Aussie poultry farmers eye US reform
The National Farmers’ Federation (NFF) and NSW Farmers are urging the Australian government to take note of their US counterparts after President Joe Biden issued orders to protect US chicken growers from powerful poultry processors. Aussie poultry farmers are now asking, if President Biden acknowledges competition failure, why can’t we?
Industry has applauded the “courageous” move by the United States Presidential Executive Order on Promoting Competition in the American Economy. This will prohibit unfair practices perpetrated on chicken growers by American chicken meat processors. These same practices are also rife in Australia’s own poultry sector.
“Australia’s poultry meat landscape is highly comparable to the US,” says NSW Farmers President James Jackson. “Poultry farmers in both countries face weak bargaining power and diminished returns. President Biden’s acknowledgment that consolidation weakens competition is a breakthrough. We hope to see similar recognition here in Australia.”
Farmers left vulnerable
The Executive Order prohibits unfair practices in US grower ranking systems. These systems allow poultry processors to exercise extraordinary control over key inputs that determine how much farmers are paid. They also require farmers to assume the risk of factors outside their control, often leaving them economically vulnerable.
“Poultry farmers do not own the birds but care for them on behalf of powerful processing companies,” Jackson explains. “They’re required to own and maintain the sheds, equipment and resources needed to do this. Unfortunately, the poultry meat processing landscape in Australia is highly concentrated. Growers have limited choice in who to contract to, and geographical constraints diminish flexibility even further.
“Essentially, poultry farmers are required to make sizeable infrastructure investments only to face the possibility that their contracts can be terminated with little to no notice. All with no alternative contract arrangements to fall back on.”
According to NFF CEO Tony Mahar, there have been countless situations in which Australian growers have painstakingly negotiated a farmgate price over many months, only for any gains to be wiped out by processors. This could be by increasing the cost of mandated inputs they sell to the grower or introducing new requirements to upgrade equipment.
“This is simply wrong, and not in keeping with the principles of competition and fair dealings,” Mahar says. “The highest political office in the largest economy in the world has decreed that the unfair and unconscionable practices perpetrated by chicken meat processors on American growers must stop. It’s time Australia followed suit.”
Despite reviews into Australian competition policy and agriculture, there’s been little action to rectify the situation for chicken farmers.
“This is a watershed moment,” Mahar says. “One that has eluded us in Australia despite countless government and ACCC reviews that have found untoward practices perpetrated on chicken growers. We call on Australian policymakers to take note of developments in the US and act swiftly to afford Australian poultry farmers the same protections.”