NFO-282 (AV10781): US Farm Report: Broiler Problem Revisited

[Opening music] Hi everybody and welcome to U.S. Farm Report in April of 1970 the NFO broiler producers in the state of Alabama initiated a space holding action at that time US Farm Report and its crew went to Cullman County Alabama to cover on film. That event playing a dominant role at that time and that that place representing the National Farmers Organization at the national level was. Mr. Bill Talbert who was one of our guests on today show also a little later in the show we'll be hearing from Mr. W O. Thomas of Cullman County Alabama who will bring us up to date on the success of the space holding action through that southern state. Bill it's a pleasure to welcome you to U.S. Farm Report. Very nice to be here Bill. I should qualify you by the way as head of the Educational Services Department at NFO and I assure you that one day in the not too far distant future we will be doing a feature show on your department which is one of the most important of all at national headquarters of the National Farmers Organization. Well it's nice of you to say so Bill and I'll be looking forward to working with you. You were a couples of hats obviously because you've done a whale of a job in this broiler situation down in Alabama. Now let's talk before we get to specifically the situation in the state of Alabama about the broiler industry nationwide. Where is the main broiler production in the country. Bill Well this was interesting it seemed to me as we delved into this broiler industry it was interesting to research it determined where the heavy producing areas were located and things of this nature find out that broilers are commercially produced and in about 22 states of the nation. The real heavy producing areas lie in the south east. Georgia is the number one producing state. Arkansas ranks very close. Number two with Alabama following Arkansas in third place up along the Eastern Seaboard into Maryland and Delaware there's a heavy producing area as well as into Maine which happens to be the eighth largest broiler producing state in the nation. Then obviously comparatively few states produce all of the broilers in the country. Yes I think that's right. Now Bill what is the status quo of the broiler producer across the country today. Really Bill when you study it you'd have to say that it's most depressing situation that exists in agriculture. I don't think there's anything that quite compares with it these broiler producers are actually living in bondage. They've brought the money to build a building to furnish the buildings with equipment necessary to produce broilers doing so they've mortgaged their farm and home now at this point the return financial return for producing broilers gives them in most cases just about enough to cover the payment on the building but they must keep producing broilers even though they're not netting any profit from it must keep producing broilers in order to make the payment on the buildings so as not to lose the farm and home. You see so really I think it's correct to say they're living in bondage. Slaves to an industry that doesn't allow them enough profit to live on. When we refer to the industry that does not allow them enough profit to live on we're referring our we to the vertical integrated yes vertical integrator plays an important part here and for the people who don't understand the term vertical integrator. Although most people are becoming familiar with it especially in agriculture means that as someone has either owns or controls the industry from virtually one end to the other well why doesn't the broiler producer do something about it. Well this was my first question too. After going into the broader industry and beginning to study it and working with the people why don't they do something. And I found that most of these people were were fearful of doing anything that might antagonize the integrator in any way because we find in most areas there's a surplus of broader houses whether it's by accident or on purpose as a surplus of broader houses. So all of our producers live in constant fear of being cut off not being provided great baby chicks and thereby have this income cut off that allows them to make the payment on the building you see. So this again has the potential to make them slaves to their industry to keep producing and say nothing. Now w o Thomas a little later in our show as I stated is going to talk about the broiler industry situation in Alabama and particularly around his home county of Cullman. But perhaps it would be in order for you Bill to tell our viewers just exactly what kind of an arrangement the vertical integrator has with the broiler producer as the contractual arrangement Bill contract is drawn up by the integrated the broader producer than predicted borders under that contract or doesn't produce borders at all. It's really quite simple. It's a contract drawn up by one individual. The other individual producers under that contract or doesn't produce. Now what exactly does the integrator do and in turn what does the producer do integrator provides. The baby chicks placing them in the house he provides a feed for the chicks. He picks the chicks up normally at about an eight week period of age and takes them off to the processing plant with the processed and the producers sent them the settlement sheet and the check the producer provides the building the