UNITED STATES DEPARTMENT OF JUSTICEUNITED STATES DEPARTMENT OF AGRICULTURE

PUBLIC WORKSHOPS EXPLORING COMPETITION INAGRICULTURE

Poultry Workshop

May 21, 20109:12 a.m.

Alabama A&M UniversityKnight Reception Center

Normal, Alabama

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A P P E A R A N C E SWELCOME/INTRODUCTORY COMMENTS:

The Honorable Eric Holder, AttorneyGeneral, U. S. Department of Justice.

The Honorable Tom Vilsack, Secretaryof the Agriculture, U. S. Department ofAgriculture.ROUNDTABLE DISCUSSION AND PRESENTATION OFISSUES:

The Honorable Eric Holder, AttorneyGeneral, U. S. Department of Justice.

The Honorable Tom Vilsack, Secretaryof Agriculture, U. S. Department ofAgriculture.

The Honorable Christine Varney,Assistant Attorney General for Antitrust,U. S. Department of Justice.

The Honorable Artur Davis,Congressman, U. S. House ofRepresentatives.

The Honorable Ron Sparks, Commissionerof Agriculture, State of Alabama.ROUNDTABLE DISCUSSION ON POULTRY PRODUCERCONCERNS:

The Honorable Tom Vilsack, Secretaryof Agriculture, U. S. Department ofAgriculture.

Gary Alexander, Producer, Westminster,South Carolina.

Kay Doby, Former Producer, Cameron,North Carolina.

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Robert Lumzy, Former Producer,Columbia, Mississippi.

Carole Morison, Former Producer,Maryland.

Sandra Genell Pridgen, Producer, NorthCarolina.

Garry Staples, Producer, Steele,Alabama.

Shane Wooten, Producer, Henagar,Alabama.PUBLIC TESTIMONY.

John Ferrell, Deputy Under Secretaryfor Marketing and Regulatory Programs,U. S. Department of Agriculture.

William Stallings, Assistant SectionChief, Transportation, Energy andAgriculture Section, U. S. Department ofJustice.ROUNDTABLE DISCUSSION ON TRENDS IN POULTRYPRODUCTION:

Norman Familant, Chief EconomicLitigation Section, U. S. Department ofJustice.

Benny Bishop, Peco Foods, Tuscaloosa,Alabama.

Max Carnes, Producer, Baldwin,Georgia.

Michael R. Dicks, Watkins Chair,International Trade and Development,Oklahoma State University.

John Ingrum, Forest, Mississippi.Cindy Johnson, Attorney, Cohutta,

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Georgia.Robert Taylor, Professor, Agricultural

Economics and Public Policy, College ofAgriculture, Auburn University.

Mike Weaver, Producer and President ofContract Poultry Growers Association of theVirginias, Fort Seybert, West, Virginia.ADDITIONAL PUBLIC TESTIMONY.

John Ferrell, Deputy Under Secretaryfor Marketing and Regulatory Programs,U. S. Department of Agriculture.

William Stallings, Assistant SectionChief, Transportation, Energy andAgriculture Section, U. S. Department ofJustice.

DUDLEY BUTLER, U. S. Department ofAgriculture.CLOSING REMARKS:

John Ferrell, Deputy Under Secretaryfor Marketing and Regulatory Programs, U.S. Department of Justice.

William Stallings, Assistant SectionChief, Transportation, Energy andAgriculture Section, U. S. Department ofJustice.

DUDLEY BUTLER, U. S. Department ofAgriculture.

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I N D E XPanel: Page

WELCOME/INTRODUCTORYCOMMENTS

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ROUNDTABLE DISCUSSION ANDPRESENTATION OF ISSUES

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ROUNDTABLE DISCUSSION ONPOULTRY PRODUCER CONCERNS

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PUBLIC TESTIMONYBROTHER DAVID ANDREWS 149TOM GREEN 151CRAIG WATTS 156WARREN GRANGER 159MR. RUDY HOWELL 162MR. LAMAR JACKSON 163MR. MICKEY BLOCKS 167MR. ROBBIE STAULT 167MR. FRANK MORRISON 169MS. VALERIE ROW 170MR. WILLIAM CRAMER 172MS. ANGIE TYLER 175MR. CHRIS SANDERS 184MR. ANDY STONE 179MR. BRUCE FAULT 184SHEILA 185MR. JAMES SHACKLEFORD 187MR. TOMMY HINES 190MR. STEVE ETKA 191MR. B. J. HYDE 194MR. OMAR HOLCOMB 195MR. TONY GOOLSBY 198MR. GARY KUSHNER 210MR. DONALD WALKER 213MS. HILDE STEFFEY 224MR. TERRY TUCKER 217MR. BRAD CAINEYUNIDENTIFIED SPEAKER

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ROUND TABLE DISCUSSION ONTRENDS IN POULTRY PRODUCTION

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ADDITIONAL PUBLIC TESTIMONYMS. LYNN HAYES 331MR. FRED PARRISH 336MS. PATTY LAVERIA 340UNIDENTIFIED SPEAKER 343UNIDENTIFIED SPEAKER 347MR. BILL RONICK 350MR. KIRBY NASERY 355MR. DONALD RAY WILKES 357MR. ALTON TERRY 358MR. MIKE WEAVER 362MR. MARK HUDSON 364

CLOSING REMARKS 384

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P R O C E E D I N G SMay 21, 2010 9:12 a.m.

SECRETARY VILSACK: Well, goodmorning. I'm Tom Vilsack, Secretary ofAgriculture. And I'm certainly pleased tobe here at Alabama A&M University andappreciate all of the folks that are heretoday.

I want to welcome everyone tothis joint competition workshop between theDepartment of Agriculture and theDepartment of Justice. It's an historicopportunity for us to listen and to learn.

Congressman, good to see you.I want to thank the folks at

Alabama A&M University for allowing us touse this facility and everyone who hasprovided assistance to us.

I also want to recognize severalmembers of the United Food and CommercialWorkers, as well as those from the retail,wholesale and department store unions thatare joining us today.

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This is, as I said, the second inthe series of competition workshops we areholding this year to allow us to betterunderstand the issues of most concern anddeserve closer attention and to explore theappropriate role, if any, for antitrust orregulatory enforcement in the agriculturalarea.

In March we held a workshop ongeneral farmer issues in Ankeny, Iowa.

Today we're focusing oncompetition and contracting practices inthe broiler industry, as well as therelationship between producers andcompanies.

On June 25th we will hold aworkshop on dairy in Madison, Wisconsin.We will evaluate the competition onlivestock markets on August 27th in FortCollins, Colorado. And we'll discussmargins on December 8th in Washington, D.C.

President Obama has providedclear direction that his government should

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be open and transparent. And that's whathe hope these workshops are designed to do.We seriously want public dialogue on thesevery complex issues.

As I travel as Secretary ofAgriculture across the country I hear avery consistent theme: Farmers andranchers and producers are worried aboutwhether there's a future for themselves andtheir children in agriculture. And we knowhaving a viable market largely determinesif such a future will exist.

Farmers have the right to know iftheir markets are fair, competitive andtransparent, especially if they're going tomake a significant investment to allow themto get in or to stay in agriculture.

At the same time, consumersacross the country have the right to knowif the food products they're buying aresafe and are fairly priced at the grocerystore.

At the Iowa workshop we discussed

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whether there was enough innovation andcompetition in the seed industry. We alsolooked at the spot market in hogs, whichhas become very thin and volatile andmaking it more difficult to actively pricehogs.

Today we evaluate the poultryindustry, and, specifically, the broilerportion of the industry.

As those in the audience probablywell know in the 1950's and '60's thepoultry industry underwent one of thelargest transformations of any sector inagriculture through consolidation andvertical integration.

Poultry production is verticallyintegrated. The company owns the birds,the feed, medications, veterinary services,whereas the growers take on the capitalcost of building the facilities, helping topay the fuel costs and caring for the birdsto market weight.

Most production is supplied

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through poultry growing arrangementsbetween the company and growers. In 1963the top four firms controlled 14% ofchickens slaughtered. Today it's roughly57%. And now it's not uncommon for agrower to have to do business with only onecompany in their area. Also beenincreasing controversies between poultrygrowers and processors, specificallyrelating to the length of contracts andcontract terms.

The concentration numbers fail toanswer the basic question, which we want tohear from you today: What is needed tohave a viable, fair and competitivemarketplace?

The issues surrounding thecompetitiveness in agriculture have beendebated for decades. And there's no doubtthat they are difficult and complex, whichis why this workshop is important and, webelieve, long overdue.

We continue to seek answers and

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solutions. The Administration is veryaware of the concerns that producers haveabout market concentration. And we'vealready taken a number of steps.

The USDA and the Department ofJustice have established the AgriculturalCompetition Joint Task Force to exploreopportunities to harness each other'sexpertise and will be developing a newmemorandum of understanding that willoutline our relationship. These workshopswill help inform us as we work on this now.

The president's budget in the agarea has increased GIPSA's funding level toimprove enforcement over unfair anddeceptive practices in the marketplace.The Department is using these resources tohire attorneys to handle complexcompetition investigations as well as otherviolations.

The current budget the Presidenthas proposed to Congress for 2011 alsorequests additional funds to hire legal

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specialists and field investigators to helpconduct more than 500 inspections to ensurethat the market is fair and above board.

We published a final rule inDecember of 2009 to improve fairness incontracting in the poultry industry.Specifically this final rule ensures thatgrowers are provided a 90-day notice beforea company can terminate their contracts.

It also ensures that growers whowere building new poultry houses get to seea -- a true written contract on the datethe poultry company provides the poultryhouse specifications, not months later,which could put the grower in atake-it-or-leave it situation.

The final rule also spells outthat the growers have the right to discusstheir contracts with their families, theirlender, their state or federal agencies,their lawyer or other growers that contractwith the same company.

We are also in the final

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clearance for a proposed rule which weintend to issue sometime in mid June tocarryout the requirements of the 2008 FarmBill that addresses issues of fairness incontracting in the livestock and thepoultry marketplace.

Again, I want to thank you-allfor attending today. And I want to thankthe panelists in advance, before myintroductions of them, for theirwillingness to participate in thisworkshop. And look forward to hearing whatthey have to say on this very importantissues in agriculture.

It's now my distinct pleasure tointroduce the Attorney General of theUnited States, Eric Holder. During hisimpressive career General Holder has servedin the private practice, as a U. S.Attorney for the District of Columbia, asan Associate Judge of the Superior of theDistrict of Columbia and as a DeputyAttorney General.

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He has worked to investigate andprosecute official corruption on the local,state and federal level. And he's fullyinvested in strong enforcement of ournation's antitrust laws to advance theinterest of justice on behalf of theAmerican people.

On a personal note, I want toindicate the personal attention theAttorney General has paid to theseparticular workshops. There are manyplaces that the Attorney General could betoday, but he has dedicated himself tocoming to these workshops as an indicationof his concern and interest.

So please welcome -- join me inwelcoming Attorney General Holder.

ATTORNEY GENERAL HOLDER: Thankyou. Well, good morning.

Thank you, Secretary Vilsack.It's always good to join with you. Andit's good to be here and it's also good tobe out of Washington, D. C.

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Seated to my left is theAssistant Attorney General for theAntitrust Division in the United StatesDepartment of Justice, a woman who hasrevitalized the Antitrust Division and who-- from whom you'll be hearing later,Christine Varney.

You might hear in me a slight NewYork accent, but it's always great to be inthe beautiful state of Alabama. I consideryou all my second home. My wife was bornand raised about five hours south of herein Mobile, Alabama, but this is my firstvisit to -- to Normal.

So I want to thank the city andour host, Alabama A&M, for welcoming ustoday and for hosting what I think is avery important workshop.

The discussion that we havegathered to begin reflects, I think, ahistoric collaboration, as SecretaryVilsack said, between the Departments ofJustice and Agriculture and leaders from

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across our nation's agricultural industry.Secretary Vilsack, Assistant

Attorney General Varney and I are committedto improving our understanding of howparticular agricultural markets function.That is why we are here. And that's whywe've decided to hold a series of fiveworkshops across the country to hear frompeople, to examine the challenges facingAmerica's farmers, growers and producers.

Now, two months ago we kicked offthis workshop series in Secretary Vilsack'shome State of Iowa, I wonder how thathappened, where we focused on the seedindustry. That meeting, I think, was agreat success.

We received very valuablefeedback from those who attended and fromthose who provided written comments.

Now, I fully expect that thisworkshop will be just as useful. Not onlydo we appreciate your input, quite frankly,we need your input, we need to hear from

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you. And today our goal is to develop a --a clearer picture of what competitiveissues participants in the poultry marketare facing, but we need your perspective.Your insights can help us fulfill ourresponsibilities to take appropriate actionto enforce the Packers and Stockyard Act.It will also enable us to be more effectiveadvocates for competition, which isChristine's job.

Now, as we begin this importantconversation it is fitting that we'vegathered here at Alabama A&M. Thisuniversity has a very long and a verydistinguished tradition of trainingagricultural leaders. And today is on thecutting edge of industry and industryadvancements.

In fact, as we speak, universitybiotechnologists are making strides in thedevelopment of an allergy free peanut.Now, this is something very important tome. I've got two children who are allergic

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to peanuts. And if you can pull this off,I will be able to get peanut buttersandwiches to everybody in my family.

But in learning about this, Icouldn't help but think about GeorgeWashington Carver, who spent his careerworking on innovations with peanuts atTuskegee University. Doctor Carver oncesaid, and I quote, "New developments arethe products of a creative mind".

Well that is certainly true, butI believe that new developments, and moreimportantly, progress, are also the productof collaboration.

Now, in coming together today ourhope is that we can move forward in meetingour goals to ensure competition, to ensureopportunity and fairness in ouragricultural markets. Secretary Vilsack,Assistant Attorney General Varney and Iunderstand that.

As farmers, producers andindustry leaders we understand that you

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face a variety of challenges. We know thatsome of you have concerns about productioncontracts. Others are worried aboutconsolidation in our poultry markets.Whether you're here to talk about antitrustissues or to raise questions about faircontracting and business practices, wereally look forward to hearing from each ofyou.

Now, with your engagement, Ibelieve that we can move closer toanswering the question that's at the heartof these workshops. The question ofwhether competition in today's agriculturalindustry is as free and is as fair as itshould be.

And as we work to answer this andunderstand why a growing number of Americanproducers and farmers find it increasinglydifficult to survive by doing what theyhave been doing for decades, I want toensure each of you that the ObamaAdministration is committed to protecting

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competition in a very vigorous manner.This is a top priority for today'sDepartment of Justice.

But I recognize that the vigorousenforcement of our antitrust laws, whilecritical, cannot fully address the concernsof many agricultural industry leaders andstakeholders. That's why we're partneringwith the United States Department ofAgriculture to benefit from its deepexpertise in your industry and, hopefully,to share our expertise on the broaderregulatory issues that are potentially atplay. And that's why our agencies launchedthe Agriculture Competition Joint TaskForce that Secretary Vilsack mentioned.

That's also why we're engagingdirectly with all of you, to listen, tolearn and to determine the best way toensure fairness and to encourage success.

Now, as we evaluate and developpolicy we want to hear from you. And Ithink that's something that all of us would

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really stress, we want to hear from you.In fact, when we announced these workshopslast year, we also issued a call for yourcomments and recommendations. And, so far,the response has really been tremendous.To date we have received over 15,000comments. And I'm grateful that so many ofyou have contributed to this extraordinaryexample of government public engagement atits best.

Not only must we keep up thiswork, we have to expand this work. Andtogether, I believe, that we can addressthese 21st Century challenges that theagricultural industry now faces. Now, I'mcertain that we can honor and preserve yourindustry's essential role in our economy aswell as our culture, our livelihood and ourglobal standing. Your participation heregives me great hope about what we canaccomplish together in the days and -- andmonths ahead. Secretary Vilsack and I lookforward to hearing from you and to working

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with all of you.So thank you so much for

welcoming us here today. And, as I said,we look forward to hearing from all of you.

SECRETARY VILSACK: General,thank you very much.

Let me explain what we're goingto do this morning. We are initially goingto have an opportunity to hear fromChristine Varney that the Attorney Generalbriefly introduced.

Congressman Artur Davis is herewith us, as well as Commissioner Sparks.We're going to have an opportunity to ask afew questions of this panel.

We will break for a short periodof time and reconvene a larger panel ofproducers and growers and have the samekind of question and answer format in themorning session.

Then I think we turn it over to-- to General Varney for the afternoonsession, which will give folks additional

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panel discussions and opportunities for Qand A.

We do want this to be asinteractive as we possibly can have. Andwe do want to hear from as many people aswe can.

Let me first and foremostintroduce very briefly the three members ofthe first panel. And then I will turn tothe Attorney General with a question and toeach of the individual panelists for aquestion so that they can make a statementin response.

As the General indicated,Christine Varney was confirmed as anAssistant Attorney General for theAntitrust Division in April of 2009.

She has held leadership positionsin both public and private sector. From1998 to 2009 she was a partner in Hogan andHartson, a very significant and prestigiousfirm in Washington, D. C., where she servedin a dual capacity as a member of the

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firm's antitrust practice group and thehead of the Internet practice group.

From '94 to '97, 1994 to 1997,she served as a Federal Trade Commissionerat the Federal Trade Commission. She wasthe leading official on a wide variety ofInternet and competition issues. Prior toher service there she served as anAssistant to the President and Secretary tothe Cabinet during the ClintonAdministration.

She is joined by CongressmanArtur Davis, no stranger to the folks here.The Congressman was reelected in 2008 toserve his fourth term in the U. S. House ofRepresentatives. And he represents theSeventh Congressional District here inAlabama and serves as a member of the Waysand Means Committee. He is a member of theCongressional Black Caucus and resides inBirmingham, Alabama.

He was also appointed to thesenior whip team for the Democratic

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Congress of the Hundredth and NinthCongress. And is the co-chair of theSentrus House, New Democrat Coalition, aswell as the Southern Regional co-chair ofthe Democratic Congressional CampaignCommittee.

Congressman Davis and I becamefirst acquainted as a result ofrelationship on the Democratic LeadershipCouncil.

Joining the Congressman is theHonorable Ron Sparks who serves as yourCommissioner of Agriculture and Industries.First elected in 2002 easily won reelectionto a second term in 2006.

In 1999 Commissioner Sparks wasappointed Assistant Commissioner ofAgricultural and Industry. He hascompleted terms as President of theSouthern Association of State Departmentsof Agriculture. And most recently servedas the President of the NationalAssociation of State Departments of

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Agriculture. Commissioner Sparks continuesto serve with that commission on theexecutive committee. And that is anopportunity that we look forward to eachmonth to visit from the USDA with the stateag commissioners and secretaries to makesure that we have a seamless communicationsystem.

So these are the three panelists.And I think, General, if I could

start with you and -- and give you a chanceto sort of expand a little bit more. Iclearly want to thank you for attendingthis workshop and certainly appreciate thecollaboration your Department is providingwith our Department, it's truly historic.

As you know, and as the folks inthis room probably know, poultryenforcement under the Packers andStockyards Act is divided between our twoagencies. This makes, I think,communication and coordination verycritical.

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In years past growers have beenfrustrated with what they feel is a lack ofcoordination and a sense that no one willhelp them.

Do you have a sense about what wecan do to improve the communication andcoordination with respect to this importantissue?

ATTORNEY GENERAL HOLDER: Well, Icertainly -- one thing -- one of the thingswe have to do is exactly what we are doingnow, which is to give people an opportunityto interact with those people likeourselves who have the responsibility forrunning the departments that are -- have,as their responsibility, enforcement of --of that act.

I think we also have to come upwith ways in which we interact with eachother in ways, frankly, better than we havein the past. I don't think the Departmentof Justice, again, quite frankly, has beennearly as active as it needed to be.

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We have tried to reach out to ourcounterparts at the Department ofAgriculture and to establish what, I think,is in some ways a historic relationshipwith an understanding of the expertise thatwe can bring to these questions and with arespect for the deep expertise andexperiences the Department of Agriculturehas in this regard.

It seems to me that without allof the relevant agencies of the executivebranch actually functioning, working --working together, speaking with oneanother, we're not going to be in aposition to give you all the kind ofservice, frankly, the kind of governmentthat you deserve, the kind of effectiveaction that I think this government iscapable of providing.

