About Contract Poultry Farming

“The average farmer has been raising chickens for Tyson Foods for 15 years. Some farm families have been raising chickens for us for three generations.”

Tyson Foods is one of the leading supporters of American agriculture, paying more than $15 billion annually to independent farmers who supply us with cattle, hogs and chickens. We depend on more than 11,000 independent farmers across the country. This includes more than 4,000 poultry farmers who contract with us to raise chickens.

What is contract poultry farming?

The practice of farmers raising chickens under contract for poultry processing companies has been around since the 1930s.* Tyson Foods has been working with poultry farmers on a contract basis since the late 1940s and it’s been a relationship we believe has worked well for both the company and the farmer. The company supplies the birds, feed and technical advice, while the poultry farmer provides the labor, housing and utilities.

What are the benefits for farmers?

Contract farming insulates the farmer from the risk of changing market prices for chicken and feed ingredients such as corn and soybean meal, which represents the majority of the cost of raising chicken. In other words, farmers’ compensation is not dependent on what the feed or grocery markets are doing.

How long have most contract farmers been raising chickens for Tyson Foods?

The average contract poultry farmer has been raising chickens for Tyson Foods for 15 years. Some farm families have been raising birds for us for three generations. We frequently receive inquiries from additional people interested in raising chickens for us.

How long are Tyson Foods’ contracts with poultry farmers?

Our contracts with farmers are typically three to seven years or longer.

How are the farmers paid?

Poultry farmers are essentially paid for how well they take care of the chickens and how much weight the birds gain while they’re on the farm. We use a performance- based incentive system that rewards poultry farmers who effectively convert the feed we provide into weight gain in the birds they raise. The payment formula includes such factors as the number of birds, the amount of feed used, the performance of their flock compared to those raised by other contract growers and the weight of the birds delivered to the processing plant.

Is Tyson Foods the only poultry company using this payment system?

The performance-based pay program we offer farmers – some call it a tournament system – is not unique to Tyson Foods. It’s used by virtually every poultry processing company in the U.S. to determine farmer compensation.

How much money does a farmer make?

Income from chicken farming varies and depends on a number of factors. For some farmers, it’s a sole source of income. For many, it’s supplemental income to another job or the raising of crops or other livestock.

Are there federal regulations protecting farmer rights in a contract relationship?

The poultry processor-farmer relationship is extensively regulated by federal law. For example, by law growers are entitled to:

  • A written copy of their contract with the poultry company.
  • Information detailing how much they are paid.
  • Information explaining how a contract can be cancelled.
  • Right to a 90 day written notice of the processor’s intention to terminate the contract.
  • Right to terminate the contract with the processor by giving a 90 day written notice.
  • Right to discuss their contract with outside parties.
  • Right to join an association of growers.

Do you require farmers to upgrade their chicken houses?

Chicken farming is like any other business; people generally have to borrow some money to start or improve their operation. Each farmer must decide on their own how much debt they’re willing to take on. We don’t make such decisions for them. However, we do provide financial incentives – more pay – to farmers who decide to upgrade to premium housing. The benefits of modern housing include a more comfortable living environment for the birds with improved ventilation and more uniform temperatures through the barn. Another benefit is energy savings.

Does Tyson Foods help chicken farmers experiencing problems with the performance of their farm?

If a contract farmer’s operation is not performing well, we have a program in place designed to help them get back on track. It gives them multiple opportunities to improve their performance and typically includes a meeting to discuss ways to do better. We want them to succeed. In some cases, we may recommend they make certain improvements in their facilities.

Is your payment system fair to farmers who have older chicken housing?

Chicken farming is like any other business; each farmer must decide independently how much to invest in their operation to make it competitive. If we segregated our payment system based on the age or type of the housing used, it would favor those farmers who have chosen against investing in ways to make their operations better and would be unfair to those who have. We do, however, provide some financial incentives for farmers to upgrade.

*Source: In Meat We Trust by Maureen Ogle

Contract poultry farmer resources: GrowWithTyson.com