equipment the electricity water and labor whatever is needed here in the production of the bird is provided by the producers. How did NFO get into the broiler industry. Well as I mentioned belly producer has been somewhat fearful and rightfully so. But when he heard of the NFO he looked to the NFO with with hope in his heart really. That here was an organization that he could look to that would provide him with some hope for the future better prices. Well he had to turn somewhere didn't he. That's right. As an individual he was helpless. Well now what can NFO do for these people. Many things really. Bill of course we can't do it all for them. They must provide a lot of the motivation themselves. Of course the NFO has been highly successful successful and in many other commodities grain dairy meat and many other smaller commodities. So we do have the skill leadership the collective bargaining knowhow so to speak so we can give them the leadership this needed because really the problem isn't that much different in the broader industry than it is in any other commodity so we can give them the least skilled leadership that they so desperately need. Also of course we can give them the legal advice because whatever is done here is always must be done in a legal manner so we can keep them on the right path here so to speak by by assisting with legal advice. I think probably the most important aspect is the nationwide aspect that is communications nationwide. The ability to have current instant communication from one area to another so that we can have this industry wide impact or this industry wide effect from a bargaining standpoint. Now down in Alabama that NFO tell these people to lock up their broiler houses. No these these actions of this type Bart is leave a spontaneous nature. The attitude was there. The attitude developed and the producers act on their own initiative. What is NFO is ultimate goal for the broader producer Bill. It's a good question Bill and I'd like to answer it in this way and it I think parallels our objectives in all commodities. Our objective within the broader industry is forced producers are concerned is to provide the mechanics or the framework of the structure so that they may get in a position through their organized spring to be able to have a voice in writing the contract that they're going to be producing chicks under and having a voice in writing this contract will of course give them the benefit of higher prices within that contract. The tentacles of vertical integration are reaching out and spreading into other agricultural areas aren't they. That's right Bill. We see this in many areas having to a great extent I feel paralyzed the broader industry vertical integration now is reaching into the swine industry and quite a few areas we see tremendous development than expansion in Arkansas. Northern Georgia North and South Carolina as well as many of the Midwestern states where some form of vertical integration within the swine industries is starting to develop. Phillip Wilkie son of the famous Wendell Willkie presidential candidate against Franklin Roosevelt in 1940 was at the convention of course you and I don't remember Wendell Willkie do we all know that I'm young for the back in 1940. Now Phillip Wilkie of course is a great enthusiastic attacker of the corporate conglomerates. He also attacked the large feed concerns who are in the business of vertical integration and contends that there should be federal legislation against this kind of thing. How do you feel about that. Well I couldn't agree more Bill and I'm sure that the proposed legislation of this type will will come in the not too distant future not only at federal level but at state level too. Phillip Wilkie by the way it will be a special guest on one of our of US Farm Report shows in the very near future Bill. And be sure to keep watching. Glad to hear it. Now if you don't mind Let's watch together as I visited with Mr. W. O Thomas from down in Cullman Alabama. In April of 1970 our U.S. Farm Report crew traveled to Cullman Alabama to cover the broiler producers dilemma in that area. It was in April that the NFO declared a space holding action among its members in the broiler business. In that part of the country on our trip to Cullman Alabama one of our hosts was w o commerce a fine gentleman a farmer from Coleman. Most of his life and I am delighted today to welcome w o back to US farm report for purposes of reminiscing about our trip to Coleman last April and to find out what progress has been made in the broiler situation there in the last few months. W Oh I understand congratulations to some degree in order because since I was there in April you have assumed a new role for an afro regional broiler director. Either I offer you congratulations or condolences one or the other which do you think it should be where they are led. Convey the way well how's it going with with your new job. How much territory are you covering. Well mostly north out of bounds but I do make trips into Georgia and others in this southeast time time we can get this rolling program to move in belt lad instead of the snow here. Let's talk a little bit about Coleman Alabama. As I recall w o Coleman is among the top 100 counties in the whole nation in an agricultural production volume wise isn't it. That is fat and it is Alabama's number one agricultural county. This is correct. So how long have you farm there. I said