And, so, that is why we are here,but it is also why when we leave and whenwe are back in Washington the communicationbetween our departments will -- will

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continue.SECRETARY VILSACK: General,

thanks very much.And for the purposes of the group

here today, I want to make one introductionof a USDA official, primarily because ifthere are difficult questions relating tothe Packers and Stockyards Act.

I want Dudley Butler -- Dudley,do you want to stand up, who is in chargeof that area to be able to answer them. Sothat's the man you want to go to.

MR. BUTLER: Thank you.SECRETARY VILSACK: I don't think

I just did you a favor, Dudley.I want to now turn to Congressman

Davis.Congressman, just from your vast

awareness and knowledge as you travelaround in your congressional district inthe state, your thoughts about competitionin the poultry industry and what, perhaps,needs to happen in order to make sure that

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everyone is being treated fairly.CONGRESSMAN DAVIS: Thank you,

Mr. Secretary.And let me begin by just greeting

you and the Attorney General. Mr.Secretary, you may recall several years agoafter our DLC partnership you came to thestate of Alabama and you had a chance totalk to some Democrats in Jefferson County.And it was good to see you then.

And, Mr. Attorney General, it'salways good welcome you come back to yourkind of, sort of adopted state.

Some of you may remember theAttorney General honored the State ofAlabama in 2009, only few weeks after hisbeing sworn in as the firstAfrican-American Attorney General of theUnited States he came to Selma, Alabama.And he honored history and he honored thewhole state by standing in the pulpit ofBrown's Chapel on Jubilee Sunday.

And, Mr. Attorney General,

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people continue to remember that visit, notquite as much as they remember Barack Obamacoming, but you're a close second. And itmeant a lot that you came that day and Ithank you for that again.

Let me -- before I answer yourquestion, I want to pay tribute to both ofthese individuals who are seated to myimmediate left because of something theU. S. Congress is about to do, but it wouldnot have happened without the leadership ofSecretary Vilsack and Attorney GeneralHolder.

Some of you in this room have avital interest in a fair and justresolution of the Pigford Case that hasconsumed some many people and so manyfamilies for close to 20 years now.

Several years ago working withDemocrats and Republicans in Congress wemanaged to reopen the Pigford litigationand we included those provisions in thebipartisan 2008 Farm Bill.

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Well, earlier this year SecretaryVilsack and Attorney General Holder made anannouncement that this long running, longfestering stain of the agriculture systemof the United States was ready to besettled.

And I'm happy to sit here andreport to you that in Congress' final daysbefore the Memorial Day recess the House ofRepresentatives is poised to passlegislation that will include a 1.4 billiondollar settlement for Pigford litigantsthat would not have happened without thevision of this Attorney General, thisAgriculture Secretary and this President.So please give them a hand for thataccomplishment.

Let me go to directly to theSecretary's question.

Mr. Secretary, the best way I cananswer that question is to share with you abrief anecdote that I recall from mytravels around this state several years

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ago.I was attending a farmer's

conference. And, candidly I did notprofess myself to be an expert on poultryfarming, I was there to learn and tolisten. I said my piece. And then at theend I -- I took questions, did morelistening than talking.

As I was about to leave, and Idid what we politicians are alwaysreluctant to do and says, is there any oneperson who hasn't had a chance to speak whowants to get in?

There's a gentleman from NorthAlabama who made his way to the microphone.He said, Mr. Davis, I'm a poultry farmer.Been a poultry farmer for 33 years.

My son is 22. He is graduatingAuburn University. A very fine school inEast Alabama, Mr. Secretary. And he saidmy son came to me a few weeks ago and said,"You know, dad, you've been a poultry for32 years. I have decided that I want to

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follow in your footsteps and I want to be apoultry farmer".

The gentleman looked out at theaudience and said, Mr. Davis, the firstthing I did was I said to my son, "Well,I'm going to put together a list ofcontacts that you may want to talk to", youknow, as dads and sons kind of always worktogether. So I'll put together a list ofcontacts I want you to talk to.

And then he said something thatstunned everybody in the room, he said, "Ihad no intention of calling a single one ofthose contacts on behalf of my son".

Everyone got quiet. And he saidI waited, I let several weeks go by and myson came back and said, "Dad, have youheard from any of those guys, you know,that you said I needed to talk to aboutgetting into the poultry business"?

And this gentleman said to usthat day that he kept giving his son therunaround.

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And everyone is sitting therewondering why would a father give his sonthe runaround when his son was trying to gointo the family business.

The gentleman looked out at allof us that day, about a hundred and fiftypeople and said, "Mr. Davis, I have donethis for 32 years. I do not have theconfidence that my son can make it in thepoultry business. I know he's smart. Iknow he has everything he needs in terms ofwork ethic. I know he has the character,my wife and I taught him that, but I do nothave confidence he can make it in thefamily business".

And I remember everyone in thatroom was sitting there wondering have wegotten to a state in farming andagriculture in the state of Alabama wherewhen a son wants to walk in his father'sfootsteps the son doesn't feel empowered totake his son along that path.

We have a lot of poultry farmers

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who are here today. I suspect, GeneralHolder, Secretary Vilsack if we had achance to inventory some of them -- I don'tknow if that gentleman is here, he may notbe, but I suspect there are stories likehis in this room.

And I didn't have a chance toquiz him or to cross examine him about whyhe didn't have confidence that his soncould make it. Maybe it's high energycosts. Maybe it's the difficulty ofsustaining a small business because runninga farm is running a small business as allof you appreciate. Maybe it's the lack ofcompetition. Maybe it's predatory pricing.Maybe it's predatory relationships betweenproducers and management.

I didn't cross examine him onthose things that day, but that man in thatroom communicated a pain in his voice.

And all of us who care about thefuture of this state and the future of thisregion have to understand that we cannot

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walk away from our farms. The reality isthat in this state farms have lost 76% oftheir value over the last decade. Thatmeans Alabama is hurting because we're notfully maximizing what our farms can do.

So I'm glad to see the AttorneyGeneral and the Secretary of Agriculturefully engaged in this very uniquepartnership because I want men like theindividual who stood up at that meeting tobe able to say, I welcome my son into thepoultry profession. I welcome my son intothe family business. I'm confident he canmake it. I'm confident he can thrive.

There's something fundamentallywrong when a father has to say to a son, donot walk the path that I walked.

The final comments I'll make, Mr.Secretary. We have the outstanding newpresident of this school, Doctor Hugine,who is here today, who's seated on thefirst row. We have a pretty good crowd offolk.

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Everyone in this room ought toappreciate, it is not an accident orcoincidence that we're at Alabama A&M. AsJay-Z likes to say they could be inanyplace in the world right now. Some ofy'all got that.

They could be in a number ofplaces in Alabama. They could be atAuburn. They could be at AUM. They couldhave gone to Selma. They could have foundan excuse to do this in Birmingham becausethe flights get into Birmingham more easilysometimes.

But they're here, Doctor Hugine,at this school, which has meant so much toNortheast Alabama. For anyone who doubtsthat Alabama A&M is 100% on its way, thatAlabama A&M is one of the proudestinstitutes in this region, turn around andlook behind you and see what Alabama A&Mcan do. Doctor Hugine, it's a tribute toyour leadership that we're today.

Thank you so much, ladies and

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gentlemen.SECRETARY VILSACK: And,

actually, Congressman, we were planning acompetition hearing on football at one ofthose other universities, for the rest ofthe country that will come later.

Commissioner, I want to turn toyou. You obviously have your ear to theground with Alabama agriculture andagriculture generally.

And I'm just curious, and I thinkthe General is curious, in knowing yourthoughts about what we can to do to makesure that this playing field is level forthe growers and producers and how can wepotentially strengthen their position sothat this playing field is as level as itcan be so that a father has a chance to sayto his son you can participate in thisbusiness.

COMMISSIONER SPARKS: Absolutely.And, Mr. Secretary, you're on

your own when you start mentioning football

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in Alabama, okay.The first thing I want to do is

certainly thank Alabama A&M. It is greatto be back in North Alabama.

Mr. Secretary, I'm one of thefortunate commissioners in this countrywhere I have three land grant universitieswith Alabama A&M, Tuskegee and Auburn. AndI am very proud of all three of them. Andthey do yeoman's work for agriculture inthis state. And I just want to -- I'm veryproud of them and I appreciate them.

And I want to thank youpersonally for taking your time to come toAlabama, along with General Holder. Thismeans a lot to -- to us in Alabama. Andthank you Assistant Secretary Varney --General. This means so much for you cometo Alabama and talk in my opinion, to someof the best farmers you'll ever meet.

I've had the privilege of workingwith industry and agriculture in this statenow for 11 years. And I can tell you it

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has been a great ride to be able to workwith these gentleman.

But, you know, there's a key wordwhen we start talking about contracts, westart talking about farmers, we starttalking about agriculture, and that keyword is profitability. Profitability --it's hard to keep anybody in business ifthey don't see a way to make a living. Andthat's the struggle that farmers have todayis to try to figure out how they're goingto make a living and how they're going tomake ends meet.

And General Holder when youstarted quoting Doctor George WashingtonCarver it makes me feel good because inmany of these individuals that's ever heardme speak I talk about Doctor GeorgeWashington Carver also. And Doctor GeorgeWashington Carver once said a man with novision is a man with no hope.

And that's why all of thesepeople are here today because they do have

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vision and do they have hope and they wantto support their families and they want tosupport agriculture.

The poultry industry is extremelyimportant to Alabama. It's over a twobillion dollar industry. The way I viewthe poultry industry, is a partnership. Itis a partnership of farmers, a partnershipof companies.

And what I have learned asCommissioner of Agriculture for the pastseven years is that sometimes in a lot ofpartnerships communication breaks down.And when communication breaks down that'swhere the hardship and the difficultiescome because many of these farmers thatinvest in the poultry industry invest theirlives, they invest their home, they investtheir land, they invest their future, theyinvest their kids' future, they investthere kids' eduction.

And when there's a lack ofcommunication of not understanding each

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other, and the troubles that they're goingthrough, then it creates adversity.

And that's what I would hope thatwe can get out of this meeting today, isthat farmers understand companies andcompanies understand farmers and we find away to move this industry forward in a verypositive way because the poultry industryis a great industry, but they are goingthrough some very difficult times when itcomes to the investment of their home, theprice that builds, utility costs, laborcosts, but, on the other hand, companiesare going through those similar issues.

So I would hope that through all-- all of this today that we find somecommon ground. That companies communicatebetter with our farmers and that farmerscommunicate better with our companies andthat we find a way to move this businessforward because without each other there isno poultry industry.

We've got to have each other to

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make this industry work. And we've got tounderstand what each other are goingthrough. The technology. And I think weneed to find a way to reward good farmersthat use the technology that these greatland grant universities afford them. Sothat's -- that's where I would hope.

There is a great risk for farmersand there's a great risk for companies.And we've just got to find a common groundand the communication that allows us tomove on.

SECRETARY VILSACK: Commissioner,thank you very much.

I think it's important for us toreflect, not just on the industry'ssignificance to farmers, but also on theindustry's significance to consumers. Veryfew people in America appreciate whatAmerican agriculture and the food industryprovides to them.

Every single one of us hasprobably 10 to 15% more disposal income in

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our pockets from our hard earned paychecksby virtue of the fact that we have theleast expensive food as a percentage ofincome of any developed nation in theworld.

So Americans have thisextraordinary opportunity to maybe buy anicer house or a car or go on a vacation inlarge part because those food dollars arestretched so far in this country. And, so,it is important for us to continue tosupport farmers.

And, General, and -- andAssistant Attorney General Varney you mightfind it interesting to know that -- thatthese farmers out here, if you took a lookat their total farm income, family farmincome across the country, only 9% of itlast year came from farming operations,which means that 91% had to come from someother place, which means that these people,in many cases, are working more than thefarming job they have, they're working off

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the farm or their spouse is working off thefarm or they're both working off the farm.

So, Commissioner, your commentsare -- are certainly important. And youbrought up the issue of communication. AndI think, as the General indicated, that thedepartments have to do a better job ofcommunicating. And, certainly, the USDAhas the responsibility to -- to -- to be abetter communicator, both with farmers, aswell as the Department of Justice.

And I'd like to ask the AssistantAttorney General who is really spearheadingthis effort. Maybe you could -- maybe youcan tell us a little bit more about theenforcement matters the Antitrust Divisionhandles and -- and how poultry enforcementis actually handled in the department inthe sense of your role in all of this.

ASSISTANT ATTORNEY GENERALVARNEY: Thank you, Secretary. And thankyou President for having us here at thiswonderful university. It's delightful to

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be here.Let me start by saying that when

we raised the idea of doing these hearingsto better understand what the issues were,and the intersection between agricultureand USDA policy and the Department ofJustice policy, both Secretary Vilsack andGeneral Holder immediately said, yes, whenare they, we're going.

So from the highest level of theObama Administration this has beensomething that we care deeply about.

And you might recall at our lasthearing in Iowa, which was the one where wekicked this off, it was at a table justlike this where we were hearing in the seedand grain industry that the differentavenues that the USDA and the Department ofJustice were pursuing. And at the table wesaid, "Well, why don't we create a jointtask force". That's where this task forcethat you've been hearing about today camefrom was the meeting in Iowa.

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And I expect today, by listeningto you, we'll come up with some additionalactivities that we need to be doing thatcould address some of the problems that --that you're experiencing.

Let me just give you a briefoverview. At the Department of Justice, inthe Antitrust Division, we essentially havethree broad areas of law enforcement thatwe undertake.

In the Sherman Act enforcement,the Section 1, we generally prosecutecriminal cartels, price fixing amongcompanies.

If any of you saw the movie, The

Informant, that was an Antitrust Divisioncriminal prosecution.

Under Section 2 of the ShermanAct we prosecute large companies that havea market share in any particular industryand are abusing that market share in anyway that's predatory or exclusionary.

And then under Section 7 of the

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Clayton Act we examine mergers. And anymerger that may lead to a substantiallessening of competition we are required toblock.

At the Department of Agriculturethey administer, as the Secretaryintroduced, the Packers and Stockyard Act.

And the intersection between aregulated an industry such as poultry underthat act, and the enforcement of thecompetition laws under the AntitrustDivision is very complex, exceedinglydifficult.

And what we have found, at leastin the time that we've been here, is thatthe more we work together the more weunderstand the industry in its totality.

As you've heard from both theSecretary and the General we understand thepoultry industry is very, very verticallyintegrated. That presents a unique set ofchallenges when we're looking atcompetition.

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At the same time, the retail sideof the industry has become very, verticallyintegrated, or very consolidated.

In 1992, for example, the topfour supermarkets had 17% of grocery sales.Today the top four stores have over 40% ofall sales.

So you've got consolidation onthe retail side and you've got verticalintegration on the production side. Andthan can lead to a lot of imbalances in thesystem.

In a regulated industry where youlook to correct those imbalances is acombination of using the tools thatantitrust division has in concert with thetools that the USDA has through enforcementof the Packers and Stockyard Act.

So, Secretary, what we're doingis working very closely with your staff tohelp us -- them educate us on where theyneed the antitrust enforcement.

We talked about the rule that

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you've been working on. We've been givingyou, at the staff level, a lot input intothat rule to ensure that when it likelyundergoes any judicial review, when itbecomes final, it's sustainable from ourperspective.

As a matter of fact, when theUSDA rules are challenged, it is actuallythe Department of Justice that representsthe USDA.

So I think over the years there'sbeen varying degrees of collaborationbetween the two agencies. I think all ofour staff have informed me that there hasnever been the degree the collaborationthat there has -- that there is now.

So from the highest levels allthe way through the staff on the ground,the staff here on the ground, you can besure that whatever is happening at USDAthey're involving us. Whatever we'rehearing about, they're the experts, we'regoing back to them.

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Our mission with the USDA is toprotect the consumer welfare of thecitizens of the United States, whether theybe producers or whether they be growers toensure -- through ensuring that our marketsare open and fair and competitive. Andthat's what we're doing.

SECRETARY VILSACK: Thank you.We've got a few minutes left.

And what I'd like to do is to give theCommissioner and the Congressman anadditional question.

And then give the General anyclosing comments for this particularsection they'd like to share.

Commissioner, let me go back toyou and simply ask you this question: Ifwe reconvened, say in ten years from now,what would you hope we would be able to sayabout the poultry industry that would be alittle bit different than it is today orhow you would see it different?

COMMISSIONER SPARKS: Well, that

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we keep -- what I would hope is that wekeep our markets open.

That we compete in a globalworld.

That we -- that the integratorsand the farmers have a better line ofcommunication of understanding each other'sresponsibilities and investments.

And I would hope that ten yearsfrom now, rather than it being a twobillion dollar industry in Alabama, it's aten billion dollar industry, but I justthink there's a lot of opportunities here.

Working with our universities.Using the technology that's available toallow these -- and reward thosetechnologies and allow these growers tocompete in the marketplace under -- underthe restraints that they -- that they haveto live under.

So I would hope that, and Ibelieve this, is that if we -- if we havethat line of communication and break down

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those barriers that growers understand thecompanies and companies understand thegrowers, and that we have that line ofcommunication.

I think that's where thedisconnect is, Mr. Secretary, is thatsometimes, even -- even though we'repartner shipping, they don't understandeach other's responsibilities.

And I think the more weunderstand that; then the -- then thepoultry industry moves forward and we allbenefit from it.

SECRETARY VILSACK: Congressman,your thoughts.

CONGRESSMAN DAVIS: One importantthing, Mr. Secretary, that I think that youand this Justice Department recognize is ananti-competitive environment is aninefficient environment. And that's worthspending a few seconds asserting to a groupfolks who don't think about these issuesevery day.

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Sometimes there's a mindset --thunder -- sometimes there's a mindset ofthe American economy that if we just getout of the way, if government islaissez-faire, if the Justice Departmentsits on the sidelines that things willnaturally happen.

And we are comfortable in thatbelief, many of us, because we like ourfree market system, we like our capitalistsystem and we venerate that as both a valueand an economic model.

But the reality, as Presidentsfrom Teddy Roosevelt to Barack Obama haveunderstood, sometimes we've got to bewatchful, sometimes we have to be vigilant.Sometimes we have to make sure that in thename of an open market we don't crowd outcompetition. And in the name of efficiencywe don't do something that's enormouslyinefficient.

And, Mr. Secretary, you put yourfinger on it earlier, the American consumer

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is a very privileged person. The Americanconsumer lives in one of the few highlyvibrant societies in the world where mostof us have routine access to most consumeritems. And most of us have a reasonableopportunity to climb to the next economiclever, even in the midst from the aftermathof the incredibly deep recession we've had,that's one of the geniuses of the Americaneconomy.

If we get this mix theCommissioner talks about right in the nextten years, if we get it right in the nexttwo decades, we'll preserve the consumer'scapacity to have access to the market. Wewill preserve the industry's capacity to beproductive and efficient in the right kindof way. And, finally, we will preserve themen and women who are laboring on farms dayin and day out, we will preserve yourcapacity to keep doing what you do becausethat's what I want to end with.

The number of men and women in

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this state and this region who had walkedaway from farming in the last 40 years isaching. So many people who grew up onfarming are walking away from it and it'sdraining vitality from whole parts of thisstate.

We've got to connect thoseindividuals. We've got to give them thepromise that they deserve. And if we doit, it won't simply be good for farmers andagri-business, it will help lift up theeconomy of the entire state and the entireregion.

SECRETARY VILSACK: Thank youvery much.

You know to the Congressman'spoint, we've lost over a million farmers inthat 40-year period around the country.And not only have we lost farmers, butwe've lost a lot of population in our ruralcommunities.

And, General, you might beinterested to know that one-sixth of

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America's population, about 16, 17% ofAmericans live in rural America, but 45% ofthose who serve us in uniform come fromthose small towns and from rural America.

And as we see a squeeze on thefolks in rural America and the economy thatsuffers in rural America, and there arefewer and fewer young people being able tostay in rural America, you have to begin towonder are they're going to be enough folksto care of all of our military needs andour law enforcement needs, where are thesefolks -- where are these folks going tocome from?

So, Congressman, you're -- you'vegot a good point there.

