Shore poultry growers are caught in squeeze Processors' demands unfair, farmers say

March 22, 1992|By Kim Clark | Kim Clark,Staff Writer

POCOMOKE CITY -- Virgil Gardner came within spitting distance of the good life.

After working for a decade as a hired hand on a little farm here, he scraped together a down payment on it and became one of the few blacks on the Eastern Shore to run his own chicken-growing operation. Fifteen years later, he had almost paid off his mortgage. "I owed less than $1,000. Then it got dark all at once."

Mr. Gardner, a lean, powerful man with a gentle manner, says chicken companies stopped sending him chicks because his chicken-growing sheds were outdated.

So he shook hands on a deal with a manager from Perdue Farms Inc. Mr. Gardner would remortgage his farm for money to renovate his sheds. After the repairs, Perdue would send him flocks to raise.

About a year later, Perdue canceled the contract, he says.

Now Mr. Gardner, 67, can't make the payments on his $66,000 loan. He's working odd jobs to put groceries on the table. And to clear the debt, he is trying to sell the 43-acre farm and little green farmhouse where he raised his seven children.

Across the Delmarva Peninsula, chicken growers tell similar stories. If they aren't broken like Mr. Gardner, many say they are being squeezed dry slowly, as part of a quiet restructuring of the industry. Like the chicken catchers who struck Perdue for four days last week over a pay cut, growers say they are being forced by the big processing companies to shoulder ever-higher costs.

Companies like Perdue, Tyson Foods Inc., Showell Farms Inc., Hudson Foods Inc. and Mountaire Corp. are squeezing the profits and independence out of the 2,700 family chicken-raising operations on the Eastern Shore, the growers say.

The unrest has become so strong that some of the traditionally independent growers on the Eastern Shore have started an organization in an attempt to negotiate for or legislate better conditions. It is part of a nationwide revolt that has sparked the creation of chapters of the Contract Poultry Growers' Association in 13 states in the past six months.

But nowhere is the revolt as important as on the Delmarva peninsula -- where the chicken industry is so concentrated that there are more chickens per square foot than any other spot in the nation.

And nowhere is the revolt as controversial as this economically disadvantaged neck of land, where many say the big chicken companies have vastly improved the local agricultural economy, providing stable and constant demand for grain and chicken. Says local banker Joel Boren, "The poultry industry is the cornerstone of industry on the Eastern Shore."

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The conflict between the small growers and the big processors was probably inevitable. Generations of farmers have had to confront similarly brutal economic realities: When there are lots of farmers, the competition is so fierce it grinds away at their profits.

Just a few generations ago, growing chickens was a common but risky business here. A farmer would buy his own chicks and grain. Then he'd try to time the markets before selling to one of the approximately 200 processing companies on the Shore. A farmer could make, or lose, a bundle on each flock.

Then companies such as Perdue, Showell and Tyson started offering the growers a safe haven. They would pay farmers to raise the company's chicks. The company even provided feed and fuel.

All the farmer had to do was build the house, pay for electricity and take care of the chickens for the seven weeks it takes to grow a chick into a five-pound broiler. They were guaranteed a minimum price and could earn a bonus if their chickens grew fat without overfeeding.

Soon it was impossible to raise chickens the old way. A few companies bought out or broke the competition. Today, the eight remaining processors won't accept chickens from growers not under contract.

Processors say the incredible growth of the number of chickens raised on the Shore -- from 330 million birds a year in 1970 to 537 million birds last year -- shows how much farmers like the setup.

The growers do have less independence, says Carl Cold, manager of the Eastern Shore operations for Springdale, Ark.-based Tyson. "But on the other side, they are guaranteed an income to produce birds. We assume the responsibility of marketing those birds."

Chicken processors say critics like Mr. Gardner are in the minority. Larry Winslow, vice president for fresh poultry operations at Salisbury-based Perdue, says his company dropped Mr. Gardner because he was an inefficient grower.

Perdue's contracts allow it to drop growers for a variety of reasons, ranging from spending too much food and fuel on the chickens to a preference to stop raising chickens in a certain town. But Mr. Winslow says neither Perdue nor any other company drops growers often. If they did, banks wouldn't grant loans to build chicken houses. And since the companies need more farmers to meet increasing demand for chicken, scaring the growers and bankers off "would be suicide."

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