmong now live in communities throughout Arkansas, Missouri, and Oklahoma and raise breeder or broiler chickens for a handful of companies that operate in the Ozarks, according to research from the Farmers' Legal Action Group, a Minnesota nonprofit. For Tawr and others, farming presented a path to success by being self-employed and self-sufficient. It was a way to marry the values and skills many Hmong brought from Laos -- farming and family -- to achieve the American dream.
The arrangement that Tyson offered Tawr, now 44, sounded easy. He wouldn't have to buy chickens, wouldn't have to take the birds to market and find the best buyer, and wouldn't have to do any marketing to sell directly to customers. Tyson would provide the birds, feed, antibiotics, and any other supplies he needed. All Tawr had to do was the work. "I just kinda wanted to check it out," he says. "And the weather was nice, and at the time, I actually thought that maybe raising poultry was kind of guaranteed money."
When policy-makers and politicians discuss immigrants in agriculture, it's usually to debate the merits of a guest-worker system or to lament the exploitation of migrant laborers who arrive indebted and uninformed about their rights under U.S. law. But immigrants like the Hmong in the Ozarks and Hispanics throughout the South are entering the agricultural field as farm owners and livestock ranchers. And Tawr and other new farmers are slowly discovering why the families from whom they bought the farms were getting out. The contracts that seemed like such a good deal really weren't. Tawr believed he would be working for himself, but it turns out he is more like an employee -- but without guaranteed pay and benefits. In arrangements such as the one Tawr has with Tyson, the farmer takes on all the risk and gets little of the reward.
"As the poultry integrators churned through producers, one of the things they do is encourage new producers," says Patrick Woodall, a research director and policy advocate for the nonprofit Food & Water Watch. "[Producers] tell them this is a really sweet deal and your income is going to be great, and they become, essentially, serfs. ... They've been recruiting people who don't know the lay of the land."
Tawr and others didn't know that they weren't just jumping into the chicken-farming industry but entering a decades-old fight between farmers and "integrators" -- the companies that buy their products.
Tawr paid $550,000 for a farm located near Summers, Arkansas -- a town so small it has no stoplight and no school -- about 30 miles outside of Tyson's headquarters in Springdale. The woman who sold it to him said the three chicken houses were too much for her to keep up. With a letter from Tyson promising him a contract, he got a loan from a private bank guaranteed by the United States Department of Agriculture. Tawr's contract was to become a breeder for Tyson, which meant he would keep and breed hens and send their fertilized eggs off to the company. The company hatches the chicks and then sends the chicks off to other farmers on contract, like Tawr, until they're ready for slaughter.
Tawr gets up at 6 A.M. to start work. His three children go to school in the neighboring town of Lincoln, which has a little more than 1,000 people. His wife works at a nearby community college, and his parents live on the farm and help breed the chickens. It takes Tawr about an hour to weigh the feed, and then he collects the first round of eggs. He takes a break in the afternoon, before going around the farm for a second time, removing dead birds and collecting more eggs. He enjoys working at home and likes his neighbors. But he only nets about $19,000 a year. (Some years he can gross as much as $120,000, but most of that goes to operating expenses. New farmers are often sold on the idea that their gross income is how much they'll actually be living on.) If it weren't for his wife's off-farm income, his family wouldn't survive.
Tawr didn't see the contract before he committed to the loan. His first contract was for one year -- that's about how long a breeder hen lives. It turned out that Tawr was relatively lucky. For many who raise broiler chickens, the contract lasts from one flock to the next. Since chicks only take five to seven weeks to become market-weight broiler chickens, it is a short turnaround. Because the contracts are tied to a particular shipment of birds, a bad flock -- due to unhealthy birds, the company sending low-quality feed, or an uncontrollable weather event -- can destroy a farmer: He or she doesn't have a guaranteed chance to recover because the company can decide not to supply a new contract.
The payment terms are also better for Tawr than they are for those who raise chickens for market, because he gets paid for every dozen eggs he turns in, whereas those who raise broiler chickens get paid per pound minus the feed it took to raise them. The contracts refer to a "base pay," say, 5 cents per pound of meat, and new farmers use those contract prices to project their income for the year and determine how big a loan they can handle. In reality, though, it's more like median pay. If a farmer turns in chickens underweight, he might get 3 cents per pound or less. The price disparities, the company says, are meant to spur competition, but because the company controls the types of chicks and feed each farmer gets, it's actually controlling the quality of the birds farmers are likely to raise.
