October 2022, Volume 28, Number 4
Meat and Migrants
The three largest US chicken processors, Tyson, 20 percent of US chicken production; Pilgrim, 17 percent; and Sanderson-Wayne, 17 percent, struggled to find enough employees to staff dis-assembly lines in summer 2022, prompting them to accelerate investments in labor-saving automation such as deboning machines.
Cargill and Continental Grain (Wayne Farms) in August 2021 proposed to buy Sanderson for $4.5 billion and create a company that accounts for 15 percent of US chicken production. To gain DOJ approval, Cargill and Continental promised to abandon the tournament system that pits poultry growers against each other by paying more to growers whose chickens gain the most weight with the least feed.
Almost all chickens and some hogs are raised by farmers who have contracts with meat processors. The processors provide farmers with chicks or piglets and feed and buy the finished chickens and hogs. In most cases, there is only one processor for farmers in a particular area, which some farmers say allows the processors to dictate contract terms. Farmers say that, if they complain, processors can retaliate by providing them with inferior chicks or feed or not weighing their finished chickens properly.
USDA solicited comments on the tournament system in summer 2022; many processors encouraged their contract growers to urge USDA to maintain the status quo. A USDA effort to end the tournament system in 2010 failed.
Cargill, Sanderson Farms and Wayne Farms in July 2022 agreed to pay $84 million to employees whose wages were suppressed by the companies sharing wage information in a bid to hold down labor costs.
Smithfield will close its 1,800-employee hog-processing plant in Vernon, California in 2023, saying high costs and Prop 12 made the plant that produces Farmer John pork products uneconomical; Prop 12 requires pork sold in California to come from pigs whose mothers have space to move freely. UFCW Local 770 represents Vernon employees, 80 percent of whom are older Hispanics who earn $15 to $20 an hour. Smithfield has 45 US plants, and says that lower feed costs in the Midwest and south make pork production cheaper there.
Walmart in August 2022 announced an investment in Nebraska’s Sustainable Beef; the retailer opened a milk processing plant in Indiana in 2018. Sustainable Beef is projected to have 800 employees who will process 1,500 cattle a day, and is receiving USDA assistance to increase competition in beef processing, where four firms have an 85 percent market share.