most of your life and I think that was right. Well I started in nineteen thirty one of actually participating and taking hold in 1936. Within him again to manage. Now w l let's talk a little bit about what I have termed since my trip to Coleman as the broiler producers dilemma. Can you a sort of background this for us tell us about historically how the situation as it exists today developed well it's a long story there babe but on this what we have gradually moved from the independent to this integrated rolling. We've had great deal problems to try and sell our bras after we moved into the integrated. We couldn't sell a man even independent producers were forced to go into the integration in order to have market for they were ordered now the way this thing started I was independent producers start in 1933 and I remained independent a male after I came back from World War Two I was going for years where award 2 came back and stepped back into taking put that eggs in road and I'm fairly typical of what is happening there. I stayed remained independent out until in the middle Pape integration started though in the late 40s and early 50s. Albert the growers if they get larger more patients they would finance chicken feed and said Democrats on this very attractive start up where they did their but the requirements then that they started making once they got the Raleigh group produce. And then they began to lower the. The prices continued to lower and they began to make heavier demands to type equipment type of building and work to produce with to put out. Well this producer at that time a majority of them felt like that they had such an investment they had this day at far this equipment and had in over their head until the head produced for all that whatever price they were up it was pretty much a vicious circle. By that time I right it had gathered to be a vicious circle at that thing. Now when I was in Coleman the integrator was paying around two cents for chicks. Let's talk about for that two cents per pound and the average broiler as I understand it weighs around 7 pounds so we're talking or rather around three and a half pounds so we're talking about seven cents per bird aren't we. Right now in order to get that seven cents per bird. The integrator provides as you said the chicks. He also provides the feed. What does the broiler producer provide. They brought a producer Bale under this integrated contract provides a path and he provides that he provides later for that utility. And of course any. Too late. I don't see how in the world he can make it and he's not making it. Let's talk a little bit about this heat factor. Northern Alabama gets pretty cold winters sometimes right. Right. It'll take some heat to take care of those birds and this is a very expensive proposition and w it is a nine eight to nine month of the year there will be some heat required on those voters and possibly six months out of the year that we have a heat requirement. Now most of those broader houses are heated by coal aren't they w right. The majority of them are heated back though but there is now underway a trend toward putting in natural gas. Right. Are some of the integrators requiring this change they would like to require that change there before action started last spring. They had already put out the information. In fact one integrator went as far as to getting it location on the railroad were to put in the gas tank. He was going to put the gas in and require that those roads to bar this gate from him instead of the local gas. That's that's quite a scheme. But they were they were trying to move to there and they had made the arrangements including this fir being built by these stowage things I recall so distinctly w o being and Coleman and attending meetings there that your broiler producers refer to themselves as chicken house janitors because that's pretty much what they are relegated to isn't it. That's right. Well now let's talk a little bit about the holding action what the issues were how it has progressed and then we'll get to the status quo. What were the bigger issues in the space holding action. Well of course there was a issue. They and then have been referred to as brain benefit which was equally as important as the pay off some of those were what w that condemnation. That was number one a issue the letter clean out sanitation. They've had this hate mail the grower having no say so in any of these men they were some of the main fringe benefits. Fred let's talk a moment about the condemnation factor now. Here is a situation where those birds that were condemned by inspectors perhaps were so condemned because of some sort of disease that existed in these birds at the time they were hatched is mad about that fact that is a fact. This disease came from this breeder flock with taking away the integrator owned or controlled and over which the broiler producer had no control that brought the producer had no control and he had no say so which flocks or any of this type of thing did you guys take. And yes it was the broiler producer who was paying the freight in the condemnation factory. Right. OK. Well now tell me about how the holding action has gone w whether the hold in action is still going bail. It has been rugged it has been the only thing they tell us that not a raw nerve. They have been ragged gag today. There is an old nag but we have at least made some probably we own two contracts that