General, your closing commentsbefore we close this first session.

ATTORNEY GENERAL HOLDER: Yeah.I mean, think that, you know, although weare focusing on agriculture generally, thepoultry industry specifically here today,we're really talking about something that I

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think in a lot of ways is more basic thanthat. And it -- I think that goes to thelast two sets of comments we've heard.

The American culture, who we areas Americans, is really -- you know, if youlook historically is really based on ouragricultural industry, the agriculturalcomponent of what America is about.

The values that we hold asAmericans, I think, were developed onfarms. I'm a city guy. I'm proud to be --I'm proud to be from New York, don't holdthat against me. But I'm also a person whoknows a little about the history of -- ofthis nation.

And I think it's important for usto make sure that we hold on to the valuesthat were developed in our rural areas thatcontinue to sustain this nation anddifferentiate this nation from, you know,many other nations around the world. It'swhat makes, you know, this nation great.

What we want to do is come up

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with a way in which we, in government, canhelp to make sure that there areefficiencies, that there is fairness there.And that our economic -- economic systemthat we have is consistent with the valuesthat we always espouse.

We're not looking for governmentto direct things, but government can play arole as a referee at times.

The Obama Administration is notlooking, one way or the other way, as muchas just to try to make sure that fairnessis the thing that permeates theagricultural sector.

And in doing so, I think we willdo the greatest service, which is toperhaps reverse the trends that we haveheard about people leaving farms, peoplenot being able to pass on to their sons anddaughters the ability to do the greatthings that they have done and the thingsthat have shaped this country, the thingsthat have made this nation great.

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Our economy and our well-being isat stake, which is somewhat, I think, youknow, the sole of this nation is alsosomething that we are fighting to preserve.And that's something that you-all, I think,are key parts of.

And, so, what we want to do, as Isaid at the beginning, is really to listento you, to figure out ways in which we canbe of service to you.

And in doing so make sure that wepreserve the great nation that we've alwayshad and that we want to continue to have.

SECRETARY VILSACK: General,thank you.

We are going to a break for --for about 15, 20 minutes or so and try toreconvene here for the next roundtable,which will be the poultry growers. We'lltalk to growers and former producers abouttheir expectations.

That will then be followed by alunch break. And then we will reconvene

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after lunch for an opportunity for thepublic generally to provide testimony.

That will be followed by anotherroundtable discussion of individuals, bothin terms of the government, as well asacademic and -- and the producer andindustry viewpoint.

And then additional opportunitiesfor public testimony and closing remarks.

So we will break for about 15 or20 minutes.

(Whereupon, the taking of theproceedings were recessed fromapproximately 10:03 a.m. toapproximately 10:41 a.m., afterwhich the following proceedingswere had and done:)SECRETARY VILSACK: If I can call

everyone's attention to the -- to the nextpanel.

Let me, first of all, introducethe panel. And I can't see the nameplates. So I'm not sure -- alright.

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Garry, I'm going to start withyou. I'm just going to go right down theline introducing folks. And then we'll get-- get to some questions and answers.

These introductions will beshort. And if I mispronounce the name, Isincerely apologize.

Garry Staples is the president,owner and manager of the White Acres Farm,an eight-house poultry operation along with60 head of registered cattle.

He's served as a board member ofthe National Poultry Growers Association aswell as vice president of the AlabamaContract Poultry Growers Association. He'son the Board of Directors of the St. ClairCounty Soil and Water Conversation. He'sserved as an officer of the St. Cloud --St. Clair County Cattlemen's Associationand the Alabama Cattlemen's Association.

He's presently a Major in theArmy Reserves. And we thank you for yourservice. He's served as the past company

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commander of the Signal Company, 20thSpecial Forces. He was a team leader ofthe Operational Detachment 821 1stBattalion, 20th Century -- 20th SpecialForces.

Carole Morison is next. And sheis a farmer from Maryland. She and herfamily raised chickens under contract for23 years on their family farm. She helpedorganize the Delmarva Poultry JusticeAlliance and served as Executive Directorfor eight years. Currently she's a privateagricultural consultant specializing inlocal food systems.

Gary Alexander is owner andoperator of Alexander Farms, Inc., apoultry production and property developmentbusiness in Westminster, South Carolina.He markets 3.2 million broilers a yearthrough his 18 broiler house farm anddevelops residential properties as well.

He serves on the Board ofDirectors of Agsouth Farm Credit, ACA and

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AgFirst Farm Credit Bank, which he serveson the audit committee. Additionally, heserves on the Board of Directors of the CSPoultry Federation and the Outdoor DreamFoundation, an organization providingoutdoor adventures for children withlife-threatening illnesses.

Kay Doby, who is to my immediateleft, has made Cameron, North Carolina herehome for -- I won't say how many years.

MS. DOBY: 55.SECRETARY VILSACK: Okay. 55

years. Just was trying to be a gentlemanhere.

She lives on a 3rd generationfarm and continues raise meat, goats and asmall flock of chickens. She's taughtkindergarten for 15 years. She and herhusband built two broiler houses and raisedpoultry until October of 2008 when theircontract was terminated.

Robert Lumzy, did I say thatright, sir?

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MR. LUMZY: Yes.SECRETARY VILSACK: Mr. Lumzy is

currently a heavy equipment operator. InApril of 1999 he purchased Lumzy PoultryFarms where he raised chickens for a livingand provided jobs for those in thecommunity who were unemployed.

In 2006 Robert lost his contractand it's his desire to regain his contractand once again become a business owner.

Sandra Pridgen is a seventhgeneration family farmer from Snow Hill,North Carolina. She transitioned the farmfrom tobacco and contract poultryproduction to a sustainable grass-based fedmarketing meats directly to consumersthrough farmer's markets, fine clubs andrestaurants.

Rainbow Meadow Farms currentlymarkets, poultry, eggs, beef, pork, lamband rabbit locally in North Carolina.

And she spent five years -- thelast five years conducting on farm research

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for pasture based livestock systems andpoultry genetics appropriate for thosesystems.

And our last panelist on the endis Shane Wooten.

Did I pronounce that right?MR. WOOTEN: Yes.SECRETARY VILSACK: Shane was

raised on a poultry and cattle farm inDe Kalb County, Alabama.

In 1997 he purchased a farm nextto his father's farm and began constructing12 broiler houses where he continues toraise poultry. In 2006 he also become aninsurance agent for the A-L-F-A Insurance,specializing in poultry farm insurance.

Assistant Attorney General Varneyand I thank all members of the panel fortheir participation.

And what I'd like to do is startoff with a question that we'll direct toall of the panel is here today and ask youto comment on it. And, just, we'll start

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there with you and just kind of work rightdown the line.

And, basically, the question isthis: The poultry industry over the last40 years has become consolidated and -- andto a certain extent vertically integrated.And the number of countries -- companiesfor growers to do business varies from eachregion of the country.

In your experience, how does thatimpact and affect the fairness ofcontracts? And what options should weconsider in taking a look at thosecircumstances where there may be only oneor two companies able to do business? Whatneeds to be done to make sure that farmersand growers get a fair shake?

MR. STAPLES: Mr. Secretary, Iappreciate y'all coming today.

But talking about the integratorsbeing in one area. In my county alone,we've got two, but they're up -- they donot cross lines at this time anyway.

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I wish I had an answer for you totell you how to fix that problem, but if wecould just get fair and -- and competitivemarkets with these people, to where wecould, as a grower, be able to go toanother integrator and say, look, I -- Ican do this for you and get them to help uswith that situation.

As it stands right now with thecontracts that we're offered now it'seither a take it or leave it situation. Soit really puts us in a bind as growers.

MS. MORISON: I'd like to thankyou for being here today as well and forgiving us this opportunity.

As far as the consolidation ofthe -- of the industry there used to beseven poultry companies where I'm from.We're down to four now. Two are very smallpoultry companies, two are major poultrycompanies. And every year we see thingsdownsizing more and more where, you know,smaller ones are -- are bought up.

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I don't see much difference incontracts between companies. It might be afew different words that are used, butbasically they're the same. So, you know,the contracts aren't really affected bythat as to whether you're big or small.Contracts are basically the same.

SECRETARY VILSACK: Gary, yourthoughts.

MR. ALEXANDER: Thank you for theopportunity to be here.

In our particular area we areafforded three integrators. And when youlook at those contracts each one of themare just minor sentences apart of eachother, they're very equal.

And in research and preparationfor this meeting I looked into an area of14 states served by the AgFirst Farm CreditBank. And those contracts throughout that14 states are with -- again, within penniesof each other.

In two or three cases we saw

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contracts where the grower only had achoice of one integrator were in, somecases, better than the ones where you havemultiple choices. So the contract portionof this business is just like any marketdriven decision. It's based uponcompetition and availability of services.

MS. DOBY: In our area we havemore than one company, but it seems to be awritten rule that if you go grow for onecompany, you really don't have theopportunity to even cross those lines to goto another company. And with -- like whatthey're saying, the contracts are prettymuch the same, but it's -- it's not acommon practice. If you start with onecompany, you -- you usually stay with them.

SECRETARY VILSACK: Robert.MR. LUMZY: Thank you for

allowing me this opportunity. But aseveryone else has said, in our communitythere are several companies, but once youstart with one, that's the only one that

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will allow you a contract. They won'tcross the lines to come to your farm.

MS. PRIDGEN: I -- I would saythat I basically agree with Kay of what shesaid. What -- what we've found is that thecompanies, there's is a slight variation inmaybe the type of heating system that theyhave, that company there uses for theirheater or their feed line system.

And, so, if you end up trying togo to another integrator; then thatintegrator is going to say, Well, you know,you're going to have to make all thesechanges to the specific, you know,Cumberland Heating System or a particular,you know, feed system that we use. So theyuse that as an excuse not to take you on.

And, also, the other thing is ifthey do end up taking you on, theirpreference is always for getting -- ifthey're in expansion mode, their preferenceis always for getting new houses.

And as soon as -- what we've

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found in our experiences, as soon as theycan get new houses, they're going to dumpthose people that -- that -- that they havebrought on from another company.

MR. WOOTEN: Thank you, Mr.Secretary.

In my area we've been veryfortunate. At one time we actually hadfive integrators that served the area whereI lived. It's kind of a sweet spot there.So competition has been pretty good in thatarea.

You mentioned verticalintegration. And our aspects and thoughtsthat on. Vertical integration, I think,has been key to the poultry industry forthe last 40 years and has provided a stableincome for the poultry farmer in a stablemarket. But as far as competition, I thinkwe have a pretty good competition in ourarea compared to some others.

SECRETARY VILSACK: During thecourse of our first panel Commissioner

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Staples mentioned concerns that he hadabout -- about a lack of communication ormiscommunication or an inability tocommunicate between companies andproducers.

I'd be curious to know from yourown personal experience or from experiencesof people that you know and trust, do youshare the Commissioner's concerns? And ifso, what suggestions would you make for usas to how we might be able to help improvecommunication?

And I'm just going to start thisway and come down the other way.

MR. WOOTEN: Well, communicationis -- between the grower and -- andintegrator is -- is one thing that I'veprepared a statement on. And if you don'tmind, I'll go ahead and start with that.

SECRETARY VILSACK: Sure. Feelfree.

MR. WOOTEN: A couple of theissues that is facing the contract growers

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that I would like to discuss is, numberone, rapid rise in expenses over the pastfew years. And, number two, the breakdownin communication between contract growersand integrators.

Just a quick example of expenseincrease. When my brother and I completedour construction of our houses in 1999expenses have dramatically increased, butalthough there are many different inputexpenses that go into a poultry farm,propane cost is -- is one of the largest.In 1999 our propane cost was aboutapproximately $42,000 a year. In 2009 thatpropane -- that same propane cost hadincreased to approximately $92,000 a year.That was a hundred and twenty percentincrease. So that was a bottom line cutoff of our profitability. Those increaseshave dramatically affected profitabilityfor the contract grower.

And, in fact, the integratedsystem that has provided such a good,

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stable income for so long, we actually lostmoney in 2008 on our farm for the firsttime.

This discrepancy between incomeand increased expenses is -- includingmyself and a lot of the other growers asyou had mentioned in the earlier panel, wehave had to go outside the farm to providefor our families.

I think in the same time framecomparison, I think the contract pay -- forme, contract pay has increasedapproximately 17% from 4.7 cents a pound to5.5 cents per pound, which is nowhere closeto offset the rising costs.

But integrators also have notbeen immune to these rapid rises in costand input expenses, but, unlike thecontract grower, the integrators do havethe ability to reduce production and drivethe chicken prices up which helps theirprofitability. The contractor does nothave that opportunity.

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In fact, I read in the Poultry

Times magazine this week that integratorsare actually in the -- are poised toincrease production because of some of thecontracts or some of the productioncutbacks that they have made, the articlestated that poultry prices were at a levelto where good profits could be made.

Unfortunately, integrators do notthe realize that the need that continues to-- continues to drive those prices up inorder to be able to increase contract pay.I think it's the inability of theintegrators to understand the financialstrain that is placed on contract growersat this time.

I believe that is key. The keyreason for that is a communicationbreakdown inside the companies and alsofrom grower to integrator. Thatcommunication breakdown -- as we all knowcommunication is very important in everybusiness.

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I was raised on a poultry farm.And one of the biggest changes that hasoccurred, that -- that I feel has affectedcommunication over the last 20 years isthat 20 years ago almost every employee inour area, almost every employee of theintegrator in the grow out side from theservice technician all the way up tocomplex manager were actually contractgrowers themselves.

So that close relationshipbetween the company and the contractgrowers was -- gave a better representationof the contract growers in any companydecisions that were made.

In comparison, over the last fewyears, a number -- that number has steadilydeclined. And some integrators haveactually banned their employees from having-- from being contract growers. In effectthat -- in effect the contract grower haslost their representation inside thecompanies or inside the integrators. That

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has, in turn, led -- led to uninformeddecisions by the companies themselves thathas affected the contract grower adversely.

This communications breakdowninside of these companies themselves hasbecome more evident in the past few yearsas profit margins for the companies havetightened and they've also tightened forthe growers.

So the constant pressure thatthese tightening of margins has placed onemployees to keep cost at a minimum hascaused some employees to be reluctant tobring up issues that may have concerned thecontract grower because it would be anextra, additional cost to that company.

So I do not believe that is aresult of the company's employees'negligence, I just simply believe that thisis just a result of the high input expensesand the low profit margins over the lastfew years and just the general corporatestructure and how communications travels up

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the structure.SECRETARY VILSACK: Thank you.Sandra -- and feel free -- I know

that folks have prepared, in some cases,written statements. If you'd like to readthem, that's fine, or summarize them,that's fine, in response to this particularquestion or if you just simply want tofurnish them. We are making a record, atranscript of this, and it will beincorporated into the record.

Question about communication andyour views on this.

MS. PRIDGEN: As you know, we areindependent poultry producers now. Butwhat I'd like to say is that when we werecontract producers some of the things thatwe noticed as a lack of communication waswhat they term as new grower's contract.Where you initially start out with aninitial contract. And then in a few yearsthey bring in a new grower's contract andyou have to sign it before you can receive

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your next flock. And there's been nonegotiation and no communication betweenthe grower or a group growers for thatcompany and negotiation of that contractwith the integrator. So you either sign itor you don't receive your next flock.

And when you have that kind ofdebt load over you, of course you're goingto choose to sign the contract. You feelthat there's no other option when you owe,you know, a half a million dollars or amillion dollars.

Also, there's -- there's a lackof communication in that what is said inthe contract and what is verballycommunicated or verbally implied isoftentimes two different things, you know.

My dad was -- after -- after thefirst company shut down our complex, my dadwas taken on by another company called CaseFarms. And with that -- in order to betaken on he took on a $80,000 debt to makeequipment renovations on -- on 16-year-old

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poultry houses so that he could grow forthat company.

And the company, as soon as theycould get brand new houses built withtobacco allotment, buyout money thatfarmers were getting, they dropped thoseformer Perdue farmers and were -- and theywere left debt.

My dad, was one of them, was leftwith, you know, an $80,000 debt. He grew12 flock for them and they dumped him.

MR. LUMZY: Thank you, sir.I'm sitting here listening to no

communication. Our problem is that when wehave a problem with the company you have aservice person comes out and they tell youwhat the company says. They tell you, withme now back in -- when I lost my farm.

They came out and we workedtogether and got my farm straight. And Iasked a question, I said, "Will it cause meto lose my contract"? And they said --when I -- with the deficiency that I had

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would not cause me to terminate my contractthat afternoon. At six o'clock -- at 6:00p.m. I got a phone call from SandersonFarms saying my contract was terminated.And I'm going -- I didn't get a chance totalk to them. I didn't get a chance totell them what happened. So I probablyknew, not the right amount ofcommunication.

MS. DOBY: Well, this is kind ofin response to Robert said. That's one ofthe ugly realities of the growers talkingabout communication.

Communication. Growers that arehere today are in jeopardy because ofintimidation by company personnel. Andthey're taking a big risk. Everybody --every grower here is taking a big risk.And -- and if you ask them, they'll tellyou.

Communication. I had a growertell me two weeks ago he was talking to theservice person that -- and he was

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questioning involved the chicks that thathe had just got. And the service person,the answer he got was, "You know, youshould just be glad you've got a job".

Well, the grower got the messagereal quick because in North Carolina, rightthere in his neighborhood, there are ahundred and sixty poultry houses sittingempty and growers have no way to pay thosepayments.

MR. ALEXANDER: I've got someprepared comments, but I think you can --

SECRETARY VILSACK: We can't hearyou. Do you want to speak into themicrophone.

MR. ALEXANDER: I've got aprepared comment. But I think you canreflect upon the communication, as theearlier gentleman stated, that this is apartnership. And it's a partnershipbetween, oftentimes an individual and acorporation, but the thing that drives itis the communication.

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And from my prepared comments Ithink it will address my feelings.

Integrators provided a minimumrisk and total market dynamic protectionfor many individuals engaging in poultryproduction.

Nowhere can anyone go intobusiness totally insulated from market riskand consumer preference changes. Withoutintegrators growers could -- could notafford to be in the chicken businessbecause of the cash flow demands and marketswings at there on farm level.

Growers realize that theintegrators have a lot of risk, capital,fixed assets, operational cash and etcetera, but the real success of anintegrator depends upon their ability toget growers to participate with them toachieve a common goal.

In most cases a verticallyintegrated operation has total assets atrisk, much less than the collective dollars

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at risk by all growers as a single group.Poultry grow-out is a great

opportunity for young and beginning farmersthrough USDA with several levels ofguarantees, low equity levels, integratorassisted cash flow, opportunities thatnormal businesses do not have access to.

The young farmer with access toland can complete a poultry house, and bein a positive cash flow position in aslittle as 16 weeks.

A poultry house well maintainedhas a life of over 30 years. Mostcontracts will pay the grower for his time,provide manure sales, pay off debt in a 12to 15 years. If a grower has all farmincome, there's great tax benefitsavailable during this amortization period.A well-managed poultry operation can be acash cow for 20 years.

Oftentimes upgrades arenecessary. This allows the grower to makea minimum, additional investment, again, to

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enjoy a favorable tax benefit, the taxconsideration and complete utilization ofdepreciation. Current grow out contractsin our area with the integrators who serveus provide about a 20% return oninvestment.

Historically, prior to the latesteconomic challenge in poultry production,as a percentage of assets held by a bank,only 2% of the poultry loans have wound upin non-accrual.

Chicken houses come with a lot ofUSDA assistance. You hear a lot about rowcrop disaster, but we have disasterprograms in chicken houses. We have energyupgrade grants. We have grants for manureholding facilities and dead birdcomposters. Poultry growers make acommitment to treat the chicken house likea small manufacturing facility aresuccessful, not like something that can bedone at the end of the day.

The grower must understand the

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grow out rules, lighting programs, feedschedules are a result of large volumes ofdata being analyzed to best fit the growout cycle. Each grower is to provide dailythe very best grow out conditions for aparticular breed to perform.

The quality of a grower, in mostcases, is reflected by his performance, butevery grower is subject to get weak birdsor just a bad performance over a givenperiod of time.

The competitive contract formulais the hard -- is the best way to rewardthe hardest workers with the greatestamount of return. These contracts sellinglike birds, with like diets, with likeweather conditions for a fixed period arevery equitable.

