Tuesday, February 25, 2014

The US Chicken System

We'll stop the Lessons for a moment so we can have a message from our sponsor.  Is the US system better than Canada's Supply Management system?

National Public Radio in the US has read the recent book by Christopher Leonard's The Meat Racket, a tale of caution and complaint against the US meat industry, similar to what was published in 1906, The Jungle by Upton Sinclair.

NPR also did a piece on Tyson, the leading chicken producer in the US, asking if Tyson was a "Meat Racket" as described in Leonard's book.

Agri007 also covered Leonard's book, and has some wisdom to offer us.

The US system has huge processors who want to buy chickens ready for slaughter.  They don't have the capital, and don't want to have their capital tied up in expensive barns and farm land, so they contract independent farmers to grow chickens for them.

Because these US farmers are independent contractors to the mega corps, and generally unsupervised or loosely supervised, the mega corporations need some method to control those feisty US farmers, keep them in line, reduce costs, and reduce risk for the mega corporation.  For example, if there is an animal abuse charge at a farm, or a waste disposal problem, or ooze running into a creek, the mega corp want and need plausible deniability, just like the CIA and NSA.  If all the chickens die because someone at the farm didn't follow proper biosecurity protocol, the mega corp wants to be able to walk away, leaving the farmer to eat the loss, likely having to reimburse the mega corp for the lost chickens and wasted chicken feed.  If the chickens eat way more feed or the barn uses lots more propane due to a cold snap, its the farmer who pays the cost of the excess inputs used.

The farmer carries all or most of the risk.  The mega corp gets the resulting product, free of any issues, no strings attached, no unforeseen liabilities.

It's a tough system for chicken farmers in the US.  You grow up quickly under these rules.  It's not for the faint of heart.

But wait, there's more.

Piece work was somewhat invented in the US by Fredrick Taylor, the father of Industrial Engineering.  Under this system, you have to work hard all day to earn a living wage, getting paid only for the good parts you produce.  These methods originated in, and were tested in US steel mills at the turn of the 20th century, then quickly adopted for automotive parts production, then many other industries.

The mega corps loved Taylor's piecework systems, for it ensured workers achieved maximum productivity, kind of.  If the workers found a faster, cheaper way to do the job, more production in a shorter time would occur, the mega corp would end up paying the worker more for that shift, so the bosses quickly found out about improvements, everybody would be forced to adopt the better way, then a time study would be done to re-calculate the "fair rate" with the new improved method, and the worker would quickly lose his advantage he invented, and the extra pay that went with it.  If the mega corp installed new machines or methods that were faster or better, then the piece rate would be calculated immediately, as the job was likely easier, so more production would occur for the same effort, so additional pay wasn't warranted.  Improvement was needed continuously to just mark time.

Workers soon learned to hide the improvements from the boss so that they received the benefits of higher pay without enabling the spreading of that improvement to other workers, and thereby lose the personal advantage. Inspectors had to be eagle-eyed, as there was an  incentive for going faster at the expense of shoddy workmanship, and hiding mistakes.

A simple system that was self-policing and encouraged maximum productivity was what the Chicken Council (ie. all the mega processors)  wanted.  But how do you implement it when your farmers are spread all over the nation, on every back road?  They invented the "Tournament Pay System".  In this case, poor performers get less pay, and the best performers get more pay.  The total amount paid by the mega corp is constant, but farmers have to keep up with their peers, or they get docked on their pay.  If you are significantly behind your cohort, you aren't invited back, and you're out of work as a contract farmer for that mega corp.

The problem is quality.  I suggest that raising chickens is what the quality industry calls a "Special Process".  Crossing the finish line with a live chicken that weights 1.0 kg isn't enough.  I suggest it matters how you got to the finish line.  Was there any cheating, or did the farmer follow all the rules?  It is difficult, if not impossible to tell.  This is similar to the cat and mouse game for illegal drugs in athletics such as the Olympics, professional sports, college teams, and elsewhere.  One tries to find an advantage and hide it, while others tries to detect cheating.  As we know in sports, there is a lot of cheating going on.  I suspect the same occurs in raising chickens under the Tournament Pay System.

In many ways, the current US system is as bad or worse than the Canadian Supply Management system.  It certainly runs the US chicken farmer off his feet trying to keep up and avoid bankruptcy.  In comparison, Canadian chicken farmers lead the life of Rip Van Winkle, as they can be half asleep and still make out OK come the end of each grow out.

Small Flockers have significant concerns about the US system, and do not recommend it for Canada.

Canadians need a better system, one designed by Canadians, for Canadians.

Small Flockers have made specific recommendations on how that effective system could be implemented.  We only need some dialogue and consideration of the ideas presented.

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