Big Chicken Getting Bigger: Cargill and Continental Grain Buy Sanderson Farms.

The heart of the matter is that three companies will control 50 percent of the broiler market:

Combining Sanderson with Georgia-based Wayne Farms LLC, a poultry company owned by Continental, would form a new competitor representing about 15% of U.S. chicken production, according to data from Watt Poultry USA. Tyson Foods Inc. leads the industry with about one-fifth of the market, while Pilgrim’s Pride Corp. represents about 16% of the national total.

Koch, Perdue, and a handful of others have the rest. As Lt. Frank Drebin once said, nothing to see here.

via GIPHY

Read the full story on the Wall Street Journal:

Price Fixing Charges in Broiler Industry

From 7/29/21 press release from the Department of Justice:

A federal grand jury in Denver, Colorado, returned an indictment yesterday charging Koch Foods, headquartered in Park Ridge, Illinois, for participating in a nationwide conspiracy to fix prices and rig bids for broiler chicken products. Separately, a federal grand jury in Denver returned an indictment charging four executives for their roles in the same conspiracy.

According to court documents, the four charged former Pilgrim’s Pride executives are Jason McGuire, a former Executive Vice President of Sales for Prepared Foods; Timothy Stiller, a former General Manager of Fresh Food Services and Small Bird Debone; Wesley “Scott” Tucker, a former National Accounts sales executive; and Justin Gay, a former Director of Fresh Foodservice Sales.

The indictments allege that the defendants and co-conspirators conspired to suppress and eliminate competition for sales of broiler chicken products, which are chickens raised for human consumption and sold to grocers and restaurants. Koch’s senior vice president, William Kantola, is among ten individuals indicted in October 2020 for their roles in the conspiracy. On May 19, a grand jury returned an indictment against Claxton Poultry for its role in the same conspiracy, which today’s indictment supersedes. Pilgrim’s Pride, a major broiler chicken producer based in Greeley, Colorado, pleaded guilty and was sentenced in February 2021 to pay a criminal fine of $107 million for its role in the conspiracy. The long-running conspiracy began as early as 2012 and lasted until at least 2019.

Be on Notice: GIPSA Farmer Fair Practice Rules

USDA programs are the product of good democratic compromise. While some farm constituencies may not benefit directly, as is the case with small-scale vegetable farmers and safety-net programs like Agriculture Risk Coverage and Price Loss Coverage, they are not actively discriminated against in the rule-making. Rather, the more populous, prosperous, and influential group — row-crop producers, for example — has the loudest voice and the final say. While the outcome may not always be equitable for all of USDA's stakeholders, at least it is without nefarious intent.

It's what happens outside of USDA that creates problems.

The Grain Inspection, Packers & Stockyards Administration’s (GIPSA) “Farmer Fair Practices Rules,” as mandated by the 2008 Farm Bill, are designed to protect contract livestock and poultry farmers from anti-competitive, unfair, discriminatory, and downright abusive practices by vertically-integrated meat processors, who have monopolized their relative markets to a monstrous degree (see Michael Pollan's quote). It's hard to imagine arguing the worth of such a measure — tantamount to the political sacrilege of demeaning the American farmer. However, lawmakers are infinitely subject to suasion, particularly if they hail from states with large poultry companies. Since 2008, the rules have never gone into effect, neutered by what has become known as the GIPSA Rider, a recurring amendment tacked on in the appropriations process to prevent the rules from going into effect. Despite a law on the books to protect farmers, the regulations and enforcement have never made it out of the legislature ... until last fall.

“According to one traditional yardstick, an industry is deemed excessively concentrated when the top four companies in it controls more than 40 percent of the market. In the case of food and agriculture, that percentage is exceeded in beef slaughter (82 percent of steers and heifers), chicken processing (53 percent), corn and soy processing (roughly 85 percent), pesticides (62 percent) and seeds (58 percent).”

— Michael Pollan, "Big Food Strikes Back"

Per the National Sustainable Agriculture Coalition, the point group advocating on behalf of farmers on this matter, the Farmer Fair Practices Rules, at last finalized, contain two proposed rules, plus an interim final rule:

"The proposed rules address the poultry tournament payment system and issues of undue preference, while the interim final rule clarifies that farmers need only prove they were treated unfairly by a company to secure legal remedy. Currently, farmers are required to not only prove harm to themselves and their businesses, but they must also prove that the result of the harm impacted competition industry-wide. The interim final rule will clarify and underscore the plain language of the Packers and Stockyards Act, which requires no proof of harm to competition from a complainant."

But we're not out of the woods yet. With the Trump administration's pause on new regulations, the comment period and effective dates have been pushed back, with the comment period extending for all rules at least until March.

In the ceaseless hue and cry of current politics, remember GIPSA. The end is so close. As the son of a chicken farmer who suffered the fearful intimidations of the poultry industry, we can't let this die now.

Further Reading

The other side's take on GIPSA:

From the National Cattlemen's Beef Association (it's curious that a cattle organization would be so vociferous against GIPSA since the diffuse and individualized nature of the industry would seem to leave it the least affected):

• Destructive GIPSA Rules
• GIPSA One-Pager

Here's The Poultry Federation's take.