Fixed contracts with an off farmowner would not be healthy, nor contributeto the ultimate product competitiveness inthe marketplace. Growers must be heldaccountable for performance through

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competition.Integrator requirements for

upgrades of current housing standards issometimes, not always has to be. A housebuilt in a current cycle has a state of artequipment and facilities. These newfacilities will out perform the technologyand equipment of aging facilities.

In our area growers are oftenallowed to upgrade to stay at the currentpay level or they're offered a contract ata lesser level continuing to do business asusual. Again, another example of riskequals rewards.

Historically the -- sometimeswhat we see in our areas is that theterminated growers refuses to see that heneeds to be more efficient. And thatreflects in the communication we weretalking about. Reward is a function ofrisk and effort.

When you look at a big picturethe grower starts out with the few less

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birds or extended out times is a smallprice to pay for the total success of thelong-term operation.

I appreciate the fact that I'venever had to write a check to make anintegrator whole base upon marketconditions. The current oversight providedby GIPSA serves the industry well. There'sno need for more government intervention inthe poultry industry. A brief look at thepackers and stockers complaints show aminimum amount of intervention necessary tomaintain fair and equitable standards.

If you look at GIPSA's website --SECRETARY VILSACK: Folks, let's

-- let's -- let's make sure that everyonegets a chance to have their say in arespectful way. So, continue.

MR. ALEXANDER: The limitedantitrust immunity provided byCapper-Volstead and other favorablestatutes enable growers and integrators tojoin together collectively in the process

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to market their products because the buyerpower in the agricultural marketplace isstrong -- or stronger than it was in 1922when Capper Volsted was enacted. The Act'sprotection continues to be criticallyimportant to today's environment.

I strongly believe any action toeliminate or dilute the Capper-Volsted orsimilar federal statutes would harm thesuccess and efficiencies of our ruralcommunities.

MS. MORISON: Would you like forme just to answer your question or --

SECRETARY VILSACK: Yes.MS. MORISON: Can you repeat the

question?SECRETARY VILSACK: Sure. It has

to do with communication and whether or not-- the Commissioner suggested that there --there was a need for better communication.

And if you want to incorporatewhatever statement you'd like, feel free todo that. I'm going to give you an

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opportunity to have that.MS. MORISON: I think that -- I

think first off the communication idea,there probably is a great lack ofcommunication. I'd say it's a one-sidedcommunication. The grower listens and thecompany tells you what to do. That's beenmy experience.

And, you know, it's -- for -- forinstance, you know, we've had mention ofdemanded upgrades to poultry houses, youknow. The company will come out say, "Youhave to do this, this and this or you getno more chickens in whatever contractyou're in". That's no way to communicatewith anybody, number one. It's going tomake the person mad.

Secondly, specifically, after 23years of raising chickens, our contract wasterminated because we refused to dodemanded upgrades.

And, you know, a few weeks before-- prior to receiving the termination

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letter for our contract, we were given anoutstanding producer award by the verycompany that was terminating our contract.So I don't think that communication works.I mean, there was no communication there.We were putting out a good product. It wasjust said, "You do it or get no chickens".

I -- I really thinkcommunications have been tried and havefailed. I've been at this for a while.I've seen a lot of efforts to makecommunications work. And I can honestlysay I have not seen anything change sincethe earlier 1990 within the industry tryingto use communications between growers andpoultry companies.

Secondly, I'd -- I'd -- I'd liketo add in, you know, the ranking system,which should be maybe a form ofcommunication, but, you know, the rankingsystem is -- is how growers are paid.

And the inputs to the farm versusthe output of pounds of meat moved off the

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farm kind of sums up really easily toexplain how this ranking system works;however, all of the inputs are directpoultry company product that are placed onthe grower's farm on a good faith basis.

The grower must trust a companyto deliver them quality inputs for theirfarm to be competitive, to raise amarketable product, and for them to havethe best potential of farm income.

The ranking system in no wayreflects a grower's performance. It's areflection of the quality of company inputsin producing the output of pounds of meat.Company control over the inputs besidesflock performance and farm income. Thiscontrol can lead to hampering or enhancingthe farm's access to fair and free trade.

Someone earlier, you know,mentioned about company employees havingpoultry farms, you know.

It's been said many, many timesby growers that, you know, the company

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employees who are running poultry farms getthe best inputs put on their farm. Sincethey're the ones that are influencing andcontrolling where these inputs go, theydecide who gets what.

So, you know, some companies havebanned employees from having contracts ontheir farms. Other companies have it.Obviously, if some companies have bannedthis practice, then there must be some goodreason for it.

I think the bottom line is that,you know, unless every farm placed in aweek's ranking receives the exact same andidentical inputs, the ranking system isunfair. We can go all the way back tochick quality that's delivered to farms,breeds that perform differently.

Growers aren't consulted on, youknow, the breeds or genetics or, you know,which one performs better. And, well, now,I don't want them, I'd rather have thisbatch over here, we have to take what the

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company brings us. And then we're supposeto, you know, perform our contractual dutyof raising the best flock possible.

There's a lot of deciding factorsbefore the chicks are ever delivered to thefarm, you know, the genetics, the health,the age and care of the breeder flock.That decides how well the chicks perform.It has nothing do with the grower, it's acompany input. They're the ones thatcontrol this.

Transportation of eggs, you know,from breeder farms to company hatcheriesvaries, as well as the operations at thecompany owned hatcheries before they're --you know, the chicks are hatched out tocome to the farm.

Feed is another issue. It's themost costly input for raising a flock ofchickens. And is the foremost influence ona grower's ranking.

Feed is formulated, mixed, loadedand weighed by the company and then

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delivered to the farm. Feed must beaccepted by the grower on the company's sayso. And there's no guarantee that the feedis of the highest quality or quantity.Personally, you know, we've had severalissues of -- of feed quality and quantitycoming to the farm.

Number one, feed quality, I meanwe've had feed so bad delivered to the farmthat it actually froze in the feed bin. Wehad to have someone come in and take thefeed bin apart, chop the frozen feed out,repair the equipment, put new feed back in.And that had nothing to do with our -- ourperformance, that was determined by thecompany. So, again, there was nocommunication there. "Well, you know, whatwe really delivered you some really badfeed. So let's see if we can't fix thisand work it out". And, you know, really,you shouldn't be penalized for somethingthat was our mistake. Instead thecommunication that comes across is, "We

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didn't do anything wrong, it's on you, andthat's the way it goes".

You know, quantities of feedbeing delivered to the farm. There's noway to verify how much feed actually comes.It's -- again, as I said, weighed oncompany scales. We get a -- a weightticket and we have to accept it because thecompany says so. Personally, we were goingto put scales on our farm to verify weightsof feed that were being delivered by thecompany.

First we were informed by thecompany that if we were to put scales onthe farm that there was no law that saidthey had to go across their scales becausethey owned the check-ins. Then we weretold point blank, "Well, if you do it we'regoing to terminate your contract".

Now, I see nothing wrong with agrower wanting to put a set of scales ontheir farm. It helps them be a bettermanager to control what is coming on to the

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farm and what is going off of the farm, youknow. Why would a company have a problemwith you putting scales on the farm.

Again, this was -- you know,there was no communication about this,there was no discussion. "It's if you do,your contract is terminated".

Personally, I -- I can't countthe many, many times that I have heard inone shape or form of another that ourcontract was going to be terminated if wedid such and such. That's no way tocommunicate with people who are yourbusiness partner.

And I think probably the last,you know, thing that -- that I'd like toaddress here is -- is the confusions andthe frustrations, you know, of how a growercan find help under the Packers andStockyards Act; and I know it doesn't --maybe it does have to do withcommunication, but just in a different formbetween growers and government agencies.

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And, you know, it's -- it'scommon knowledge that, you know, GIPSA onlyhas certain authorities. They can onlyinvestigate complaints. If there's anyviolations found, you know, it has to bereferred to the Department of Justice.

And, you know, it'sunderstandable to me, although frustrating,that the Department of Justice has, youknow, a lot more important issues toaddress than the issues of one contractpoultry farmer. I mean, you know, we dohave bad guys out there in the country andaround the world.

So, you know, that right therethat is understood, but then it needs to beunderstood, too, that once a grower doesfile a complaint with GIPSA, they're leftwide open for retaliation by the companythey contract with. And it's the singlemost important fact that keeps growers fromfiling complaints.

Companies are also aware of the

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inability of enforcement of the Act. AndGIPSA investigations, I mean, I've -- I'veheard comments from company personnel thatit's nothing more than a hassle in theirdaily operations because they know thatthere will be no enforcement of the Actbecause GIPSA does not have that authority.

So, I think, probably, what needsto be done there, either USDA needs to havethe same authority and powers over poultryas they do over other livestock, or a clearand concise method needs to be developed inwhich communications are opened and whicheasily flow between USDA, GIPSA and theDepartment of Justice in order that growersdo have an open avenue for makingcomplaints. And, you know, for knowingthat this information went to all theproper places it should have gone and helpcan be given. Thank you.

SECRETARY VILSACK: Garry.MR. STAPLES: Secretary Vilsack,

I'd like to comment on the communication

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thing, first, and then read a statement --regardless of what some of the pressreleases say was prepared by me and not bysomebody else. It may not be as good as itcould have been by somebody else.

But as far as thecommunication-wise, when I first started wehad a yearly meeting with my integrator.Went on for about two years. But sincethat time I've -- even with that integratorand a new one, the only communication Ihave is with my service tech, unless I askto speak to someone. And if I get theopportunity to do that, it's one-on-one, meand whoever I ask and my service tech. Sothe communication problem is a problem, Ireally feel it is.

What y'all can do for us, I don'treally -- I don't really know, but it is aproblem.

And if you don't mind, I'll --I'll read my statement.

I'm here today to speak to you

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about my experiences as a poultry grower aswell as those of other poultry growers.I'm not here just for myself.

I've been in the business fornine years. At that time I had a 7-yearcontract. Four years ago I changedintegrators and I was given a 3-yearcontract. Last year I signed a newcontract, flock-to-flock. What that meansis every 60 days that's the only time I'mactually under contract to grow chickens.At the end of that 60 days, I can beterminated.

I've personally borrowed amillion and a half dollars. And everythingI've got is mortgaged so I can be a poultrygrower. I've got eight poultry houses, twodwelling houses, a hundred and eighty acresof land and all the life insurance policiesI've got.

As a poultry grower witheverything I've been mortgaged, I had nochoice but to sign that flock-to-flock

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contract. Like many of them of said,either I sign it or I ain't got nochickens.

Without any chickens, I can't payany bills. I can't pay my mortgage becausechicken houses are designed for one thing,grow chickens.

I personally feel like I have agood relationship with my integrator. Iwork for hard them to raise a good, qualitychicken, but I wonder how I can feel reallysecure knowing that every eight to nineweeks I may not have a relationship at allwith them.

Poultry -- poultry's been hasgrown under the contracts for over 50years. The company owns the chickens.They control the quality of the chickens.They control the feed and they control thefeed weighing system. They control the paysystem. And they -- and they can cancel mycontract at any time.

They also can require expensive

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upgrades. These upgrades usually cost asubstantial amount of money, which meansI've got to take out another loan. Andwhen I do that I'm not necessarilyreimbursed for it by the company in anyway.

There's three growers in mycounty that were given a letter -- a letteron a Thursday that told them they had tomake upgrades. The following Monday theygot another letter. It said, "You're nolonger an employee", or "you're no longer agrower with this company".

When this could not be done, thecompany terminated contracts. And sincethere's not another company in our area atthat time, they were left without chickensand a mortgage that they could not pay.

New houses built in our area ofAlabama are given -- at this time some ofthe areas given near 10-year contracts witha pay system that, according to thecontract, will not let make less than zero

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six point zero six cents per poundregardless of their performance.

My newest two houses are two yearold and equipped the same as these newhouses. My contract is flock-to-flock, notten years. My bottom pay is point zerofour three oh. I've also known growers inour county that their bottom pay is a pointzero three two five.

With a flock -- flock-to-flockcontract the contract can be changed at anytime. With the cost of power, water andgas going higher every year you would thinkthe company would help compensate for moreenergy costs. My gas alone has gone from70 cents to a dollar and twenty-eight inthe past six years, just the gas. Lastyear I signed a new contract. And insteadof helping with my energy allowance, theytook away point zero zero three oh centsper pound over a year's grow out. On myfarm alone, just my farm, that's a $4500savings to the company and a loss to my

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farm.And although I came here on my

own today, it's not without a lot of worrywhen I leave that I'll have someretaliation. I spent 20 years in themilitary. And I feel strong about theUnited States that we should be able to. Iappreciate y'all -- y'all for coming and Ihope y'all will help us.

Thank you.SECRETARY VILSACK: I'm curious

to -- to talk to several of you in terms ofyour experience with the ranking system,which Carole mentioned.

And let me start with you, GaryAlexander. Are you operating under thesame system and --

MR. ALEXANDER: We operate underthe same system. We're fortunate enoughour integrator separates and breeds ofbirds, and separates the time of grow out.And these breed of birds comes with adifferent diet and we settle like kind to

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like kind each week.SECRETARY VILSACK: So you're not

experiencing what Sandra was talking about?MR. ALEXANDER: It results in a

ranking system, but that ranking is basedupon your performance with a given set ofconditions. And everybody you're rankedwith has equal conditions.

SECRETARY VILSACK: Is that theexperience that --

UNIDENTIFIED SPEAKER: Who do yougrow for?

MR. ALEXANDER: I -- I growFieldale Farms. It's a small familyoperation in Northeast Georgia.

UNIDENTIFIED SPEAKER: There'sthe difference, there's the difference.

SECRETARY VILSACK: Garry.MR. STAPLES: In my instance, I

grow what we call or what the industrycalls a big bird. And I may be a littlebit different from some of the othergrowers up here. I know they -- most of

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them in my county grow for another companyand they settle with 15 to 20 to sometimes30 growers.

In my instance, I settle with --I think the most I've ever settled with isfive. So this ranking system doesn't hurtme as bad. And there, again, I'm here towork for all growers, not just myself.

I still stand to lose money underthe ranking system. The ranking system hasgood points, but it has a lot more badpoints than it does good points.

SECRETARY VILSACK: The folks onthis side. Experience with the rankingsystem?

MR. WOOTEN: I think the -- myexperience with the ranking system has notbeen as nearly as good as some of them andnot nearly as bad as others I think.

The ranking is -- I think was putinto place to push performance. And if you-- the way it was designed, if you were --if you'd done a good job; then you would

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get rewarded. If you'd done a better job,if you put more effort into your grow out;then you would get rewarded for that. Ofcourse it's got it's good and bad aspects.But, overall, I really don't know how theproper way to fix that would be besidesmaybe making sure all of the playing fieldis level like the -- Garry, I believe itwas, mentioned.

MS. PRIDGEN: I don't have acomment.

MS. DOBY: Well, one thing aboutthe ranking system, there's no transparencywith a checks and balances to prevent thisranking system from being used to target orto retaliate against the growers.

And one of the things about thisranking system that when it comes into --one of the things that come into play isthe company says that some of the growers,when they're cut off, they're bad growers.Well, this ranking system, you're notstarted out equal. And the system is

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controlled by the company.I think it's unfair because of

the lack of transparency gives the companythe ability to terminate or penalizegrowers based on false claims of poorperformance that, in fact, is out of thegrower's control.

I understand why the companyfinds this system attractive, but there'sone thing that I don't understand is whyour federal government allows this tocontinue. And I really believe that it'san unfair system.

SECRETARY VILSACK: Anothercomment that's been in a couple ofpresentations has to do with the issue ofdebt and the leverage that debt either doesor doesn't provide in a relationship.

And I'd be curious to -- to havethe panel's views on whether or not theissue of debt creates an impetus to -- toaccept things that you would otherwise notbe willing to accept but for the fact that

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you're concerned about having continuedbusiness and a debt and the ability torepay the debt.

Is that a serious issue forgrowers?

MR. WOOTEN: I think definitely-- definitely that is an issue because ofthe extreme debt load -- you know, any --anybody under that kind of a debt andrealizing that there's no other way besidespoultry -- being in the poultry industrythat you could actually pay off that debt.It does definitely put a strain on -- onany -- to accept conditions given byintegrators.

I've been very fortunate that myintegrator in our area and all theemployees in our complex -- I grow forTyson Foods out -- out of the Snead area.And all the employees have been very easyto work with, but -- and done a good job.But they do not understand the pressuresput on us as a lot of them do not

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understand the pressures put on us.MS. PRIDGEN: I would have to say

that it puts you in a position to where youdon't see another way out of it. I mean,in our case the farm has been in ourfamily, you know, for over 250 years andwhat are you going to do, you're going to-- you're going to do what they tell you todo because you can't afford -- you've gotthe farm put up, you've got thegrandparents home place, everything put up,you can't afford to risk all of that.

MR. LUMZY: I agree 100% withwhat was just said. In fact, when Ireceived my contract, in order for me toreceive my first birds, I had to firstinvest over $10,000 in upgrades before theywould even bring me chickens.

MS. DOBY: Yes. I'd like to readand comment about something that I alreadyhad in my statement.

When I retired from teaching in1993 was considering building two 500 foot

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chicken houses. I was promised thislong-term relationship as long as I raiseda good bird, followed the company'sinstructions.

And, initially, I was providedwith a contract for that 10-year length ofthe loan; however, a few years later thecompany brought out another version of thiscontract. Said I needed to sign it tocontinue to get chickens.

Before the end of the initial10-year term the company again changed thatcontract to a 1-year term. I realized thatthe company could change contracts easilyby threatening to stop placing birds if Irefused to sign.

Well, it's typical for growers tobe asked to do expensive upgrades on theirpoultry houses before this first loan andthe building has been paid off. I knowbecause I was one of those growers.

The threats put before you, thecommunication, the threat is put before

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you, if you do not do this, they're notgoing to bring you any more chickens togrow out. This is extortion, plain andsimple.

So the growers grow out -- go outto their lenders and they tell them, "Okay,the company wants me to put in newequipment". The lender says, "Sure. Howmuch you need, we'll fix you right up".The grower is now in deeper debt and has toput up more collateral, most of the timehis own personal home.

The company tells the grower ifthey make these upgrades that they're --they're going to get paid more under thisranking system.

I asked the company managers, Iwent to them, I said, "You want me to dothis. Show me on paper where I'm going tomake this money back to justify borrowingmore money when I still owe money on thesehouses"?

They couldn't do it.

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Growers that have made thesemandatory upgrades are now findingthemselves in financial trouble. Some ofthem have gotten off farms jobs. Some arerefinancing these loans in order to makethe payments. 10, 15-year poultry loansare turning into 30-year loans with no morethan a flock-to-flock guarantee.

When companies get into troublefinancially they need to cut production andthe growers suffer. In North Carolinathere are growers that have borrowed a lotof money to make upgrades demanded by thecompany. And then the company, because ofbad financial decisions, terminated theircontract. Depending on how many houses thegrower had the debt can be thousands oreven millions of dollars.

Precious farm land and homes wereput up to do what the company demanded.This is where this unfair ranking systemcomes into play again. The company saidthat these -- some of these growers were

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cut off because they were bad growers. Howdid they get labeled a bad grower? Theygot labeled a bad grower by the rankingsystem. They had no control over theinputs, but then they were labeled by this.

This past Monday morning in NorthCarolina, one of these bad growers wentout, drove down a country road. He wasterminated from his contract, about to losehis home. Took a gun and ended his life.

That's what we're talking abouthere today. This is personal. It getsreal poultry growers.

And what we're asking today isthe USDA and the Department of Justice tohelp these contract poultry growers.

SECRETARY VILSACK: Carole, whatabout debt and the leverage that it covers?

MR. ALEXANDER: In my --SECRETARY VILSACK: No --MR. ALEXANDER: -- in our

particular area we're very fortunatebecause of the relationship between USDA

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and the banks. 80% of the loans in -- inthe counties that I'm in and the countiesthat surround me are guaranteed by USDAfunds.

Throughout that guarantee processUSDA has reviewed that poultry contract andhas reviewed the terms of the of the loanand said, "Yes, these two are equal.There's enough cash low to make thepayment".

