AG Stein supports proposed USDA rule to increase transparency in poultry industry

Attorney General Josh Stein signed a letter Monday supporting a proposed rule from the United States Department of Agriculture aiming to increase transparency in the poultry industry.

Stein, joined in the letter by nine other state attorneys general, wrote that the rule would “decrease the information imbalance and increase transparency between chicken growers and processors.”

According to the National Chicken Council, a D.C.-based trade association, more than 90% of chickens used for meat in the U.S. come from contract growers: farmers who raise chickens on behalf of a chicken company that provides the chicks, feed and veterinary care. These growers are compensated based on the “weight” of their farm — the amount that the chickens grow after growers receive them.

Farmers with the highest farm weight are rewarded with extra pay, while those with the lowest weight are docked pay, Stein’s letter says.

The Rural Advancement Foundation International - USA, which supports the proposed rule, says that chicken companies control nearly all the variables for production, such as quality of chicks, feed and health.

“Poultry corporations cast this system as encouraging healthy competition, but in reality, the outcome of this competition is never in the control of growers,” RIFA-USA’s website says.

Aaron Johnson, RIFA-USA’s Program Manager for Challenging Corporate Power, said that any bonuses given to high producers are taken from the money docked from low producers — cutting into their base pay.

“If you’re on the bottom of a tournament group, you can make half as much as you would on average,” Johnson said in a phone interview with The News & Observer.

The proposed rule would not end the tournament system, but would provide potential contract farmers with more information before they begin growing chicks. Chicken companies would be required to provide prospective farmers with a disclosure document including how many chicken placements they would be guaranteed per year, earnings from other chicken growers in prior years and the company’s history of bankruptcy and litigation.

The NCC opposes the proposed rule.

“All chicken farmers are provided the same quality of chicks, the same feed, and access to veterinary care,” a May release from the NCC said. “Farmers who invest in more advanced facilities, as well as use the best management practices will likely produce higher quality chickens more efficiently. Farmers receive a base pay per their contract and potentially a bonus, based on the health and quantity of the flock.”

A representative from the NCC could not be reached for comment Tuesday.

While Stein and the other state AGs support the rule, they also wrote that it would be more effective if it were enforced by governmental or external auditors, rather than the chicken processors themselves — which is how the law is currently written.

The proposed rule is one of three the USDA announced it would introduce last year. The remaining two, which have yet to be formally proposed, will address retaliation, deception and unfair practices in the meat industry.

The USDA is also opening an inquiry to determine if the tournament system should be restricted or changed “to create a fairer, more inclusive marketplace,” according to a May release.

The U.S. Department of Justice filed an antitrust lawsuit against three chicken processors last month, alleging deceptive practices within the tournament system that “pits chicken growers against each other to determine their compensation,” according to a press release.

A proposed consent decree would prevent two of the processors from “penalizing chicken growers by reducing their base payments as a result of relative performance, while still allowing for incentive, bonus and other types of payments to growers.”