Former contract chicken grower Craig Watts. | Photo courtesy of Craig Watts.
Story by Ashley Quincin
Twelve years ago, Craig Watts sat in a motel room with his wife, when a Perdue Farms commercial flashed on the television. Jim Perdue, the company’s chairman, walked through a chicken house – a pristine one, with fresh pine shavings, clean farming equipment and big, beautiful birds.
He was advertising Perdue’s “humanely raised” poultry.
“I didn’t see nothing like that in day-to-day work,” Watts, a former contract grower for Perdue for nearly 24 years, said. “I was like, ‘This is such bullshit.’ Pardon my French.”
For Watts, that was the beginning of the end. One chilly December morning in 2014, he and Leah Garcés, a then-animal-welfare activist with Compassion in World Farming US, released an exposé on Watts’ North Carolina farm, where he raised around 720,000 chickens a year for Perdue.
Watts stood in front of the camera, flanked by thousands and thousands of chickens, and detailed the sordid conditions of the birds he raised for Perdue. The birds’ bellies were raw and red, bred to have such large breasts that they became too heavy to support themselves on their own legs.
“I just felt like the consumer needs to know what the conditions are actually like on these farms,” Watts said.
‘Take it or leave it’
Today, more than 90 percent of broiler chickens and the majority of turkeys are raised by independent farmers under contract to poultry companies. Watts signed a contract with Perdue in 1992 as a lifeline back to the farm his family has owned in Fairmont, North Carolina, for centuries.
But under the contract system, Watts said, there is an imbalance of power.
The contract specifies that Perdue is solely responsible for determining the breed of chickens the grower – referred to as the producer in the contract – receives; the number and density of chickens in each flock; the size, weight and age of each chicken to be produced; the time of processing for each flock and the estimated time of placement of any future flocks.
In return, Watts was paid less than 5 cents per pound and was responsible for raising the chickens and managing their waste. He could not control what the birds were fed or what medicine they were given.
“There’s not any good faith bargaining that goes on in the contract process,” Watts said. “It’s handed to you – take it or leave it.”
Contract growers also undertake a significant amount of debt once entering a contract with a poultry company, making large initial investments into housing or equipment with the expectation that the debts will be paid.
Many growers, especially in North Carolina or those who live on generational farms, have their farms and even personal homes tied up as collateral, said Tyler Whitley, director of Mercy for Animals’ Transfarmation project, which helps farmers transition from industrial farming to raising crops.
Angela Stuesse, a cultural anthropologist at UNC-Chapel Hill whose research focuses on the poultry industry, said growers often invest thousands if not millions of dollars into the equipment they need to grow chickens and become financially locked into the work they are doing.
Companies can also threaten to suspend bird deliveries if they believe that housing specifications or equipment upgrades are not up to par. This can have a detrimental effect on a grower trying to pay their mortgage.
With the recent closures of poultry plants in the South, Whitley said, the financial burden on growers can get even more overwhelming because fewer plants mean fewer birds are needed. Tyson Foods shut down two poultry plants last year, including laying off over 200 workers at a plant in Wilkesboro, and plans four more closures this year.
“Debt is a big problem for chicken growers in ways that make it difficult for them to walk away,” Stuesse said.
Most growers raise chickens under an arrangement commonly known as a tournament system. Under this, companies use a relative performance system to determine how much a grower gets paid. Growers who raise the largest number of chickens using the least feed would get paid more. But growers say that because they do not control the health or number of chicks they receive, this system is exploitative.
“This always boils down to five words: all inputs are not equal,” Watts said. “Your paycheck is basically randomized through company inputs.”
Watts described the contract system as a whole as one of adhesion, which exists when the two contracting parties are at such disproportionate bargaining power that the weaker one – in this case, the grower – could not have negotiated any variable terms in the contract.
“There’s a lot riding on that relationship between the integrator and the farmer, and I think it’s a desperately hopeless relationship,” Watts said.
‘A very opaque industry’
For decades, poultry growers have complained to the U.S. Department of Agriculture of abuses that come with the contract system.
After Watts exposed the conditions on his farm, he filed a complaint with the U.S. Department of Labor against Perdue.
In his 2015 complaint, Watts alleged that in recent years, he had observed an increase in the number of chicks on his farm carrying a bacterial infection. Watts said he believed Perdue had not adequately controlled sanitation in its hatcheries to prevent birds from developing infections, as well as not treating sick birds at the hatchery to prevent the spread of infection on Watts’ farm.
Perdue’s practices and conduct caused the birds to be raised under conditions that elevated their risk of contamination with salmonella, e-coli and other harmful bacteria, in turn threatening the health of consumers who purchase and eat them, the complaint alleged.
Under the employee protection provisions of the Food Safety Modernization Act, Watts alleged that Perdue then began harassing him with almost daily inspections.
Perdue did not respond to request for comment by the time of publication.