You know, I don't know that muchabout the USDA rules, but it looks likewhat would be in one place for one statewould be for all.

But the USDA looks over thesecontracts and helps balance the grower'scash flow or has impact upon the grower'scash flow from the very beginning thatmakes the amortization of these loans fitthe terms of the contract.

SECRETARY VILSACK: So in yourarea it's reliance on the guarantees thatthe USDA provides?

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MR. ALEXANDER: It is. And it'sfaith that you can put in the fact thatobviously USDA knows more about it than youdo. So you have a feeling going forwardthat it will work.

SECRETARY VILSACK: So ifunderstand your comment correctly, you'resuggesting that there's not as muchleverage as some of these other folks haveexperienced because of that?

MR. ALEXANDER: That's exactlyright.

SECRETARY VILSACK: Carole, howabout your experience?

MS. MORISON: I -- I think thatdebt has a major influence over what agrower does, what a grower doesn't do, whatthey say, what they don't say, what'spopular and what's not popular.

I don't know about the USDAloans. I don't know. I'm just wonderingif we all should be after you-all forgiving us bad advice.

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MR. STAPLES: Along those samelines. If it's such a good contract, whydoes it have to be guaranteed?

If -- you know, I -- I got mymine and it's not guaranteed, and I putsome money in it. But my bank done minebecause of my personal wealth or my equitythat I'm putting in there. So what I'msaying is, if these contracts are as goodas these people say they are, why do theyhave to be guaranteed?

SECRETARY VILSACK: Since we'rekind of piling on USDA here --

ASSISTANT ATTORNEY GENERALVARNEY: Want to turn to DOJ for a minute?

SECRETARY VILSACK: Well, let mejust ask this one question and then I willturn to you. Christine, I'm sorry, I'mprobably monopolizing this.

But I am obviously interested inthe -- in the discussion that was startedbetween GIPSA and DOJ when -- when thereare problems and folks feel the necessity

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of going to the next step of filing acomplaint.

And I'm interested in -- in thereaction of everyone -- and, Carole, youbrought this up, and everyone else'sreaction about, what would be -- how do yousolve that problem? Do you perceive it asa problem? And if so, how do you solve it?Do you give -- would you be interested inGIPSA having more enforcement authority as-- as was possibly suggested, or do youthink that there is a process of improvingthe current system so it works better?

Garry?MR. STAPLES: I personally -- I

personally think that GIPSA needs a littlemore authority. I don't want to takeanything away from DOJ because I'm prettysure they've got their plate pretty full.

As I understand it right now, orthe people I know in GIPSA, especially theone you introduced and put him on the spot,he's a pretty a good man, I think, Mr.

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Butler. I think there's been a tremendousturnaround since he's been there as far assomebody wanting to help us in the poultryindustry.

In past from, what I knew ofGIPSA, poultry was about as low down on thelist as you could get.

I think you're going in the rightdirection with having full enforcement fromGIPSA for poultry, beef, you know, thewhole -- the whole meat industry.

SECRETARY VILSACK: Gary, yourthoughts on that.

Do you have anything?MR. ALEXANDER: I'm not very

familiar with the enforcement authority ofGIPSA. But I had always -- always lookedat GIPSA as being, for a lack of betterterms, the DOT of the poultry industry.

I felt like the integrators had atremendous amount of respect for when --when GIPSA was brought up. And -- and howit functions today, and the fact that we've

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got more credible people in GIPSA lookingat the rules, I think it's a positivething, but I'm not familiar with theenforcement branch.

SECRETARY VILSACK: Thoughts onthis subject on this side. Kay. I'msorry.

MS. DOBY: When I was thinkingabout this I had came up with threesuggestions.

And, one, would be to prohibitthat use of that unfair ranking system.There are other ways that companies couldpay growers that create incentives forgrowers to do a good job without unfairnessof that ranking system.

Another one would be make itunlawful for companies to force thesegrowers these expensive upgrades in theirpoultry houses at their own expenses.

Upkeep is one thing, but if thecompanies are convinced that theseexpensive upgrades will improve their

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bottom line, then maybe that's somethingthey should be paying for. They might be alittle bit more cautious about what theyare requiring.

And then the third thing was towork together to enforce the Packers andStockyards Act. And to investigate why thepoultry market is so broken that growerspay -- like Shane said, had -- you know, helost money last year, but it's beenbasically flat for the past 15 years.

SECRETARY VILSACK: So do youthing that -- that GIPSA should have moreenforcement authority, or do you thinkthere should be some kind of improvement tothe current system so the Department ofJustice could act?

MS. DOBY: Well, I think there'ssome rules there that have not, you know,been enforced. But, yeah, I think GISPAneeds more enforcement authority.

MS. PRIDGEN: I think they needmore authority. My biggest concern is that

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there's really no open market for poultryexcept in my situation, which I'd like toread my prepared statement in a few minutesabout, you know, what we're doing and wherewe're direct marketing.

But, you know, you can still goto the stockyards and you can still sellcattle and you can still sell -- you know,it might not be much of a market, but youcan sell a little bit of pigs, but there'sno -- there's no open market at all forpoultry.

There's no options for thosegrowers who have those houses who choose togo grow out from under contract except togrown on -- on a -- on a small scale andstart working, building their ownentrepreneurial business and doing directmarketing.

And then you get hit with, whatI'd like to talk about, which is the lackof opportunities as far as slaughtering.

SECRETARY VILSACK: Well, why

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don't you just briefly touch on that.MS. PRIDGEN: As you-all know we

had 16 years that we raised under contract,my family did. And at the end of that timemy dad was left with $80,000 debt that hadto be paid off. So there we were with thefarm. Well, we didn't want to lose farm.So we had to start treading water.

Well, I -- we were raising lamb.And I had been selling the meat at thelocal farmer's market and I had developed acore group of customers. I encouraged dadto start chicken and sell them at thefarmer's market. This couldn't pay off thehuge debt that he had incurred, but it wasbetter than nothing.

Soon we were getting requestsfrom restaurants, fine clubs and severalsmall co-op grocery stores. Demand wasgrowing, but the new problem was the lackof slaughter infrastructure. The nearestindependent slaughter house was a hundredand thirty-five miles away. We would have

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to drive 270 -- 270 miles round trip twicea week to process and pick up our birds.And then the owner decided to sell hisproperty to a developer.

So now we would have to take ourbirds to either Kings, South Carolina, we-- I live in North Carolina. So we'deither have to take them to either Kings,South Carolina or Manita, Virginia, anaverage of 426 miles round trip twice aweek to be processed.

It is worthwhile to note that allthe while there were three chickenslaughter plants and two turkey slaughterplants within one hour of my farm all ownedby poultry corporations.

With diesel fuel at over $4 agallon we were losing money and couldn'tcontinue to drive that distance.

Processing birds on farm underUSDA exemption was not a viable option asUSDA has a 20,000 bird exemption underPO90-492, but the North Carolina Department

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of Agriculture only allows a thousand birds-- chickens to be slaughtered out fromunder inspection.

It was apparent that we weregoing to have to stop raising chickens eventhough there was a growing weekly demand.By then we were marketing about a thousandbirds per week.

In late 2007 Chaudhry Halal Meatsin Siler City, North Carolina opened apoultry processing plant. Even though thisplant is a hundred and fifty miles from ourfarms, it afforded us the opportunity tocontinue raising chickens and meet thegrowing demand.

The biggest issue for independentpoultry producers is the lack of localslaughter infrastructure. Verticalintegration in the poultry industry overthe last 50 to 60 years has decimated theprocessing infrastructure.

North Carolina is seeingphenomenal growth in the local food

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movement. Consumers are taking the USDA'sKnow Your Farmer, Know Your Food Campaignto heart, but a lack of local of slaughterinfrastructure and thus lack of ability --availability of product will hamper theaccess of that and the success of thatprogram.

This intense vertical integrationhas made it very difficult for anyindependent farmer or cooperative group tocompete financially. Because of processorownership throughout the entire chain ofproduction these companies can sell poultryproducts for a lot less than I can. Onechick will cost them about 15 cents toproduce. I will have to pay a dollar forthat chick. Feed costs will be two tothree times theirs and processing fivetimes their cost.

The increasing cost of productionmeans that I cannot be competitive in pricewith these large companies and, thus, Imust depend on the purchases of customers

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with more disposal income.I recognize that this is part --

that part of this is an issue of lessvolume, but demand for what we areproducing is growing, however, a lack oflocal slaughter infrastructure is thegreatest barrier that we face and one thatwill severely inhibit opportunities forsmall and midsize poultry producers in thefuture.

And I do have somerecommendations if that would be okay.

SECRETARY VILSACK: If you couldjust summarize them just because we'rerunning out of time. I need to giveChristine five or ten minutes.

MS. PRIDGEN: I think that USDAneeds to finalize some mobile meatprocessing unit regulations so that we canget back up and going to help get localpoultry slaughter infrastructure withincommunities to help rebuild this local foodsystem.

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And what's desperately needed iswe need a requirement to allow states to --to allow all states to allow 20,000 birdslaughter out from under USDA -- under thisUSDA exemption until this poultry -- theUSDA poultry slaughter infrastructure isrebuilt. So we need that as an interimsituation.

USDA grants and loans need to beclearly targeted to facilities for smalland midsized independent producers oreither producers form in cooperatives.

The other things we really needfor USDA to -- to -- USDA's RuralDevelopment funding for business andindustry loans in order to guarantee theseloans for the bricks and mortarconstruction on small and mid scaleslaughter facilities.

I would like to ask for morecoordination across the Rural DevelopmentPrograms. For example, the USDA valueadded grant provides for feasibility

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studies. This funding would -- could beused by a group of poultry farmers to workwith economic development entities to seehow many chickens would need to be grown inorder to build a processing facility.

Also, I'd like to see USDA FSISto work with owners of small, independentred meat slaughter houses to add a poultryslaughter line and to help them withfacility design so that they could meet theregulations.

The last thing I would like tosay is I would like for you to consider howbest to implement these recommendations.

And what I want you to thinkabout is if the next generation finds thatthe only pathway into poultry farming is toincur huge amounts of debt with noassurance of being able to pay it back,they may wisely decide not to farm.

SECRETARY VILSACK: We just hadan interesting briefing yesterday with thenational press and some of the press in

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Washington, D. C. about Know Your Farmer

Know Your Food.We just completed an inventory, a

mapping inventory of all the processingfacilities in the country both in terms ofcows, in terms of pork and in terms ofpoultry, and also the rendering facilities.And tried to match it up with where thesmaller producers are so that we coulddetermine where the gaps are.

Our Rural Development folks werein the room, they are a part of Know Your

Food, and they are interested in using theBI program -- this industry loan program totry to make loans available to those whowant to get into that business. And, asyou know and as you noted, we were areworking on regulations relative to thesesmall mobile units. And we have alreadybegun to fund a number of them and we willcontinue to do that.

So there is a process underwaynow in the last year in the Obama

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Administration to try to create some energyfor that type of activity.

Shane, let me give you anopportunity to comment briefly on theGIPSA, DOJ issue and then I'd like to turnit over to Christine for any questions orcomments she has.

MR. WOOTEN: I've never had --I've been fortunate, I haven't had some ofthe situations that some of these othergrowers have and concerns and things thathave happened to them. So, personally, Iwould -- I don't know much about the GIPSAregulations and stuff. But the only thingI would say about it is maybe make it morepublic of how to start that processbecause, you know, I've never needed to,but if I did, I wouldn't know where --where to start.

SECRETARY VILSACK: Well, mentionwas made of Dudley Butler. And I just --you know, just so you know, this guy ishere today doing his job. His farmstead

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was recently, for all intense and purposes,totally destroyed, with the exception ofhis home, as result of recent -- recenttornado. So, Dudley, we appreciate youbeing here notwithstanding your ownpersonal circumstances.

MR. BUTLER: Thank you.MS. VARNEY: Well, Secretary, I

have to say the panel has been eye-openingfor me and I have lots of follow-upquestions that I don't think I'll be ableto get to today. So you can expect to hearfrom me.

But, Mr. Staples, let me say Ifully expect you will not experienceretaliation by virtue of your presencetoday, but if you do, you call me at thisnumber because I want to know about it.

What I really want to follow-upon, Secretary, is this competitiveness onthe contracting side. And I have a coupleof questions that I'd like to get thepanelists to think about if we don't have

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time talk about now, so certainly duringthe break and afterwards.

I'm very interested in yourexperience after 23 years when you wereterminated. Were you able to switchintegrators? Were you able to go somewhereelse?

MS. MORISON: No, we weren't ableto switch integrators. Again, even thoughthere's four companies in the area, whatone wants, they all want.

ASSISTANT ATTORNEY GENERALVARNEY: How does that -- how does thatactually work? I would think that a growerwith your -- with your reputation should ina -- in a competitive market be fairly --it should be fairly easy to switch?

MS. MORISON: It -- it really --I don't think it really matters as far asreputation goes, it's just a matter of theywon't put chickens on the farm and theywon't give you a contract, you know. Theupgrades that were demanded of us, had we

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gone to another company, they would havesaid the same thing.

And even though, you know, we hada good growing history, we wouldn't havehad one with another company, we would havebeen starting out at the very beginningwith a record with a new company.

ASSISTANT ATTORNEY GENERALVARNEY: So, then, it's a reduction incapacity if they're not replacing it or arethey expanding somebody else's capacity?

What happens when --MS. MORISON: All the --ASSISTANT ATTORNEY GENERAL

VARNEY: -- you're taken -- when yourcontracts are terminated, is capacity justreduced in your area or do they --

MS. MORISON: No. They -- theyget other people to build houses or, youknow, they phase in more birds in otherplaces.

No, they -- every year in ourarea they are increasing production. More

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-- more birds are being produced everyyear.

ASSISTANT ATTORNEY GENERALVARNEY: And I'm very interested in theupgrades that you all have talked about.Can you tell me a little bit, because I'mhere to learn, I don't know that much aboutyour industry.

What, in your view, are the kindsof upgrades that are reasonable andappropriate and right for the integratorsto be -- wanting from their growers? Andwhat are the kinds of baskets of upgradesthat are, in your view, are used basicallyto -- to take you out of business, which iswhat I'm hearing you say today.

MS. DOBY: Well, sometimes theupgrades can be -- it depends on whatthey're asking. Now -- and another thing,it might be the company -- okay. Youstarted out building houses by thecompany's specs, okay. And then thecompany, they decide, well, you know, we're

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-- we're not going to grow this six poundbird anymore, we're going to grow a ninepound bird.

So that means although you justbuilt these houses four years ago, you'regoing to have to go back in debt $80,000because we want these big fans put inthere. We want more, a cooling system putin there because we're going to this biggerbird and it's got to be cooled more. Sothe grower foots that expense for thecompany to grow the birds that's going tomake them more money.

And the thing about it is whenyou put those upgrades in sometimes likethe companies will say, "Okay, we're goingto give you -- you do this and we will giveyou a little bit extra".

But that extra will never cashflow to the pay for that expense. Andthat's where the grower gets into the debtproblem.

MS. PRIDGEN: What I would like

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to see is from our family's experience andthe community's experiencing in NorthCarolina, these companies are alwayslooking -- when they're looking atexpansion, they're looking for new houses,I mean, the newest houses that they canget.

And what I had talked aboutearlier that happened is when the tobaccoallotment buyout was going on, there werefarmers who had houses that had been takenon by this company that were former PerdueGrowers and they were taken on by CaseFarms.

And in that situation they builttwo new houses to Case's specifications forCase. But what Case did was went out andtalked to some farmers who didn't have --didn't grow poultry, into building brandnew houses for them. And, so, when theygot those brand new houses, those newfarmers to start growing, they went backand dropped those houses that they had

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initially taken on as the former PerdueGrowers.

So, now, this farmer may havefour houses or six houses on his propertyand maybe only two of them have chickens inthem and the other four, even though theyhave the same equipment in them, you know,don't -- don't have that.

ASSISTANT ATTORNEY GENERALVARNEY: And then one other question that Ihave that I think I will probably have tofollow-up with more off line, but if anyoneof you could tell me, are you in co-ops?Are there co-ops for growers?

Does Cooper-Volstead work foryou?

MS. DOBY: There was one a co-opand it was closed. And that was the lastone.

ASSISTANT ATTORNEY GENERALVARNEY: And why don't co-ops work? You'reall shaking your head no. Tell me why.

MR. STAPLES: They probably

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would. It's just -- I guess you need toknow some poultry growers. It's just hard-- it's hard to get a lot of poultrygrowers to say yes to anything together.But that's probably one of the biggestproblems.

ASSISTANT ATTORNEY GENERALVARNEY: Any other thoughts on that?

MR. WOOTEN: Also we have severalgrower based companies -- programs and --and organizations.

I think the -- we had mentionedearlier about the debt and the --

ASSISTANT ATTORNEY GENERALVARNEY: Right.

MR. WOOTEN: -- and -- and Ithink a lot of growers are afraid to gettoo involved with anything that would goagainst the status quo because of theirdebt.

ASSISTANT ATTORNEY GENERALVARNEY: Well, Secretary, I have a lot ofwork to do from this. And I want to really

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understand our role in the GIPSA process onthe complaint side.

I'm wondering why complaintsaren't treated confidentially until acertain point in time. I think there'sprobably more streamlining we could do.Whether or not GIPSA has the authority, wecan certainly provide troops and help anddo what we can do.

I want to understand more aboutthe contracting practices and see what wecan do to help make sure that that's acompetitive marketplace.

And I want to thank all of you.I know you take time out of your -- out ofyour livelihood to come here and talk to usand on my part to educate me.

Thanks.SECRETARY VILSACK: I want to

join with the Assistant Attorney General'sremarks -- to the panel. I want to thankyou for taking the time and being able toshare, not only your personal stories, but,

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in some cases, some painful stories offriends and neighbors who have beenimpacted by this industry.

My commitment to the folks whoare here today and to poultry growersacross the country is to continue to workhard with Dudley and those in the GIPSAarea to make sure that our regulatorysystem is as good as it needs to be to makesure that growers and producers have a fairshake. I mean, at the end of the daythat's ultimately what it's about.

I, too, have learned a good dealhere. And I'm sure, Dudley, it'sstrengthened his resolve as well to do agood job.

This is obviously an issue that-- that will require a very close analysis.The Congress has directed us to do that inthe 2008 Farm Bill. We began that processwith the rules we published last year in aneffort to try to make greater equity in therelationship and to make sure that folks

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had notice that contracts were going to beterminated, that they weren't left withoutany opportunity to try to seek alternativecontracts and alternate opportunities. Butthis is obviously a difficult issue, a setof difficult issues.

And I might say that it isreflective of a deep concern that I sharewith you today, and that is, about thefuture of our rural communities generally.I think it is very important for the restof the country to know what you know aboutthe challenges and struggles of producersin this country. I think the rest of ustake what you-all do for us for granted,whether it's the producers, or whether it'sthe folks who process and slaughter thelivestock or the folks who -- who pick ourfruits and vegetables along the entirestream here, we, as a country, do notappreciate and do reflect our appreciationfor those who give us a safe, abundant,affordable supply of food, which is really

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puts us in a much more competitivecircumstance economically.

So we owe you a fair shake. AndI'm committed to doing that as long as I'mthe Secretary of Agriculture.

With that, let me ask you to showyour appreciation for the panel and we willreconvene shortly after lunch.

(Whereupon, the taking of theproceedings were recessed fromapproximately 12:00 p.m. toapproximately 1:00 p.m., afterwhich the following proceedingswere had and done:)MR. FERRELL: I think we'll get

started.In the front, and the people in

the middle, if you want to provide comments-- if you want to provide a comment, youshould have picked up a ticket at the -- atthe front of -- as you came in thebuilding.

And what I'm going to ask is, I'm

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going to ask -- there's going to be acouple of options here.

We have two microphones up fronthere. And if about, you know, five to ten,twelve people can get in a -- in a row oneach side in front of the microphone.

And you're going to have twominutes to provide some comments.

Our goal is to get as many folkswho would like to provide a comment theability to do so.

So as you come up to themicrophone, we'll have someone that's goingto take your ticket from you. So that waywe know that everyone who wanted to providea comment has -- has be given theopportunity to do so. And then we'll pickthis up again later on this afternoon.