Companies like Tyson often demand changes or improvements to the chicken houses before a contract is renewed or sometimes on threat of terminating an existing contract. Farmers might have to make minuscule changes -- keeping the hens a few more inches apart or changing ventilation in the houses -- that end up costing a lot of money. If they don't make these changes, the terms of their contract can be changed without warning. One year, Tyson didn't tell Tawr about new space specifications for keeping his hens and sent him only 7,000 hens for each house instead of the 8,250 he'd received the year before. Tawr says that translated into a loss of between $20,000 and $30,000 in his gross income for the year. Tawr had to take out a personal loan to cover his mortgage payments. Now Tawr has two loan payments to make and believes he probably paid an inflated price for the farm itself. In Arkansas in 2000, the median house price was about $72,800, so being on the hook for half a million dollars is a much higher debt than the area's average homeowners have to support.
"It was not as rosy as they painted the picture to be," Tawr says. "There's a lot of expenses, and ... the integrator has their hands around your throat. They can squeeze it and suck the life out of you anytime they want to. You don't get to make any decisions. You either do it or you lose your contract."
Tawr isn't the only Hmong farmer who has struggled. According to a report from the Farmer's Legal Action Group, many Hmong were signing contracts they couldn't read and getting into deals they didn't fully understand. At least 12 Hmong declared bankruptcy in 2006. "Most had no way to assess the risks without being educated regarding the history of poultry production before committing to the purchase and the move," the report said. The concerns are similar for other immigrant farmers, especially Hispanics, who moved into the area to work at chicken-processing plants but were also recruited to buy operations. Hispanic farmers sometimes pooled their money and bought farms without a contract, only to realize later they wouldn't be able to sell their chickens on the open market, says Rudy Arredondo of the National Latino Farmers & Ranchers Trade Association. Many just walked away rather than trying to save their farms.
According to the Farmer's Legal Action report, many Hmong believed "that if they just work hard and are good farmers, they will make good money and pay off the debt." In America, it turns out, that's not entirely true.
Americans have become increasingly aware of the ins and outs of factory farming. Michael Pollan's books -- which regularly make the best-seller lists -- instruct consumers that our current system is unnatural and unhealthy, especially when it comes to meat: "Were the walls of our meat industry to become transparent, literally or even figuratively, we would not long continue to raise, kill, and eat animals the way we do." In recent years, other writers and filmmakers have explored the same system -- Eric Schlosser's book Fast Food Nation (which was turned into a movie); Morgan Spurlock's documentary Super Size Me; and the documentary Food, Inc. all convey the message that our food policy perpetuates a system that is unhealthy for consumers, cruel to animals, and exploitative of migrant workers.
However, there is still precious little attention paid to how the system is bad for farmers as well. Mike Weaver, who runs a local association of chicken growers in West Virginia, says chicken farmers in his area are settling for almost an entire cent less per pound of meat than they did in 1975 -- when the median household income was around $11,800. (In the same time span, incomes for most other workers have increased fivefold.) The number of companies buying livestock from farmers has declined, and the surviving companies have grown bigger by acquiring the smaller firms. For growers, that often means doing business with only one firm: Chickens grow quickly and can't travel more than 100 miles for slaughter and processing.
Lawmakers once feared that this type of monopoly control could hurt the agricultural industry. During World War I, when prices for all types of food started to rise, Woodrow Wilson ordered investigations into the meat markets. That led to the Packers and Stockyards Act, which sought to prevent food processors from engaging in anti-competitive behavior and ensure fair prices for meat and dairy products. To enforce the rules, the USDA created agencies that were later combined into a single bureau called the Grain Inspection, Packers and Stockyards Administration, or GIPSA.
However, the act was enforced sporadically and barely kept consolidation at bay. As the number of farmers shrank and each began producing more, many agriprocessing companies began offering them contracts to sidestep the competitive markets that increasingly benefited farmers. During the 1950s, chicken farmers went to an almost exclusively contract system. In the beginning, this worked well. "Early on, the contract poultry growers were the ones in the neighborhood with swimming pools," says Fred Stokes, a 76-year-old former cattle rancher in Mississippi.
Then came the Ronald Reagan administration. Reagan redefined what anti-competitive behavior meant and changed how anti-trust laws were enforced. These changes, along with the increasing popularity of a conservative economic philosophy that de-emphasized the role of government regulation, prompted courts to raise the standards farmers had to meet in order to bring cases against the companies. To win a case in court, farmers had to prove that a company's policies resulted in harm to consumers, an impossibly high burden of proof for an individual chicken grower. "It was a way to kill a case that any individual farmer brought," says Peter Carstensen, an attorney who is working on a Supreme Court appeal of a chicken farmer's case that was shot down in lower courts.
These policies -- which now have years of case law backing them up -- gave large agriprocessors a lot of leeway. Companies like Tyson started to dictate changes that would increase the chickens per house and the pounds per chicken grown, all of which cost farmers money. That sent many farmers into debt, making them even more dependent on contracts from the companies. Because of the contract system, prices overall were depressed, and farmers needed contracts just to stay in business.
