Farmers demand ACCC inquiry into chicken industry
A major investigation into the chicken meat industry will be launched next month, against a backdrop of accusations that a buyer duopoly, corporate takeovers and supermarket price pressures are driving family farms off the land.
It comes as seven family-owned and operated chicken farms in northern NSW will go belly up this week, even though Australians eat twice as much chicken as beef and pork and six times more than lamb.
The Australian Consumer and Competition Commission will review the chicken meat industry between July and December, to investigate claims the nation's two big chicken companies - Baiada and Inghams - are abusing their power over farmers.
In NSW, a decade ago there were six major chicken companies who contracted farmers to grow their birds, but now Baiada dominates the state, with a company called Cordina a minor player.
Chicken farmer and father-of-six, Jeremy Cruickshank, 45, has four huge but empty sheds on his farm near Casino, after Inghams collected the last of his 120,000 birds last week as part of Ingham's complete exit from producing chickens in NSW.
After 13 years of growing chickens on his farm, Mr Cruickshank will this week look for a new job in town while he sells parcels of his property to service his debts.
There are no longer any chicken processing plants close enough to the Northern Rivers region to sustain the 12 chicken farms that lost contracts in the past year.
The blow to Mr Cruickshank's business has devalued his farm by 45 per cent, which spooked the banks off lending him enough money to retrofit his sheds for growing an alternative crop such as mushrooms.
"We have been left high and dry with assets and infrastructure worth a lot of money that are now more of a liability," Mr Cruickshank said.
"I didn't realise you could invest so much money into a business only for the chicken processors to turn around and say 'we don't need you anymore, so your multimillion-dollar investment is worth nothing'.
"My parents, who are nearly in their 80s, own half of this operation and were hoping to retire off what we made from poultry, but now there's no income and the place has been devalued.
"I have kids keen to get into agriculture but … I don't want them to, because when it comes to the family farm I don't see a viable future."
The big chicken companies are increasingly turning to corporate growing services, funded by superannuation firms, that grow tens of millions of chickens a year far cheaper than a family farm. Chicken farmers struggle to sell their farms, which are only worth the land value without a contract, because corporate firms offer more favourable terms to the processors.
A chicken processing industry source said market volatility like the huge spike in the cost of grain during the state's worst ever drought has forced the major chicken companies to favour corporate growers.
While farmers make huge investment in their sheds, which require constant upkeep to meet regularly revised animal welfare standards, chicken companies are exposed to the lion's share of risk such as supermarket wars over the price of a barbecue chook.
There is no suggestion chicken companies have failed to honour contracts, but farmers have complained it is not possible to negotiate a fair deal because farmgate prices and payment terms are kept secret through nondisclosure agreements.
"Chicken growers are getting torn to pieces and handing ticking time bombs to their kids," NSW Farmers president James Jackson said.
"Growers have to accept whatever price the processor offers them, because the processor knows no one else is making an offer."
The big supermarkets were just as much to blame for the demise of family-owned chicken farms as the chicken companies themselves, according to Mr Jackson.
"I don't really blame the processors (such as Baiada and Inghams), who are under extreme pressure by the supermarkets," he said.
"Domestically consumed perishables like milk and poultry, where there's no international market, are beholden to the supermarkets."
Neither Baiada or Inghams would comment on the allegations of anti-competitive behaviour.
A Baiada spokesman said: "We do not wish to pre-empt the inquiry before it commences and so would prefer not to comment on the inquiry."
An Inghams spokeswoman said: "We would never pre-empt the regulator and will make no comment until we have greater clarity of their concerns."
National Farmers' Federation president Fiona Simson cheered the ACCC review.
However she urged federal Agriculture Minister David Littleproud to launch a more comprehensive inquiry into the industry with powers to compel chicken companies and supermarkets to disclose their bargaining practices.
NSW Farmers, Victorian Farmers Federation and the National Farmers' Federation want a mandatory code of conduct, similar to one recently applied to the dairy industry.