we have under negotiations at the present time. It may be a step put this back into the role of growers hand instead of integrated things. There has been progress made in one sense on pay. Now in Germany as we mentioned before that we had all gone mad. And the threat they moved the contract price up from a cent and a half to a cent nanny a pan to set out with them integrated. And the way that I refer to this is probably the price of broilers so that they integrators have that have drop very low and tell me that I'm in contact with or worked with where they have cut the price of growing relative to these growers to as low as a certified Santa pound salmon found in there that we're involved in that this whole inaction is going now. For some reason the integrated do not dare to cut it from this sentiment to Tucson fan. It's from 9 a.m.. Well that's some with a sale because of the financial condition that we have some of our members that have had to grow abroad to try to keep the mortgage. They can't make anything but at least the financial institutions are said it's bad to go along with them a higher loan rate that rose and have WEO in April when I was in Coleman a number of the broader producers in that area had started to convert some of their broiler house space to hogs. How's that working out. Well they're not working out too good. You've had a bad price situation that price situation has affected them. And this is another thing that I saw. But oh the nation that when you tried to convert in a segment of agriculture to whereas it you're not getting fast for one commodity you convert to another segment of it then you overproduce in that area. Both in that price is that and this may be some of the problem here on the hog production because of this conversion that the prices have gone down and they haven't turned that really to where with it. By the way I think it's interesting to point out to our viewers that the holding action going on down in your part of the country is perhaps unique to NFO in that you're not holding a commodity you are actually holding space. And I don't know that the NFO has ever done this before but this is about it you're holding space in your in your broader houses well due to the uniqueness of the situation I guess. This would be about the only commodity that would work for it later would because you really don't own the commodity we don't own the commodity. We just on the facilities to grow the commodity and the labor to produce. What were the signs that many of your people put on their broader house doors what did they say these doors will be closed for contract overhaul that they have never had anything to say in the writing of the contract they owned and now they integrated wrote these up safe and fair and fact the legal sources that we have consulted down there have been amazed that they could even get the contract signed by this road producer out there that has a 20 30 40 thousand dollar Marty zone that play and this is a service he led them from to meet those payments. Well he really doesn't have much to tell us and I must tell you there's no reason that they do what they want to this contract anyway w o to wind up today since we perhaps have some urban dwellers looking at our show. Perhaps we should mention what the integrator gets for this broiler for which he pays the broader producers say seven cents and then eventually what the housewife pays for that same bird in the supermarket Well this is a rather integrated instigating process itself there. Now this integrated part of live bear this in mind. He has control of those babies shaking he said his press aside markup profit on the baby cake. He said to donate the feed. Then he also process. And he said she's processing go in they don't in fact do that you really can't say it is the cost of going though take it. So they kept so low until that really not a factor anyway. And on that this process put that this broiler this last year they have averaged approximately twenty cents per fan ready to cook press since integrated does all this talk of this process in this rain. And he put this out to the grocery the corner grocery or other supermarket and I was price there is usually thirty nine cents. All right. So we're talking now about a chicken at the at the supermarket for say around a dollar and a quarter dollars thirty five for which the broiler producer received seven cents. Right. They've taken that the Southwest has purchased for the family meal and incidentally it has been more or less about over the to life in years and now it's a chain mail of good wholesome food. I really enjoy W. O Thomas. He's quite a guy and I'm sure a very enthusiastic NFO worker down in Alabama. Yes I agree. He's a tremendous leader. Bill I want to thank you very much for being on our show today to sort of give us a new look at the broiler situation. It's been a pleasure having appreciated being here. And don't forget soon the educational services department will be featured on our show. Looking forward. Thank you so much. My special guest today has been Mr. W O Thomas from Cullman Alabama and Mr. WJ Talbert. Bill Talbert who heads up and opposed educational services department and who has also worked predominantly and arguably in the broiler situation in the state of Alabama. And in fact all over the nation U.S. Farm Report is seen each week at the same time on this same station until we meet again. So long everybody.