Poultry growers seek rights in Mississippi

Larry McKnight became president of a farmer's group,
then lost his contract

By Jim Cullen

Over 17 years as a poultry grower, Larry McKnight had expanded from his base near Forest, Miss., to a second farm in nearby Sebastopol. He had 11 chicken houses, with a capital investment of $650,000 and he was growing 1.5 million chickens a year. For all that, he was netting only $20,000 to $25,000 a year, because the poultry processors call all the shots.

"They put the contract on the table and we have to sign because our loan is tied up in those houses," McKnight said.

Until the contract is pulled, that is.

Poultry "integrators" typically provide the chicks, feed and drugs but they require growers to supply houses that meet the company's specifications. Each new house may cost the grower $125,000. After a seven-week growing period, the company may decide not to renew the contract, leaving the grower with the debt.

The conditions are familiar throughout the "Broiler Belt" from Texas and Oklahoma southeast, where 90 percent of the nation's chickens are produced. [See "Chicken Fat Goes to Processors," The Progressive Populist February 1996.]

Mississippi growers recently got their state House of Representatives to spell out some of the rights and responsibilities of growers and processors. Among other things, the bill would have required companies to give growers notice of termination and to pay off the capital investment of growers who were terminated without cause.

But the Senate Agriculture Committee watered down the House bill to create a mediation board to hear complaints and refer them to arbitration. Even that compromise was too much for the agribusiness interests who put pressure on senators to kill the bill.

One Mississippi poultry grower, who asked not be identified for fear of retaliation by his "integrator," said six senators flaked on the growers in the half-hour between the time they talked to them in the lobby and the 27-22 vote on March 11 to study the issue at least until after the general election. The growers still hope that House and Senate conferees will restore the bill.

"We've got everybody in the state of Mississippi against us, except the hunting dogs association, and I'm not sure about them," the grower said. "But the problems are real."

Actually, the poultry growers have a few other allies: loggers, Gulf Coast commercial fishermen and the formidable Farm Bureau Federation, which is not noted for siding with small farmers over agribusiness interests.

McKnight, president of the 2,800-member Mississippi Contract Poultry Growers Association, said they were running up against not only a powerful industry that is used to getting its own way, but also the prevailing view among people in power that government should not interfere in people's lives.

The poultry growers had been working to obtain legislative relief since 1994 but the processors were resisting. "The integrators told people who had contracts and were building new [chicken] houses if the bill passed, the wouldn't be adding those houses and the growers were told the companies would leave Mississippi. Some people bought into that argument," McKnight said.

In 1994 the growers had run up against the opposition of the Farm Bureau. They were told, the issue was not among the resolutions in their policy book. "So we backed up and became part of the Farm Bureau and changed their policy book," McKnight said.

The loggers and fishermen have similar situations in their businesses, McKnight said. They were looking for support when they seek relief from what they see as attempts to regulate them out of business.

This year the companies also broadened their base, enlisting the Mississippi Manufactur-ers Association and the Mississippi Economic Council. But the growers managed to get the bill through the House. "Because the House is much closer to the people, they understand the types of contracts we were talking about," McKnight said.

Gov. Kirk Fordice, a Republican who is in the construction business, indicated he would veto the House bill, but growers hoped he would go along with the mediation plan in the Senate version since that is often used in disputes in the building trades.

Meanwhile, the growers are still under pressure and McKnight's activism has done his business no good.

"Two years ago when I went over there as president of the association my farm in Sebastopol was at or above average [in performance grading by the integrator]. Then after I became president it went below average and my contract was terminated. All of a sudden I couldn't grow a good chicken anymore." He noted that his predecessor as president also was terminated, lost his farm and had to file for bankruptcy.

McKnight, who is 45, has filed a lawsuit in federal court, alleging that the integrators stopped doing business with him because of his activities with the association. His remaining farm is still in business. "I grow for a small family-owned poultry operation and they've treated me fairly," he said.

John Morrison, executive director of the National Contract Poultry Growers Association in Ruston, La., said relief for growers tends to boil down to two types of bills. One spells out rights and responsibilities in the contracts to protect growers, as a Minnesota law and the House version of the Mississippi bill did. But he said growers generally prefer "empowering" legislation that requires processors to engage in good-faith bargaining, such as California, Washington, Oregon, Maine and Michigan have enacted.

An attempt to amend the federal Agricultural Fair Practices Act with an empowring provision to require good-faith bargaining has a relatively broad base of support by farm groups but it is dormant in Congress.

"Growers need some type of empowerment," Morrison said. "If we don't give them some type of equalizing power we're going to be tied up entirely in vertically integrated industry or they're going toe limited to the terms the companies offer."

If growers had enough leverage to increase the price of chickens by a few cents a bird, McKnight said, it could double the net income of some growers. In the states of Washington and Oregon, processors are relatively smaller and family-owned but they are required to negotiate their contracts in good-faith and growers receive 30 to 32 cents per bird, Morrison said. That compares with 15 to 20 cents per bird in much of the "Broiler Belt" in the South, from Texas and Oklahoma through the Southeast, where 90 percent of chickens are produced.

McKnight once worked as a supervisor in a poultry processing plant and recognizes that workers in the plants have their problems, but he said that is a separate issue. Labor unions are not part of the growers' coalition; he said some allies joined the cause with the provision that unions were not involved.

Morrison said the growers have had preliminary discussions with labor organizations. They have not yet approached consumer organizations, but he is not ruling anybody out. "We've got to have every ally we can find in this battle," he said.

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