Chicken growers have complained about the practices of companies like Tyson for years, and now those practices have spread to other industries. Companies that process pork began contracting with hog farmers in much the same way; now the cash market for hogs is nearly dead. Then companies tried to get the cattlemen to adopt the same system. If anyone still has a romantic vision of a wide-open West and a hard-working, independent way of life, it is an American cattle rancher. As a group, ranchers did not take kindly to contract farming. "They don't want to become chickenized," Weaver says.
Because profit margins have shrunk so steadily, farmers are expanding their operations, which means fewer farmers produce more livestock for less money. Research from Food & Water Watch shows that the number of factory farms -- defined largely by how many individual animals they have -- has grown over the past decade, that smaller producers have disappeared, and that all farms have collapsed inward toward packing-plant centers. Barriers to entry for new farmers have grown because the size of the operation needed to be profitable is so large. It has created an hourglass-shaped system. Nearly all of the roughly 2 million farmers deal with a handful of processing plants; the top four food retail chains control more than half the market for the country's 300 million consumers.
Most of the profits and benefits redound to the few companies in the skinny middle of that hourglass. Little of the money consumers pay for chicken in the supermarket goes to growers like Tawr, and that's part of the reason companies needed to recruit new workers like him. Farming families who had been in the business for generations knew that it was no longer possible to be truly self-employed. "Those who came to agriculture with an idea of being independent ... face the possibility of having to sign a contract that will make them serfs on their own land," Stokes says.
Despite his high hopes for a self-employed and self-determined life, Tawr ended up working on a very demanding assembly line -- exploited in many of the same ways that American companies have exploited new immigrants for generations.
Ranchers, and to some extent farmers in general, still have friends in the House and Senate. In the 2008 farm bill, Congress directed the USDA to revisit and possibly rewrite the regulations that govern these markets. Under the Obama administration, Agriculture Secretary Tom Vilsack has taken the mandate seriously. The USDA and the Department of Justice formed a joint task force and held five large, all-day conferences with livestock farmers and producers around the country. In some cases, individuals might have specific anti-trust claims against their contract companies. But the USDA wants to see how to improve the markets for farmers.
"Sometimes we have to be vigilant," then-Congressman Artur Davis said in May at one of the workshops in Alabama. "Sometimes we have to make sure that in the name of an open market, we don't crowd out competition, and in the name of efficiency we don't do something that's enormously inefficient." In other words, the USDA and Justice Department are exploring whether these are markets that work at all.
In addition to Vilsack's efforts, ranchers and growers believe J. Dudley Butler, who is in charge of GIPSA under the Obama administration, really wants to fix the problems with the contract-farming system. "The secretaries of agriculture under both parties have really been derelict up until now," Carstensen says. "The secretary of agriculture deals with lots of other issues. This was something [that was] a 'tomorrow' type of thing," he says. "Now, we finally got a secretary who said, 'No, tomorrow is today.'" Most chicken farmers, however, believe they'll never see a return to a robust cash market for chickens or even hogs. Many are simply hoping for more transparent contracts that take away companies' right to terminate them without warning and for nearly any reason and force companies to honor them long enough for farmers to recoup money on mandated investments.
The idea behind rewriting the rules is to make them more specific, which would limit the abilities of regulators and courts to interpret the law in a way that disadvantages farmers. The workshops over the past year generated nearly 60,000 comments, according to the USDA, and the department is taking those comments into account and is expected to issue final rules in late spring.
The big agricultural companies are fighting the changes, of course. Stokes, who lives in Mississippi, says a lot of the farmers believe the new GIPSA rules will hurt them, because they've heard the anti-GIPSA propaganda from the companies with which they contract. "Unfortunately, farmers believe it," he says. "I run into people who are good people, who say, 'Boy, these GIPSA rules are really going to mess things up.'" Of course, there's a chance the rules won't change at all: The Republican-led House of Representatives could decide to modify the farm bill to take away the USDA's power to make these changes.
The revisions to the rules, though, weren't designed to help new immigrant farmers like Tawr. The loudest voices for reform are those who emphasize what the loss of farms means to individual families who have held them for generations -- the Scots-Irish and German settlers who helped carve out the Midwest and define it as farming country. What's at stake is what it means to be a rural American. Immigrant farmers' struggles highlight how bad things are for all farmers. These days, the only people who want to enter the business are those least likely to know anything about it. In that sense, advocates see the plight of fourth-generation farmers like Mike Weaver in West Virginia and newcomers like Tawr in Arkansas as completely entwined.
Tawr says he looked at other families who have been farming for years and realized that they only make it because they run the farm to pay off their mortgage but rely on additional income to raise a family. He wants to try to stay in the business, however. "I don't know, you just take it one flock at a time," he laughs. "You can't make a living just off the poultry alone."