A drop in the demand for chicken is crippling many Southern farmers who raise the birds for large processors, known as integrators because they own the birds from hatch. As demand here and abroad has diminished, many farmers have had their contracts canceled and are facing bankruptcy as bills go unpaid and they can't may mortgages on huge chicken houses.
"Nationally, 800 to 900 chicken farmers have lost contracts since last fall, almost all of them in the South," said Gary McBryde, an economist with the Department of Agriculture. "Chicken production is down 7 percent since April 2008," the National Chicken Council said. Many have suffered from the bankruptcy of Pilgrim's Pride, which we have covered here. Today the company announced closing of its plant in Dalton, Ga.
Many argue that the contracts given to farmers to raise chickens stack the odds against them succeeding. "The farmers raise the chicks to maturity, then are paid by the pound for the meat," reports David Zucchino of The Los Angles Times. "But the integrators own the chickens and decide how many the farmers get. They determine the formulas under which farmers are paid, based on a complicated feed-to-meat ratio."
According to the National Contract Poultry Growers Association Farmers provide half the capital in the industry but earn only 1 percent to 3 percent on their investments, versus more than 20 percent for integrators in boom times. (Read more)
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