But in its 2015 formal response to Watts’ complaint, Perdue claimed that Watts was essentially “blowing the whistle” on himself. Watts’ footage revealed that he had disregarded the welfare of his chickens and ignored the biosecurity protocols designed to avoid the spread of infection in poultry flocks, Perdue alleged.
“Unhappy with the amount of money he earns under his contract with Perdue and unsuccessful in affecting change through the established contractual and regulatory channels, Watts devised a cruel scheme,” the response states.
The response also alleged that Watts cannot file an employee complaint against Perdue in the first place because he is not an employee of the company – he is an independent contractor.
Ironically, Watts has very little independence as an independent contractor, he said.
“You’re basically still dictated by how to, how many times to, when to,” he said.
In recent years, the poultry industry has been rattled by lawsuits claiming growers are misclassified as independent contractors rather than employees. Because of that misclassification, growers are then subject to fraud and breach of contract.
Perdue argues that contract chicken growers generally fall under the “agriculture exemption” of the Fair Labor Standards Act. But the U.S. Department of Labor published a final rule, effective March 11, revising the department’s previous guidance on how to analyze who is an employee or independent contractor under the FLSA to counteract these arguments.
“The misclassification of employees as independent contractors may deny workers minimum wage, overtime pay, and other protections,” the department said in its announcement of the rule. “This final rule will reduce the risk that employees are misclassified as independent contractors while providing a consistent approach for businesses that engage with individuals who are in business for themselves.”
Under the Packers and Stockyards Act of 1921, growers also have certain rights and protections, including accurate payment, protection from unfair practices and reasonable contract conditions.
But growers say despite all these rules and regulations, companies still act deceptively.
The USDA recently amended the regulations under the Packers and Stockyard Act. The Transparency in Poultry Grower Contracting and Tournaments final rule, which went into effect Feb. 12 of this year, aims to address the deceptive practices of “a very opaque industry,” Whitley said.
The rule requires poultry companies to disclose to prospective and existing growers the income range of growers in their region and tournament group as well as information about feed quality and bird deliveries when a tournament system is used. This includes the source of the birds, the age of the flock, and feed and medicine information.
Aaron Johnson, policy co-director at Rural Advancement Foundation International, a nonprofit based in Pittsboro that advocates for agricultural policy and food equity, said his organization has often observed the tournament system being used in a retaliatory way. The USDA’s new rule, which requires that growers receive transparency documentation, now provides evidence for growers intending to prove a pattern of sabotage.
“There’s more of a paper trail for a grower to be able to collect and to be able to demonstrate a pattern of retaliatory behavior by means of providing them subpar inputs on a consistent basis,” Johnson said.
The Inclusive Competition and Market Integrity under the Packers and Stockyards Act final rule, which will go into effect May 6, strengthens the act’s protections against deception and discrimination, which can legitimize claims against poultry companies by either the department or a private litigant.
But the rules, which were introduced by Democratic U.S. Secretary of Agriculture Tom Vilsack in 2022, were not passed without a fight.
The funding of the USDA’s Packers and Stockyards Division is managed by Congress’ appropriations process. This year, the House Committee on Appropriations included language in its appropriations bill to prevent the USDA from spending any money to further draft or implement new rules under the Packers and Stockyards Act.
Similar strategies were used by opponents of the act during the Obama-Biden administration, Johnson said, when similar rules were delayed so severely that attempts to update the act failed.
In February, the National Farmers Union delivered a joint letter to committee leadership in opposition to provisions in the committee’s bill that would prevent the USDA from implementing new rules. Senators Jon Tester (D-MT) and Charles Grassley (R-IA), both generational farmers, also urged Congress to oppose any provisions that would not strengthen the act.
Although the committee’s attempt to hinder the USDA from future rulemaking was not successful, Johnson said he suspects it will be tried again, pending this year’s general election.
“The industry has allies in Congress that do not want to see this rulemaking activity completed or continue,” Johnson said.
Bob Ford, executive director of the Poultry Federation, said the USDA’s rules are just more “bureaucratic” paperwork that poultry companies have to deal with. He said most growers do not have a problem with the tournament system, which the transparency rule addresses.
“Our companies are now and have been since February 12 rewriting our contract for the growers,” he said.
‘Brighter day down the road’
Watts remembers waking up one morning and deciding that he would not spend a single dollar more on Perdue. His perfect-world scenario, he said, is to “rent a bulldozer and push this industry off a cliff.”
A decade later, he is still on his farm in Fairmont, transitioning from industrial chicken production to mushroom farming.
Watts said the USDA’s rules, although they will not address the contract system’s inherent power imbalance, will encourage growers to pay attention and ask questions. His one hope? That the USDA will be able to stand enough on its own in the future to protect growers from deceptive contracts. “Maybe, you know, there is a brighter day down the road,” he said.