For -- for growers who do notwant to speak at the microphone, we haveother -- some other options as well.

Straight out these double doors,down the hallway, we have a conference room

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off to the left. And we have some GIPSAemployees that will take your commentsdirectly that way as well.

So if you -- it's up to you whereyou would like to provide your comments.

So why don't we go ahead and getstarted and we'll start on this side.

BROTHER DAVID ANDREWS: Thankyou. My name is Brother David Andrews. Iam hear reading the statement of a growerwho not only couldn't -- was afraid to comeas well as afraid to speak. So I'mspeaking on behalf of someone else.

First of all, let me give a wordof gratitude for all the time that you havededicated to this process. You and yourtime is greatly appreciated.

From a grower's perspective Iwant to assert that the system is broken.The current system is one that favors theintegrators and allows for the manipulationof outcomes to growers primarily throughthe tournament system.

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While the lack of competitioncreates one set of problems, the tournamentsystem creates another set. It takes moneyfrom the growers and gives it to anothergroup. The grower has no control over thequality of the feed that gets delivered,nor how much of each type is delivered.

Another compound -- component tothe cost equation is the chick cost. Theintegrator has complete control over thequality of the chicks delivered to thefarm.

Another form of manipulation isto exclude the best growers and worsegrowers in the average cost calculation.

Another aspect of the tournamentsystem is related to time between flocks.The tournament system benefits theintegrators when farms similar inperformance sell in the same week. This iseasily achieved by manipulating out timesand grouping similarly performing farms.

The tournament system that is

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common in the poultry industry is the onlyexample that I know of that has theemployees-growers subsidizing the successof the employers.

Thank you.MR. FERRELL: Okay. We'll start

over here. And if can you introduce -- ifyou can mention what your name is, too,that's helpful. Thank you.

TOM GREEN: Mr. Butler, poultrygrowers and other interested parties. Myname is Tom Green and I'm a former CoffeeCounty, Alabama poultry grower. Beforethat I -- I had a dual military career. Iwas an infantryman. And I served in theaviation branch as a pilot. I flew combatmissions in Vietnam and also served as apublic affairs officer at the Army AviationCenter.

My wife and I went into thepoultry growing business in 1990.

I was 52 years old at the time.We were both excited about going into the

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new business, totally different fromanything in our past. Poultry fit ourplans that would take us into our goldenyears.

We invested a little more than$500,000 to build four 500 foot poultryhouses on our 90 acres of land just southof Enterprise. And we depended entirely oncompany advice and the SBA and our bankers.The SBA financed -- they didn't finance,but they guaranteed our loan.

As frequent problems aroserepetitively we -- we sought advice fromother growers. And over time formed acooperative that gave us better prices onsupplies and equipment, and all growersneeds that we could fill outside of thecompany influence so that we could bringour prices down.

It also served as a forum inwhich growers could come together, discussissues and express solutions. Wecommunicated with the USDA packers and

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stockers to initiate investigations ofirregular suspected and greater activities.We appealed to DOJ's Antitrust Division onissues. I had one substantive complaintforwarded to the DOJ from packers. And theaction -- for an action review. It wasreturned to me 14 months later withoutaction.

As a cooperative we participatedin workshops to explore ways to improve ourcompany-grower relations. Contract equitywas our primary goal.

Our contracts continued to bewritten on a flock-to-flock basis and couldbe terminated by either party with a 10-daynotice for any reason or no reason at all.

These contracts were written atthe grower's expense for equipment, trialand error housing upgrades and no regardfor compensation to offset expenses.

In October 1995 Hurricane Opal --Opal blasted through Alabama and took out alarge number of poultry farms. Many of the

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more vulnerable, older farms were totaled.This gave the integrators an opportunity tobring new projects on, which theyvigorously pursued.

Along with the expansion of newfarms, the integrators demanded upgradesfor tone ventilation and new equipment forthe older farms, for the ventilators onthose farms, which, at that time, wouldhave been a one hundred thousand upgrade toour debt load.

Our new -- our new contractscontained upgrade requirements. Alsocontained a demand for growers to signmandatory arbitration in order to settleany disputes that may come up.

Any -- any grower not signing thearbitration clause by January 15, 1996,will be terminated and would not receivechickens. This was also brought to theattention of the packers and stockers, andthey sent somebody down to investigate andit resulted in nothing.

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MR. FERRELL: Sir, if we can make-- we're going to try to make sure we geteveryone as possible.

MR. GREEN: Okay. I've got oneparagraph left.

MR. FERRELL: But in our nextround of comments, we're going to try toget as many people so you might be abletake another crack at it.

We just want to make sure thateveryone who's come here, at least, onechance.

MR. GREEN: Okay. This was thestraw that broke the camel's back -- brokethis camel's back. And my -- Ruth and Italked about it at length about theprinciples, about what happening to us.

We talked to lawyers, packers,Birmingham SBA, everybody. Nobody couldhelp. We were not allowed to sell ourhouses and we were not allowed to go withany other of the other companies of thethree that were working in our area.

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Ruth and I chose to stand ourprinciples. We did not give up afundamental right to access the publiccourt of law and guaranteed -- which isguaranteed by our Constitution, regardlessof price.

I had flown too many combatmissions defending that Constitution toforfeit it.

It was truly ironic thatprotecting one right, we lost another. Welost the right to property. We lost 77acres, four outstanding poultry facilitiesand five years of hard work. It was soldfor a hundred and seventy-seven thousanddollars salvage.

We were denied our right toproperty by the company actingunconscionably and in my military mind,they were criminally acting.

Thank you.CRAIG WATTS: My name is Craig

Watts. I've been a contract a poultry

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producer since 1992. I'm careful not touse the term independent because I do notfeel today that we're independent, I feellike we're more of a captive supplier.

The competition on the productionend of -- as it relates to us, the growers,it does not exist, it does not exist. Wehave no voice in an industry that we're soheavily invested in. Growers mortgagefarms and homes based on an assumption thatthe relationship with the poultry companywill be long term and mutually beneficial,but what we get is a growing agreement withno security at all.

Contracts can be terminated atany time for any reason and as growers wehave no recourse. Contracts can be changedat any time for any reason. And we're, youknow, forced to sign a contract whether welike it or not on a take it leave it basisbecause, you know, we can either sign it orface bankruptcy. It's almost like asking aquestion, would you rather drown or burn?

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Either way, it's not a good way to go.Another major issue is a method

of compensation, which this has been beatto death, but it's called the rankingsystem or the tournament system. I'veheard it called a reward system, when it'sactually the grandest Ponzi scheme that'sever been invented.

Timing is everything. What youget, who you get, when you get it has moreto do than any managerial decision thatI'll ever make. And -- and also influencesmy compensation, you know.

The ranking system serves as acost control method for the companies.That's what it boils down to. It's noreward system for a grower, you know. Theysay, "Well, it's the bad growers come outhere and do the complaining".

I've got proof different. Forwhat it's worth, I'm a very above averagegrower, but I see the faults in it. For meto make it up here, somebody is getting rid

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of down here. That's the way I see it.Anybody in this room knows that

there is no such thing as a level playingfield, the inputs. There's just too manyvariables. Quality of chicks. Quality offeed. The feed deliveries. And the beatjust goes on, you know. The stuff that'soutside of our control is almost endless.That is irrefutable.

But when they want to compensateus, they pretend we've got a level playingfield.

All I ask you to do, as Congress,is prohibit poultry companies from beingable to cancel our contracts justarbitrarily. Ask the USDA and theDepartment of Justice to declare theranking system unfair and deceptive.

Thank you.WARREN GRANGER: Good afternoon.

I'm Warren Granger from Alva, Oklahoma.I'm a former poultry farmer of 22 years. Igrew chickens for a large Arkansas

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multinational company.This hearing is a monumental

event for growers in America. As a poultrygrower I spoke out about the unfairness ofthe contracting system through state andnational poultry organizations and anymedia that would listen.

Several pieces of state andnational legislation were introduced overthe last three decades, only to be stifledby lobbyists of big chicken. Numerouscomplaints were filed by me and many othersto the Packers and StockyardsAdministration, but to no avail. Growerswere told that the PS&A has no teeth toenforce legitimate claims of the manyinjustices inflicted on growers as is Davidagainst Goliath.

15 years ago I secretly recordedthe broiler plate pay clerk telling me howI and members of the Oklahoma ContractPoultry Growers Association were targetedand how my grower pay was manipulated for

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trying to bring about change to an unfaircontracting system.

This sound recording was turnedover to the PS&A at that time. We weretold that the DOJ, Department of Justice,was understaffed and only went after thebig stuff.

Recently 50 poultry growers inSoutheast Oklahoma filed a lawsuit againsta giant poultry company from Arkansas forfraud, negligence and violation of theOklahoma Consumer Protection Act.

Groups of seven growers at a timeare scheduled for separate trials over thecourse of the next several months. Thefirst trial ended in April with the firstgroup being awarded 8.3 million. Punitivedamages were rewarded against the company.And by the way, my secret recording of15 years earlier was used as evidence inthis trial.

Question, why are some of ourland grant universities advocating for the

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large poultry farmer? Right here today wehave a PhD that will be on this panel afterwhile that testified for the giant Arkansascorporation in the Oklahoma trial fromOklahoma State University. I thoughtland-grant universities were suppose toresearch and teach prospective ag producersviable methods to produce food and fiber asto receive a fair and equitable return oninvestment. Why are PhD's testifying forbig corporations against the growers?

The poultry farming business ismisaligned. We need your help to level theplaying field.

I would like to say thank you tothe Secretary of Agriculture and the U. S.Attorney General and all these otherofficials for hearing the concerns offarmers across America.

Thank you.MR. RUDY HOWELL: My name is Rudy

Howell and I'm thankful y'all are listeningto us.

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I have grown birds 15 years and Iam very concerned about the payment systemthat being based on true competition.Grower pay can be easily manipulated by thecompany. For instance, incorrect feeddeliveries, incorrect feed weights,inaccurate bird count and easily changingdocumentation, all of which affect grower'sranking and pay.

I feel like the USDA and theDepartment of Justice should takeaggressive action to enforce the lawagainst unfair and deceptive tradepractices and acknowledge the current paysystem as unfair and deceptive.

Thank you.MR. LAMAR JACKSON: My name is

Lamar Jackson. I've been growing poultryfor 30 years. And I would like to thankyou people for coming here today,distinguished guests. I could spend all mytime thanking you for just being here.It's a great pleasure to have somebody to

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listen to us.We, as growers, appreciate your

concerns for our well-being in becomingsuccessful growers in these United States.Integrators, in general, want everythingleft alone. They want no new laws tointerfere with their business as usualpolicy as they have it now. The system isdefinitely a broken one in extreme need ofrepair.

This administration has anopportunity to help individual growers whosupply our nation, as well other nationswith a healthy food product, poultry.

We need the USDA packers andstockers to mandate policies that enableour already existing enforcers, along withthe Department of Justice, to be able torigidly enforce and prohibit mandatoryupgrades on housing and equipment that aretotally unnecessary to the cost effectiveproduction of poultry in this country.

These upgrades require countless

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more hours of kilowatt energy to producethese birds to market. Keeping the growerin constant debt gives the integratorsassurance that these growers will have tocontinue to grow poultry for them. Thiseliminates competition and thus makes theirstronghold on growers evident.

Let me say that numerous growersare not attending these workshops becauseof being afraid of retaliation on them bytheir integrator. A grower this morninghas already been threatened by his serviceperson if he attends and speaks at thisforum.

All the integrator has to do ismake sure that particular grower receivesinferior chicks to start a grow out withand maybe short his feed delivery, whichcan lead to a higher feed conversion rate.This happens, really it does. This is thetype of undue fair practices that need tobe addressed now. Our payment rankingschedule is also totally unfair. On a farm

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the size of mine, which is a hundred andeight thousand broilers, my paycheck, in afive-week grow out period, can vary as muchfrom $22,000 gross down to $11,000 for thesame amount of chickens. This makes itimpossible to meet financial obligationsand be able to plan any future endeavors.

Please enforce the laws alreadyin place by giving the USDA and packers andstockers real authority to do their jobs inorder to help us and this industry.

Thank you very much for yourtime.

MR. BUTLER: Hold on, hold onjust a minute. This is Alan Christian, mydeputy. I want you to tell him about whogot threatened, not -- not right here, justgo back and tell him who -- what the name.

MR. JACKSON: I sure will.And I did say this, one more

time. I've been doing this for 30 years.It might be just 31 because I'm gone, too,but that's okay.

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MR. MICKEY BLOCKS: I'm MickeyBlocks.

The lack of competition in agiven geographic region has led tointegrators with all of the power, thisleaves the grower with little or no choice.The grower is given a contract, it's onesided, it's a take it or leave itsituation. Companies should not have thatmuch control in a region.

DOJ and USDA need to doeverything possible to limit this type ofpower because this power is unfair anddeceptive practices have developed. Forexample, the ranking system, forcedupgrades, contracts that can be changed orcancelled at any time. Compensation, as Ihave not kept up with increases in energyand material costs. These are all signs ofa broken system that needs to be correctedas soon as possible.

Thank you.MR. ROBBIE STAULTS: I am Robbie

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Staults from the Shenandoah Valley ofVirginia. And I want to thank you fortaking time to listen to my comments.

I'm here to share my experiencewith contract poultry production. In 1979I bought a two house poultry farmcontracting with a major chicken company.The income from the farm was enough toallow me to pay labor and my bank note.

Things were going so well that in1992 I decided to build two additionalhouses. After five years, I was requiredto perform company upgrades to all fourhouses. During this time operatingexpenses were on the rise, but pay from thechicken company was not being increased.

Now, I have an increased banknote along with increasing expenses, but myincome, it remains static.

My plans for early retirementbegan to evaporate. After a couple ofyears operating in this manner, I came tothe realization that I was never going to

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pay for these new houses. This is a commoncycle that chicken farmers are trapped in.

Does that matter, does it matterwhat state or region you're in? No.

That's why today is so important.We need USDA and the Department of Justiceto stop requiring growers to installexpensive upgrades in their poultry housesat their own expense.

And Congress should stop poultrycompanies from cancelling grower contractswithout adequate faults, unless theyreimburse growers for the investment theymade to service the contract.

Thank you for your time.MR. FRANK MORRISON: My name is

Frank Morrison. I am an ex-contractpoultry grower from Maryland. Our contractwas terminated two years ago due to notupgrading to the company standards.

One of the major challengesfacing contract growers is the rankingsystem. I have an example, which happened

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to us. I could purchase propane for 30%cheaper than what the poultry company wascharging us. When I informed the company Iwas going to purchase and supply my ownpropane as any independent business personwould, I was told if I did not -- if I did,my contract would be terminated. Even ifwe wanted to be competitive, the companywill not let us. This contract system hastaken away the entrepreneurial spirit ofthe farmer who has for decades found waysto reduce costs on their farms to stay inbusiness.

The USDA and DOJ need to takeaggressive action and enforce the lawagainst unfair and deceptive trade practiceby the poultry companies.

Thank you.MS. VALERIE ROWE: Good

afternoon. My name is Valerie Rowe. I'dlike to thank you for this opportunity tospeak with you today regarding the currentsituation as a poultry grower.

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I became a poultry grower fouryears ago. I did this in an attempt tosave a family farm that was in the processof foreclosure due to an unfair contract.That resulted in my elderly inlaw's birdsbeing cut off, without notice, on the dayof delivery, because they refused to makeexpensive and unnecessary upgrades.

The problem has turned out to bean industry wide issue regardless of whoyou grow for or what type of bird youraise. I have learned that a contract is acontract in name only. Mine was suppose tobe a 5-year contract. It has changed fourtimes in as many years. Integratorsroutinely rewrite these so-called contractsto their benefit whenever they see fit.And depend on the fact that the grower isdeep in debt and will sign them out of fearin order to continue getting checks.

I thank God my husband and I havenonfarm jobs. Without them, we could notafford paying out of our pocket to raise

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chickens. We will not be able to continuethis much longer.

The solution to this systemicproblem: The USDA, along with theDepartment of Justice, must exercise theirpower and stop these unfair contracts now.

Thank you.MR. WILLIAM CRAMER: Thank you.

My name is William Cramer and I work forthe Interface Center on CorporateResponsibility. We are a faith basedmembership organization who investorsmembers own a hundred and ten million --billion dollars in shares in companies likeTyson, Smithfield and Hormel. Our memberscome from a variety of faiths, Methodists,Baptists, Episcopalians, Catholics and manyothers. In addition to owning shares inmajor meat companies, restaurants and fooddistributors, our members also manage largehealth care systems that buy a lot of food.

Our members are increasinglyconcerned about the conditions under which

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their food is produced. They're especiallyconcerned about fair treatment of poultrygrowers and chicken processing workers.

We believe strongly that contractpoultry growers are the backbone of therural economy in the South. When they arepaid low prices, they make poverty wagesand that hurts rural communities.

We also feel that the industry,as currently structured, is unfair toworkers. The lack of competition andpoultry processing means companies canviolate workers' basic rights and disregardhealth and safety. As a result, workerturnover at poultry averages about ahundred percent a year. We need good jobsin rural areas of the South and thisindustry isn't providing them.

There's enough money in thesupply chain for everyone to get a fairshare, but we need to enforce regulationsthat promote fair competition so megacorporations like Walmart and Tyson don't

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take more than their fair share.The poultry processing -- the

United of States of America was founded onprinciples of freedom and free enterprise.Without fair competition, we do not havetrue freedom or free enterprise. Thepoultry processing industry in America isincreasingly monopolized and that isun-American.

Our organization and people offaith around the country are watching thesehearings and other efforts to restorecompetition and fairness in food andagriculture in America. We hope to seebetter enforcement of our existing laws andmore effective regulations coming out ofthese hearings.

For people of faith gathered heretoday I ask you to consider the followingquestions: If Jesus were here today whatwould he say about grower fairness andworker justice? Who would he support?

Thank you.

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MS. ANGIE TYLER: Thank you forhearing our concerns and I hope you'recompassionate.

My name is Angie Tyler. And I'mthe only grower here from Louisiana. So Iproudly represent every one of them. It'sbeen a tough year for us.

My husband and I have beenraising broilers for 20 years now. And, asI said, I'm the only one here from ourstate.

There's a lot of things that needto be addressed. And this is not oneproducer, this is not one integrator, thisis nationwide.

And the decisions that y'all makehere today and in the weeks to come, monthsto come, even years to come, can beremembered by the whole agriculturalcommunity historically. This has neverbeen done before.

And what we feel is that the USDAmust take action immediately on any unfair

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practices. The poultry farmers in ourcountry are on the brink of collapse. Theranking system of payment is obsolete, it'sbroken, and it needs to be changed.There's too much room there formanipulation. And there's no checks andbalances whatsoever.

And because costs have farexceeded the pay raises, producers cannotpay their bills, they can't pay theproduction costs. Energy has increased somany times more than the pay has increased.And many times the pay has gone down. TheUSDA needs to enforce laws already in placeand investigate these unfair practices.

Poultry remains the mosteconomical and healthy source of protein inour country. As the demand in domestic andforeign markets increase, along with thepopulation, our poultry production has toincrease also. The farmers are absolutelymandatory for this. And we must ensure,not only survival, but the potential for

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success and progress as our future. Andwe're relying on you for that help to makesure that we can stay in business and doour jobs and do it right. And we want todo that job in a marketplace that is fair.It's our future.

Thank you.MR. CHRIS SANDERS: Good

afternoon. My name is Chris Sanders. I'mwith United Food and Commercial Workers.

On behalf of my president and thethousands of members and my local union inKentucky and Southern Indiana, and dozen ofpeople wearing gold shirts in this room, mybrothers and sisters, and literally 250,000poultry workers across America, we want you-- to ask you to pay special attention tothe needs of folks who kill, cut andprocess chickens.

We're here about competition inissues in agriculture, but agriculture isnothing without consumers and, of course,retailers.

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So pressure on growers andvendors, producers and us all across theindustry come from the margins that aredictated by retailers. I don't mind namingnames, I'm talking about Walmart. Until weget some grip on the control that majorretailers like Walmart have in thisindustry, we won't get anywhere. Walmart,of course, is not the only grocer in thisindustry, but all grocers are taking theircues from the -- from America's largestgrocer, Walmart.

