[Pittsboro, NC, January 14, 2025] — Today RAFI celebrates the finalization of the “Poultry Growers Payment Systems and Capital Improvement Systems” rule under the Packers and Stockyards Act. This rule introduces a significant reform to the poultry tournament system that will allow poultry contract growers to reliably estimate their income for the first time in decades.
RAFI Policy Co-Director Aaron Johnson is pleased that this rule builds upon other rules that address unfairness and deception within the poultry tournament system, such as the USDA’s “Transparency in Poultry Growing Contracts and Tournament” rule. “USDA’s new payment systems rule requires a fixed base price in poultry contracts, a requirement that will work alongside the finalized transparency rule’s required disclosures of flock placement and stocking density to ensure for the first time that prospective growers can more reliably project the minimum income they can expect to earn on their contracts,” Johnson remarked. “RAFI has struggled alongside many current and former contract growers to secure these reforms for decades, and we are incredibly proud of those growers today, many of whom risked retaliation and their own livelihood to use their voices to speak up for change.”
The finalized rule also aligns with the 2022 DOJ Consent Decree on the merger between Sanderson Farms and Wayne Farms, which establishes the judicial precedent of fixed base prices in poultry contracts in response to abusive practices in poultry grower payment.
Some of the significant reforms of this finalized rule include:
● requiring poultry companies to provide contract broiler growers with a clear base pay price in their contracts,
● prohibiting deductions from the base price and allowing bonuses to be paid above the base price to reward performance,
● limiting the variability of grower payments, providing growers with more financial stability,
● requiring poultry companies to comply with a “duty of fair comparison” in which performance comparisons between growers are conducted in a transparent and equitable manner when growers receive different pay rates based on their performance and
● ensuring that poultry growers receive a “Capital Improvement Disclosure Document” that outlines the financial risks and rewards of making expensive capital improvements to their poultry grow-out houses.
It is imperative that Congress not interfere with or nullify any of the three Packers and Stockyards rules that the USDA has finalized over two years. This would leave countless contract growers with few protections against corporate exploitation. “Growers who speak out against unfair compensation practices or unexplained capital investment requests are often retaliated against with inferior stock, feed, and medical care,” says Melanie Canales, Challenging Corporate Power Project Manager at RAFI. “When this retaliation goes unchallenged, integrators can continue leveraging their outsized influence to control nearly every aspect of the poultry tournament system and evade accountability to the growers they contract. It is imperative that integrators continue to be held accountable through established rules, as well as this most recently finalized rule,” she added.
Background on Grower Payment Systems in the U.S. Poultry Industry
The tournament system is a manipulative scheme designed by poultry processing corporations to stabilize and control their production expenses — in the form of prices paid to farmers—while transferring as much of the financial risk involved with growing chickens as possible onto growers they contract with. Contract poultry growers do not own the chickens they raise or control what feed or medicine is provided to their flock — these are all provided by the integrator. Contract poultry growers are tasked with achieving the most efficient possible growth of their flocks for the least amount of feed — which is expressed, in performance terms, in their statistical feed conversion efficiency. It is vital at this point to note that the final weight and feed conversion efficiency of a broiler flock depends mainly on the initial health and gender of the chicks, the quality and reliable availability of their feed, and the timing of flock pick-up — all factors that are controlled by the integrator, not the contract grower.
When these growers’ flocks of fully grown chickens are picked up by their integrator for processing, the corporation does a detailed analysis of the feed conversion performance of each grower in that week’s “tournament group.” It then averages these statistics, docks the pay of the growers whose flocks were found to be below average, and transfers that money to growers of above-average flocks as bonuses. In essence, the effect of this system is to stabilize and externalize the costs of the integrator while accomplishing an extractive transfer of bonuses to some growers by penalizing others — all within a system that is heavily influenced by integrator-controlled inputs and actions.
RAFI challenges the root causes of unjust food systems, supporting and advocating for economically, racially, and ecologically just farm communities. We envision a thriving, sustainable, and equitable food system: where farmers and farmworkers have dignity and agency; where they are supported by just agricultural policies; where corporations and institutions are accountable to their community. RAFI is a 501(c)(3) nonprofit organization based in Pittsboro, North Carolina, and incorporated in 1990.