In competition we all know theword monopoly, the control of whenever onesupplier has a grip on the industry. But Iwant us to learn a new word today. It'smonopsony. Monopsony is the tyranny of theretailer when all roads and all productgoes to one place. And that's Walmart.

We have to do something aboutthis because until we do something aboutWalmart its pressures on agriculturemargins, we really won't get anywhere at

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all. For our people, for my members and myindustry, we can't make a living wage untilWalmart is able to pay the companies more.It's just a fact, it's reality. There's somuch pressure on margins that everybody isgetting -- is getting squeezed. And forour folks, Black, White, Hispanic, justdoing their best to make a living wage,that will never get any better until we getsome improvements in the way that Walmarthas a grip on the industry.

So I'm here today on behalf of200,000 poultry workers or more. Please dosomething to put real competition in retailso we can all survive and thrive.

Thank you.MR. ANDY STONE: Hello. My name

is Andy Stone, I'm from Mississippi. I'vegot a couple of comments to make on somestuff I heard here today before I getstarted reading my statement.

One of the things that wasmentioned here today was communication was

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a problem in the industry. I can assureyou not. I've had a lot of communicationwith my integrator, sometimes at armslength, sometimes nose length, nothingchanged when I left.

And y'all's challenge here todayis listen to us communicate to y'all, butif y'all do like the integrator, when Ileave, if y'all don't anything, we're notany better today than we were yesterday.

When I started growing chickensin 1995 I bought land and moved 60 milesfrom where I grew up. I moved to thebroiler capitol of my state.

I did this thinking that I had a-- that I had a reason -- that if I had areason to switch from one integrator toanother I could. After a few months intothe business I realized that theintegrators have an unwritten pact withtheir sister integrators, "You don't takeour growers and we won't take yours".

I built three modern houses,

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equipped it with all the bells and whistlesavailable and approved by the integrator.I had a 15-year note and a $300,000 loan,but my contract was good for one year.

I remember expressing my concernto a company representative and being told,"Don't worry about that, we will alwaysneed chickens, that's just how things aredone". Six months into my first year myrepresentative came out and said that thecompany was offering a raise. I said,"Wow, that's good. Six months into thebusiness and already going to give me araise".

However, there was a smallstipulation attached to this raise. To getthe raise, I had -- I had to add equipmentto my houses.

I told the representative, "Idon't want to add equipment to my houses,they're new". He said, "Fine. If youdon't add the equipment, you won't qualifyfor the raise". So I added the equipment.

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My problem is that there is noguarantee that my integrator will continueto contract with me. As a result, raisingchickens involves a tremendous --tremendous sense of insecurity.

This past February I received aletter from my integrator stating, and Iquote, "If you fail to provide the properenvironment, we may not be in a position toplace birds in your care in the future".

I received this letter because myservice representatives noticed severalblind birds on my farm. At the time of theletter my overall ranking was in the top14%.

Since that time, overall rankinghas climbed and put me in the top 10% ofthe company, yet I have to wonder from oneflock to the next if my company will be ina position to put birds in my care.

This insecurity hangs over myhead each day that grow chickens. You canargue this and say no one's job is secure

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in today's economy, but the situation isnot the same. Your job is a job. My jobis a job with a huge debt attached to it.With my debt load, coupled with my standingin the company, I should not have to worryabout the company being in a position toplace birds in my care.

The situation in contract poultrygrowing is out of control. The companieshave so much power the growers always endup at a disadvantage. It's time for thegovernment to step up and rein in thesecompanies so that growers are treated morefairly. That's why the hearing today is soimportant, but a hearing isn't enough. Weneed the USDA and the Department of Justiceto stop poultry companies from requiringgrowers to install expensive upgrades inthe poultry houses at their own expense.

And Congress should stop poultrycompanies from cancelling growers contractswithout adequate cause unless theyreimburse the growers for the investments

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they've made to service the contract.Thank y'all.MR. BRUCE FAULT: My name is

Bruce Fault. I'm from Fairmont, NorthCarolina. And thank you for thisopportunity to speak with you.

In an effort to remain within thetime allotted me, I would like to addressthe quality of birds that are supplied tome by my integrator.

In my experience of 16 years, ifI am supplied with a good quality input Iam able to grow a good quality chicken. Ifthe quality of the chicks is poor, we areunable to produce enough weight to pay thebills. We work harder with a poor flockthan we do with a good flock.

Under the current ranking systemthis can significantly -- significantlyimpact our overall income. The rankingsystem is just unfair and needs to becorrected immediately. I would like to seethe USDA, along with the DOJ, use the tools

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already available to them to stop thisunfair pay system immediately.

Thank you.SHEILA: My name is Sheila. I

would like to say that we really enjoy thechicken business and the company we workfor, but we would like to see a few changesto be made. We would like the rankingsystem to be different because of theunfairness of it. Your ranking depends onthe quality of chicks, age of your houses,houses being premium or not. We cannotcontrol the quality of chicks we getbecause of such things as diseases, thehandling of the eggs and the delivery ofthe chicks. Things can go wrong not beingthere on the spot, but at the end of batchwe are asked what went wrong, why doescertain things happen such as the chicksdid not grow, they did not put on weight orthey lost their life.

And then it starts, you need toupgrade to premium so you can do better.

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We tried to explain upgrades cost money,which we do not have. And their solutionto the upgrade is that you will get theincentive pay, which is a half cent moreper pound, which will not pay the loanback, for the upgrades, in a reasonableamount of time.

And with chicks being thecompany's, we would like to see the companycontribute more than just two incentivechecks per year for the propane, which isgreatly appreciated, if fall in the righttime frame.

The farmer has to take care ofthe litter. And we have to do the PLT, thePWT, the sawdust and light bulbs except fortwo loads per house per year. Theutilities, such as gas, propane, diesel,electricity, water, supplies andmaintenance. It would be nice if thecompany would help more and give a cost ofliving raise since we have not had a raisein about three years or more, but that does

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not stop the rising prices of the gas andthe diesel, propane, the electricity andsupplies.

My husband and I have had to goto our banker several times to try to get asolution to keep paying our loan and ourbills from batch to batch. And the bankerhas said to us he does not know how we havesurvived and how we are making it. Now weare trying to reduce our loan just to makeit. And we are trying to -- just trying topay our bills and the credit cards off fromthe propane.

Again, I would like to stress asto how you much we enjoy the chickenbusiness and we would like to see the USDAand the Department of Justice declare theranking system as an unfair system and tostop poultry companies from requiringgrowers to install expensive upgrades intheir poultry houses at their own -- at ourexpense.

MR. JAMES SHACKLEFORD: Yes. My

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name is James Shackleford and I'm hererepresenting RWDSU Workers of America. Andit's an honor to be here today before you.

You know, after working 18 yearsin a poultry facility, poultry plant,chicken plant, you know, and the thingsthat you see go on and people talking aboutit's not enough, you're not making this,you're not making this. It's just ablessing for me to be here to see bothsides of it because I never knew, you know,this side of it.

I was granted to be arepresentative -- a union representativethree years ago and now I see the otherside. And that's why I'm here today.

And it's not about I, I, I, it'swe, it's a team thing. It's no I in teambecause you have the growers, you have theproducers, you have the packers, you havethe laborers. And the laborers, you know,I come to stand and look out for thelaborers today because without the laborers

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you have -- you have no -- no product. Imean, you know, the worker they -- they putit on the market.

Also consumers, all of us are.I just left a restaurant just a

minute ago and they couldn't keep enoughoff it on the bar, you know. So it's notshortage of it, we've just got to figureout and get an understanding of where --where the monies -- the monies -- you know,to fairly distribute the monies, you know.

I'm here today to stand and lookout for -- for my workers because withoutit, you know, you're not going to have -- Iheard a guy say today about vision for yourchild, you know, the grower, I understandthat. But also the worker have a visionalso. And their vision is to want theirkids to work in a poultry plant and make adecent living. And, you know, afterworking 30 years in a poultry plant, leavewith a decent pension where you can enjoy adecent life, but not to automatically write

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the worker off because the worker do playan important part also.

So I just -- I pray that Godbless the producer and God bless the packerbecause when you guys get together and youcan come together in -- in peace, it makesit great for the worker.

Thank you.MR. TOMMY HINES: My name is

Tommy Hines. I'd like to comment on thesystemic problem that the poultry industryhas within intimidation to the growers.

I've spoken to numerous growersabout attending this meeting, but most ofthem were afraid to come for fear ofretribution from their poultry company.

As growers we have investedeverything we own in this business. Theindustry does not treat the grower as acontractual partner with the company, weare merely someone hired to take care ofthe birds for them. You have to do as youare told or you could be refused placement

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of birds or could face a drop in the numberof birds places or worse.

We need there to be moreoversight from the USDA, Department ofJustice or help from Congress and moreenforcement of the Packers and StockyardAct. There is a lack of competition fromthe companies for the growers in businessnow and, therefore, no incentive to changethe behavior towards the grower. Thereshould be mutual give and take and mutualrespect as business partners.

I'd like to say thanks to thegrowers here today for taking thisopportunity to show support for thisworkshop and a chance to be counted and ourhope to change this industry.

Thank you.MR. STEVE ETKA: I'm Steve Etka.

I'm Legislative Coordinator for theCampaign for Contract Agriculture Reform.

Poultry is arguably the mostbroken of agricultural markets where the

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processor sector has such total dominationthat producers are coerced, not only tosign one-sided take or leave it contracts,but also to borrow as much as a milliondollars to build facilities on their ownfarms for the right to grow the company'schickens with merely a one flock,seven-week guarantee of payment.

And the payment, itself, oftenrepresents a negative return on investment.

To anyone hearing this it wouldsound like one of the worse investmentspossible and anyone would be foolish tofall into such deal, but the growers thatget sucked into the systems are not stupid,far from it.

For a poultry grower the cyclebegins with deception about the incomestream a grower will enjoy if they buildthe expensive chicken houses and signed thecontract. But the rosy plans of income arenever put into writing, so there's no wayto enforce the promise -- the promises.

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The contracts themselves are quite anotherstory, but once the grower bites the hookand goes deep into debt they start a cycleof debt burden from which it is verydifficult to escape.

The attention of USDA and DOJthat you all are giving to this issue todayis quite historic. And I applaud bothagencies for hosting this discussion andfor asking the right questions. But thisprocess will be meaningless unless itushers in an era of aggressive enforcement.Both the Packers and Stockyards Act, aswell as the DOJ Antitrust authorities, torestore competition and fairness to thepoultry sector. Though not perfect, thesestatutes are very strong and the failure toenforcement by your predecessors has beennothing short of shameless.

In closing, it's important tomention that the growers who are speakinghere today do so at their own risk. Andyou've heard a lot about that. The threat

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of retaliation for a grower speaking outpublicly is well documented. And even inthe last 48 hours we've had growers whohave been threatened not to attend thismeeting and not to speak out. So for everygrower here today, there are many otherswho have stayed home for fear ofretaliation. And that is more than just acommunication problem.

So I strongly urge both agenciesto do everything in your power to protectthose growers here today from retaliationand to take it the aggressive enforcementaction to bring some balance of marketpower to the poultry sector.

Thanks.MR. B. J. HYDE: Hi, I'm B. J.

Hyde. I just wanted to touch on how we getpaid. We get paid by a feed conversion,the amount of feed it takes to get thebirds to a certain weight. The problemwith that is the feed gets manipulated alot. For example, during the wintertime, a

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lot of times they'll put this corn mash init, instead of feed grain that they get outwhiskey bales instead of corn, you know,should be in it. And we have no controlover that whatsoever. It's -- it's justabsolutely -- the feed conversion is wherethey want it. I mean, it's -- we havenothing to say about it.

I also want to touch on some ofthese upgrades that they make you do. Theyalso want you to use certain vendors andsuch as that, they won't accept anybodyelse. So they kind of manipulate us thatway, too.

That's all I've got to say.Thank you.MR. OMAR HOLCOMB: Hi, my name is

Omar Holcomb. I live in South MarshallCounty. And I want -- two things I want totalk to you about. One is the politicalramifications that are used in chickens.And the other is a little anecdote thathappened to me recently.

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Since I've been doing this for 17years chickens has been used as -- has beena -- been used in politics. The first timewas in the '90's when the steel imports forRussia were -- were -- protections, trades,were put on there. And -- and several shiploads of chickens had to turn around andcome home from Russia.

And because somebody isprotecting one industry, the farmingindustry takes it. And recently the --there was protection put on tires fromChina. And China put -- turned around onchickens and stopped it. So our industryis being used as a, if you want, apolitical football. And it's a two billionindustry in Alabama. And I doubt if thetire industry in Alabama is a two billion,but it's being used that way.

The second is a little anecdotethat happened to me two weeks agoyesterday. As I had my chickens -- thesegrowers will relate to this. I had my feed

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up, chickens all ready, the time came, thecatchers all showed up and there we satbecause there was a bomb threat at bothprocessing plants. So we sit there forabout six hours. And I'm talking to fieldrep, who's really been good to me.

She said, "Okay, they'll justgive you an hour each hour you wait, plus20%".I said, "Okay, what's our options"?

"Well, you can wait another sixor seven hours, they'll come back at oneo'clock in the morning.

By then my birds will have beenoff feed 18 to 20 hours before they pickthem up. That means another six hoursbefore they process them, or, said, "We cango in there and lower all the equipment,see if we can get some feed out here", and-- because I was totally out of feed, "Andthen we can raise -- and then we can raiseit all up and then process them".

Okay. We'll just catch them atone o'clock in the morning. That's what we

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both decided.Well, I called them a few days

later. "Well, what did they decide to do"?"You competed with everybody else", justlike that. They lied to me just straightto my face. I had to compete with them.

And that wasn't quite fair,nobody on Monday, Tuesday or Wednesday orFriday had to wait for bomb threats toclear out. Now, I can live with that, butI don't like to be lied to.

So thank you very much.MR. TONY GOOLSBY: Thank you. I

appreciate this opportunity to get toaddress this -- this forum. I thank Godfor America and I thank God for being bornan American. And I just praise God thatI'll die as an American.

I was born in a little house on afarm in 1950, delivered by a midwife. Idon't know how old I was before I ever seenmy first doctor. I've lived on a farm allmy life. All my ancestors were farmers.

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And we go back before the Civil War. Someof my ancestors was here before the Whiteman got here.

In 1997 there was a farm came upfor sale, a hundred and five acre farmclose my mother and daddy's homesteadthere. I wanted that hundred and fiveacres so bad, but I couldn't figure out away to buy it.

I had a pretty nice little homeand 20 acres down at Rainesville, Alabama.And this company named Cook Poultry movedinto the area and announced they werebuilding a new poultry breeder, hatcheryand all that kind of stuff. And they werewanting people to -- growers -- wanting newgrowers, sign contracts and build houses.

I talked to my banker and Italked to my wife. And my banker said,"Yeah, we can go with you on it if that'swhat you want to do". So in 1998 westarted the loan process. She and I soldeverything we had. Took our savings. We

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invested probably a hundred and fifty to ahundred and seventy-five thousand of ourmoney. We borrowed $600,000 from the bankthat was guaranteed by the USDA. And thatguarantee was -- had an insurance premiumon it that I paid thousands of dollars for-- for that guarantee.

Okay. In a few years into mycontract with Cook Poultry they delivered anew set of hens to my farm. Later on thatweek they came in with a new contract. Andthey said, "Mr. Goolsby, we want you tosign this new contract".

And I said, "Well, I -- we've gota contract".

"No, we need you to sign this newone".

This is in 2002. And I had acontract that was still in effect. Had abrand new set of hens in these houses thatwas the top of the line, the best set ofhen houses in the area. And I said, "Well,I don't -- I don't understand. I don't see

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why that you want me to sign a new contractwhen -- when we're under contract with younow".

"Well, that's just the way it is.We want you to sign this new contract".

I said, "Well, I just -- I thinkI'll just go with the one I've got". Andlike Mr. Wooten earlier in the day had said-- I'm from the same county he's from.There's five different integrators in thatarea up there, you'd think there would be alot of competition. I had the best set ofhouses in the country. I told them, "I'lljust go with this set of hens and I'll --and I'll see if I can find me a contractwith another integrator".

They said, "No, you can't dothat. You either sign this contract orwe're going to come pick these hens up".

Now, these hens is already on thefarm, done been there a week or two.

And I said, "Well, you can't dothat, we've got a contract, you signed it

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and I signed it and it's a legal bindingcontract, you can't do that".

"If you don't sign this newcontract, we're going to pick them hens up.We'll be here tomorrow morning at sixo'clock to pick them up".

The next morning at six o'clock,that was on a Wednesday, I was sitting inthe driveway when they pulled in and Isaid, "You need to turn around and go backbecause you're not getting these hens.I've got a contract with you. And it's alegal binding contract. I'm going to holdyou to it, you're not getting thesechickens". And, so, they left and theywent back.

On Thursday they had nine lawyersin the judge's office in the De Kalb CountyCourthouse behind closed doors. And theygot Circuit Judge Randell Cole to issuethem a writ of seizure notice against mewithout my knowledge, without myrepresentation, without any -- any

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opportunity for me to give my side to thejudge to show him my contract or anything.He issued them a writ of seizure. He senta copy to the District Attorney's office.He sent a copy to the Sheriff's office onFriday. I didn't know the first thingabout it.

Monday morning, about daylight, adeputy knocked on my door. And I'd donebeen up since about 3:30 because of --you've got to get up early and go feed thechickens, make sure the thing is going. SoI was sitting there drinking some coffee.

They -- they hand me this writ ofseizure. And they say, "Tony, the judgehas ordered us to come out here and seethat the chicken company gets those hensout of your houses".

I said, "How can he do that? We-- I haven't been notified, I haven't had ahearing. I've got a contract. How can hedo that"?

"Well, we're just doing our job".

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"Well, okay".They go to chicken houses. And I

get in my truck and I go down there.There's things that needs to be done whenyou're going to catch chickens. You've gotto get your waters up and stuff like that.

And I had read every word of thewrit of seizure and it didn't say anythingabout me not going to the chicken houses.Me -- it just said I wasn't to interferewith them catching them.

I go down there and I raised mywaters. And I tried to get my equipmentready. And the deputies come. And I comeout of the chicken houses there.

And they walk up to me and say,"What are you doing down here"?

I said, "I'm trying to take careof my equipment I've got $500,000 in".

And they said, "Well, you're notsuppose to be there".

And, so, I said, "Well, alright,I'll go home".

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Well, they had the cars pulled inbehind my truck and had me blocked. Andthey said, "No, you're going to stay hereuntil the chief deputy and the investigatorgets up here".

I said "No, if you'll just moveyour cars, I'll go to the house and get outof your way".

"No, you're going to stay here".I hadn't broke any law. I hadn't

-- you know, I had threatened anybody,anything.

So I get in my truck, it's coldweather. I'd just had an accident about amonth before, broke my back, broke all myribs, busted my skull. I was just nearly adead man. Barely could walk. Sitting inmy truck with the heater on and the otherpolice come up.

And they jerked the door open anddragged me out of my truck and downed meand handcuffed me and throwed me in apolice car and carried me to jail. Kept me

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in jail all day, all night. Didn't bookme, didn't fingerprint me or nothing untilthe next morning about four o'clock, 4:30in the morning.

They came and got me andfingerprinted me and charged me withinterference with a government operation,put a $500 bond, and released me on my ownrecognizance. Told me I could call my wifeto come get me.

I went home and took a shower andI drunk come coffee, made a few phonecalls, and I went Fort Payne. Went to mylawyer's office and gave her $5,000 tostart defending me on them arresting me andeverything.

Went to the District Attorney'soffice, he wouldn't talk to me. Went tothe Judge's office, he wouldn't talk to me.Went to the Sheriff's office, he wouldn'ttalk to me.

I go back home. I get on thephone and I called a man that was here

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earlier today, I wished he was still here,Mr. Ron Sparks, the Commissioner ofAgriculture. And he knows me and I knowhim. And I told him what had happened.And he said, "Tony, I'll" -- this wasTuesday about dinner time, a little afterdinner.

He said, "Tony, I'll be there thefirst thing tomorrow morning and we'regoing to check into this and we're going todo something about this".

MR. FERRELL: Sir, if you couldjust sum it up.

MR. GOOLSBY: Tomorrow morningnever came. I called two or three dayslater they let me talk to his assistant.His assistant said, "Mr. Goolsby, I assureyou we're looking into this, you will hearfrom us".

That was in 2002. And I've neverheard from them.

The poultry company sued me, CookFoods sued me and Santa Rosa Farms for 4.4

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million dollars for forcing them intotaking such a drastic action.

We went to court. And the juryawarded me a verdict just like that(snapping fingers). The Judge throwed theverdict out and ruled in the chickencompany's favor.

I -- I appealed it down to theState Supreme Court. And the State SupremeCourt throwed it out, ruled in the chickencompany's favor, but there was one legalpoint that I had that they couldn't back upon if the jury gave me a verdict, afavorable verdict. I had the right to comeback to county court in De Kalb County andstart all over again. And, so, we didthat.

Cook finally settled with us. Wehad done sold most of our farm. Done soldour chicken houses to keep our home. Wehad to sell just nearly everything we hadso we'd have a home to live in.

So that's what Cook Poultry done

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to me. That's a personal -- all these ispersonal stories that's been told today andeveryone of them is true. Every wordthat's been said today is true.

This antitrust thing, theAttorney General, the USDA, you've got thepower, but these lobbyists for theseintegrators and these other big, hugeconglomerates that are buying thelegislation and buying the actions --

MR. STALLINGS: We've got someother people who need to talk, your twominutes --

AUDIENCE: Let him talk, let himtalk. Let him talk. Let him talk.

MR. GOOLSBY: I'm proud to be anAmerican. You know, I love this country,but we need our government to step up forus and quit -- quit working for thelobbyists in Washington and down here inMontgomery and start working for thepeople. Our Constitution says, "We thepeople".

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I thank you for the opportunityto speak. And I'm sorry for -- for myemotions, I apologize. Thank you.

MR. STALLINGS: Thank you.MR.FERRELL: I think for the

remaining four folks, if you want to goahead and give your comments, and thenwe'll go to the next panel. And then we'llpick it up with more comments after that.

Thank you. Proceed.MR. GARY KUSHNER: Thank you for

this opportunity.My name is Gary Kushner. And I

serve as General Counsel to the NationalChicken Counsel, which is the nationaltrade association representing a lot ofthose bad guys we've just heard about. Iguess this is one of those days wheretiming is everything.

In fact, I had hesitated to riseto the microphone during today's session.Believe it or not, I felt it important thatthe many fine people who left their farms,

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traveled long distances to come and sharetheir grievances deserved to have thatopportunity.

And it's hard not to be moved bythe passion with which they tell theirpersonal stories. But I felt it important,particularly hearing Mr. Goolsby talk aboutpersonal stories, to offer the perspectiveof a lawyer, at least, who represents theintegrated poultry industry.

And I only want to make onepoint, and it is just one point, and it's alegal point because that what theseworkshops largely are about.

And that is that I don't know thefacts of any of the specific allegationsthat we've heard today. And it may well bethat there are contracts that are unfair,that are -- that there are contracts ofadhesion as a lawyer would call them. Thatthere are contracts that have beenbreached, that may well be the case.

But I've yet to hear anything all

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day, other than the word competition, thatlinks those contracts and those grievancesthat these fine people have shared with usto anti-competitive conduct.

And, certainly, you folks atGIPSA and at the Department of Justice areaware that the law is well settled. EightFederal Circuit Courts have made very clearthat in order to bring a case under thePackers and Stockyards Act alleging unfairor unjustly discriminatory or deceptivepractices, there must be a showing ofadverse effect on competition.

That's not to say there are noremedies for ill will or for a particularpersonal experience that may not have beenhandled properly that may be unjust, thatmay represent a breach of contract. Wehave a long and large body of competent --contract law well settled in common law andin many states did provide ample remedy.

And where there is true and --and demonstrated anti-competitive activity,

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there is the Packers and Stockyards Act aswell as the -- the number of laws thatAssistant Attorney General Varney touchedupon earlier today.

So I just wanted to make thatclear that it's not to belittle any of thestories that we're told today, they areheartfelt and heartwarming, but to justmake clear with purpose, as I understand itof these workshops has been, and that's todiscuss competition and the laws underwhich competition is regulated in theUnited States.

Thank you very much.MR. DONALD WALKER: I'm Donald

Walker from Oxford, Alabama. I'd like totake this time and to talk about somethingthat's very dear to me. Valerie helped mewith this comment last night, but, Ms.Valerie, I'm not going to do this, I'mgoing to shoot from the heart.

What Mr. Goolsby just said,folks, is happening to a lot of people.

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This room is full of people that'sbleeding, not from the heart, but from thehip and it's time this was corrected. Theintegrator has run over growers for yearsand years.

I've been in the poultry businessever since I was eight years old. I'vegrown up in the poultry business. I'vebeen in it since '90 on my own. But it'stime that things changed, not just here inAlabama. We've got people all over theSoutheast here that's hurting. And it'stime that something happened, some way,somehow, things has got to change or theThird World is going to feed us.

This box lunch we got out therefor seven dollars and a half, may cost us$20 ten years down the road if something isnot changed, people.

Young people not wanting to getin the chicken growing end. And I've gottwo children and I wouldn't advise eitherone of them to do it. They've seen what

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it's like, they don't -- they don't wantit. Mother and daddy is having to dealwith it, so they don't want any part of it.

But, again, I just thank you forthe opportunity to be here and I appreciatethis time.

HILDE STEFFEY: My name is HildeSteffey. And I'm here today representingFarm Aid, which is the national nonprofitorganization working with family farmers tostay on their land and to thrive.

At Farm Aid we hear from familyfarmers every day. We've operated a 1-800hotline since our beginning in 1985. Andlast year we had just under 1,000 contacts.

What we're hearing from poultrygrowers has us deeply worried. Nobodyknows more about the problems ofconcentration in the poultry sector thanfamily farmers.

But you may notice the smallerturnout at this workshop and smaller linesat other hearings you hold this year.

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Family farmers are fearful of retaliationfrom integrators if they comment and forvery good reasons.

We've heard troubling storiesabout what happens when a farmer speaks outagainst unfair, one-sided and deceptivecontracts, many of the same stories you'rehearing today. Farmers are provided withpoor quality feed or sick chicks that diewithin days.

Poultry companies halt or delaythe delivery of new birds. Farmers arerequired to make expensive upgrades.They're borrowing without faircompensation, or their contracts aresuddenly drop altogether.

The lack of antitrust enforcementin recent decades has been responsible forthe misguided trajectory and limitedbalance of our current food system.

The result has been a severelyconcentrated marketplace in which power andprofit are limited to a few at the expense

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of countless, hardworking family farmerswho ask nothing more than a level playingfield.

We regret that recentadministrations have turned a blind eye tothe very real threat of corporateconcentration to family farm livelihoods tothese our national food security.

We applaud this administration'shistoric commitment to address issues ofcompetition and concentration inagriculture. And we urge you to make fulluse of experience and wisdom of the familyfarmers you're hearing from today. Theyare very courageous to be here speaking outagainst a contracting system that is notjust unfair, but plain wrong. Please don'tlet them down.

Thank you.MR. TERRY TUCKER: My name is

Terry Tucker. I'm proud to say that I amfourth generation farmer in the communitythat I live in. And I hope it don't end

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with me as far as my family is concerned.I've been in the poultry business for 18years.

We did quite well in the poultrybusiness, but, you know, I also know thedifferent stories and I know themanipulations that go on as well in thepoultry business. I saw my neighbors, youknow, lose their farms. I saw both spouseshaving to go out and take other jobs justto make their payments. And, you know, asAmericans we pride ourself with equality,you know. We'll send our -- our children,our daughters, our sons, our husbands, ourwives off to war to fight for thisequality.

And this ranking system that wehave in the poultry industry is ridiculous,you know. You've heard a whole differentthings that's going on in this rankingsystem, you know, from bird delivery tofeed and several others. And I want toaddress two of those.

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And I want to address the birddelivery. One of the things is the factthat, you know, we don't have any controlover that if -- I raise straight run birds.And that means that's mixture between maleand female birds.

Well, if I get more male birds onmy farm and Joe down the road, you know,gets more females, guess who's going to --if he's -- if he's a halfway decent poultryfarmer and sees after his chickens, I'mgoing to beat him out because I got the --I got the more dominant bird, I got themale bird. Now, how fair is that?

Feed delivery, I want to addressthat just for a minute, you know. If I runout of feed during the course of a grow outand let's just say -- I'm going to throw anumber out there. Let's say I'm out offeed for 48 hours. Well, let's say Joedown the road, he's not out of feed, we'reselling together under this so-called fairranking system, that's what the integrators

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say, we know better. Guess who's going tobeat me out? Joe is going to do it.

We really need your help from theJustice Department and the Department ofAgriculture to look into this rankingsystem because it's killing us. Yeah, I'vemade money in the poultry business, I can'tstand here and tell you that I haven't, butI've also lost money due to this rankingsystem.

So, please, we need your help.Thank you.MR. FERRELL: I think we're going

to go ahead and just take one more comment.And then we'll go to the next panel andwe'll get to that panel; then we'll pick upwith more comments then.

So if there's still people thatwould like to provide comments, we'll allowmore time to do that later on in the day.

MR. BRAD CAINEY: Thank you fortaking my comments. My name is BradCainey. I'm from Nashville, Tennessee.

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And thank you to Farm Aid who informed meabout these hearings.

My reason for coming down fromNashville today is because I feel -- I haveto step off topic, I'm not a chickenfarmer, I'm a chicken eater. I believe thehealth care crisis will not be solved untilwe address ag policy and consumerpreferences.

David Kessler, the former of headthe FDA, says in his book, The End of Over

Eating, it took 30 years to challenge andchange the social stigma of cigarettesmoking. He estimates that one-quarter ofthe population, 75 million Americans ormore, are addicted to food. We need tochange this epidemic of obesity. It isnational security.

In this past decade lifeexpectancy dropped. The processed foodpart of our western diet is shorteninglives. According to Michael Pollen fooduse to be 18% of household expenses. It is

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now at 8 or 9%, thank God, but at whatprice is this food so cheap?

Health care and health insurance,in the same period, went from 10 to 18%.Again, national security.

The medical term for the lost offarmers is called a bleed out. One millionfarmers is not safe, two million farmers issafer. We need to grow more farmers.

If the trend continues tourbanization, let's bring production tourban areas.

Finally, on the subject ofjustice, criminal, not civil penaltiesshould be applied to all polluters. Andthis should reach international law.

Thank you.UNINDENTIFIED SPEAKER: I've been

in the chicken business some 15 years.I've watched the chicken business andintegrators evolve to a level that theaverage farmer can no longer sustain aliving at, nor can we carry the rest as

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we're asked to carry.15 years ago growers only had a

7-year mortgage on new houses. Now, newhouses take 15 to 20 years to pay off withvery minimal base rate increase. I don'tknow if these farmers are able to pay offthese houses.

I just want to tell my story.There was a hundred and fifty growersinvolved in a regional shut down. As wewas growers, we was ranked in the top bigbird division of Pilgrim Pride.

February 27th we got announcementthat our plant was going to be closed. ByMay all birds was gone. 600 houses sittingempty. In those houses who's going to feedour children?

I would say shut down with noreflection to the growers and producers.We were told by Pilgrim staff we was thebest at what we did. Our community wasdesiccated and most growers was heavilyindebted, owe $200,000. And we had growers

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with new houses and with only three growouts.

900 jobs have been lost. Most ofour houses have been -- I mean cost ofupgrades. Our local businesses aresuffering because of loss of income inlocal economy. A hundred and six milliondollars jerked out of our economy.

All the equity each farm hasworked so hard to build overnight with ourhouse has turned into huge liabilities.Paying insurance, taxes, no birds.

Several -- several growers werenot able to survive with such a hit. Andthe uncertainty of our future most of ourlocal farmers have managed to keep creditwith our local suppliers and banks.

Now, we are asked to restart thisprocess and put our integrator's balancesheets back into the green. This processof restarting our houses has cost usunnecessary thousands of dollars; however,we do have another chance now. Our plant

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will reopen. Almost a year and a half haspast. We will miss two years of incomewhere the interest has not -- has stopped-- has not stopped accruing.

I do give Don Jackson, the CEO ofPilgrim's Pride, an enormous amount ofcredit. He managed to do the unthinkableby saving Pilgrim's Pride through one ofthe gloomiest times of financial ruin.

I would also like to take time togive our local and state leaders credit.They worked with us around the clock andour CEO to put a feasible plans togetherwhich led to the reopening of our plant.

But the balance of my future isstill, and my grower friends, is in thehands of Pilgrim's. I would like to ask aseries of questions that will hopefullyensure such trying times never occur in mylifetime, my son's lifetime or futuregenerations.

How can my fellow growers beprotected from such an event ever happening

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again? Should we be paid for down time orshould we get start up money? We are ateam, integrators and growers and poultryworkers, too. Should we have longercontracts? Should we have guaranteed loansfrom integrators?

Now, you tell me the industryneeds, it just not one company's problem,but it's the whole industry's problem thatneeds fixing.

We thank you for your time. Andwe thank you for the opportunity to growbirds again on our farms. We hope thechanges will make a brighter future for allthe growers and integrators. We are oneteam. What can you do for us growers? Weare the South Georgia Division of Pilgrim'sPride, Douglas, Georgia, the best of thebest.

MR. FERRELL: If our panelistscan come up to the table and we will getstarted.

MR. FAMILANT: Hi everybody. My

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name is Norman Familant. I'm the Chief ofthe Economic Section at the AntitrustDivision of Justice that works on mostagriculture matters.

And we're going to have a veryfast paced discussion here among thepanelists. We're going to cover a lot ofissues. They're going to be many of thesame issues that we've been discussing --you've a been discussing so far today.That's no surprise because those are theissues on everybody's mind, but I think itwill be interesting to -- to see -- to getthe perspective of this panel.

During the -- during this panelwe're going to -- we have a plan, we hopeit will work. If you have questions, writethem down on the index cards that wereavailable when you came in and pass themoff to the sides where many of thevolunteers in the jackets, and the burgundyoutfits, will collect them and bring themup.

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I'll try to work them in. Iwon't be able to work all of them. And I'mnot sure how much time we'll have left atthe end. But the -- but, as you've beentold before, there is an open testimonyhour directly after us. So, hopefully, youcan pose your question then.

Let me -- we -- we -- we have avery capable and interesting panel with a-- from a very wide array of backgrounds.And, so, let me introduce them. I believethey're all in alphabetical order here.

Benny Bishop currently serves aschief operations officer for Peco Foods inTuscaloosa, Alabama. He grew up on apoultry and row crop farm. And is agraduate of Jacksonville State Universitywith a BS degree in businessadministration. Benny has worked full timein all areas of the poultry industry for 40years.

He has served on the boards ofthe Alabama Poultry Association, the

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Arkansas Poultry Federation and is the pastpresident of the Mississippi PoultryAssociation.

Let's see. Sorry for -- becausewe're in the order here.

Max Carnes runs the Carnes Farmsin Baldwin, Georgia. His growing businessstarted in 1977 when he built three houses.He has grown that business to 16 housesnow. That entire time he had contractedwith Fieldale Farms. He's a graduate ofthe University of Georgia. He has twoother business interests. He's in thepaving business and on the ExecutiveCommittee of the Georgia HighwayContractors Association of which he is thepast president. He -- he also has aninterest in Zaxby's Food Operations inNorth Carolina, but Zaxby does not buy itsbroilers from Fieldale Farms.

Let's see. Next we haveProfessor Michael Dicks. Doctor Mike Dickswas raised in rural Orange County,

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California. He began his agriculturalcareer working in the vegetable fields andthe ranches of the Irvine Company. He wasactive in FFA and Ag Explorers. Heobtained degrees in biochemistry and animalscience from California Polytechnic StateUniversity in 1975.

Doctor Dicks served in Kenya forthree and a half years with the U. S. PeaceCorps. He obtained his Master's and hisDoctorate in agricultural economics,specializing in natural resource policy,from the University of Missouri. He hasworked with USDA's Economic ResearchService in Washington, D. C. And iscurrently at Oklahoma State University inthe area of agricultural policy.

Doctor Dicks has analyzedcontracts, production records and financialinformation for hundreds of poultry growersin eastern Oklahoma and western Arkansas.

And has measured the economicimpact of the poultry industry on a local,

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regional and state economies. He has alarge number of professional publications.He currently operates a hundred head Anguscow calf operation. And is a member ofnumerous community, church and socialorganizations.

Number -- let's see -- sorry.Next is John Ingrum.

John Ingrum is from Forest,Mississippi. He's currently a poultrygrower for Cook Foods of Mississippi. Healso builds poultry facilities. He served10 years in the U. S. Army on active dutyand six years with the Scott CountySheriff's Department. He also worked as abusiness manager at Killian's Motors,Incorporated, Forest, Mississippi, for12 years.

Let's see. Next to him -- I'msorry for the shuffling around here -- isCindy Johnson.

Cindy Johnson had an earlyexposure to the poultry industry and a

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grasp of how the industry works through herfather who has a PhD in poultry economics.She majored in agriculture at theUniversity of Georgia and graduated fromthe University of Georgia Law School in1982.

After working in Valdosta for twoyears, Cindy moved with her husband and sonto Dalton, Georgia. She was offered a jobas an appellate lawyer with the insurancedefense firm of Kenny and Kim, where sheremained for six years. In June of 1990,she joined the law firm of Waycaster,Morris, Johnson and Dean. Since 1990,Cindy has represented hundreds of growersin state and federal courts and in pre-suitnegotiated settlements. In 2002, she lefther former firm to join her husband intheir practice in Cohutta, Georgia.

Next is Doctor Robert Taylor.Professor Taylor is the Alpha

Distinguished University Professor inAgricultural Economics and Public Policy of

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the College of Agriculture at AuburnUniversity. Prior to joining the Auburnfaculty in 1988, he held faculty positionsat the University of Illinois, Texas A&MUniversity and Montana State University.He has conducted applied research on a widevariety of topics, including marketconcentration, conservation, buyer powerand bio-energy. He's authored orco-authored five books and over 200articles -- and 200 articles and reports.And has testified before Congress onconcentration and consolidation in the foodindustry, particularly on issues in thelivestock and poultry industry.

And, finally, is Mike Weaver.Mike Weaver farms 350 acres in

Pendleton County, West Virginia. He raisesAngus beef cattle as well as broilers -- aswell as broilers for Pilgrim's Pride thatare processed at the Morefield, WestVirginia processing plant.

He started in the poultry

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business with turkeys and switched tobroilers about six years ago. His broilerfacility is comprised of two houses with94,000 birds per flock.

Mike is president of the ContractPoultry Growers Association of theVirginias. He is a retired special agentfor the U. S. Fish and Wildlife Service.He served as a board member of t heAllegheny -- Allegheny Highland Alliance,the West Virginia Special Olympics Program,the Potomac Highlands Wounded WarriorOutreach and Roritan National.

So let's go right away to our --to my first question area. And -- and I'mgoing to turn to some -- I'm going to turnto specific panelists for the firstresponses for all of these question areas.

Number one, in addressing ourtrends in poultry panel topic, we firstneed to gain some insight into key changesin poultry production and marketing overthe past decade. What changes have

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occurred in the typical initial investmentin the scale of efficient operation and thetime required for each flock to reachmaturity?

What do we know about thequantity and quality of poultry producedover the last decade and the importance ofexports?

And I'll, of course, turn toProfessor Dicks.

MR. DICKS: Thanks, Norman.It's great to be here and thank

y'all for coming. It is a great countrythat we can all come and voice our opinionsand be heard. And I hope that we -- we allare heard respectfully.

Even -- even universitypresidents -- university faculty aren't --aren't immune to being victimized or hurt,intimidated. Even this morning I've hadgroups call my dean and call my presidentof the university asking for backgroundinformation and paperwork, Freedom of

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Information Act to try to get me to ceasemy participation in these hearings. Sothose that know me know that I amun-intimidated.

Let me -- let me start by givinga few recent changes that, I think, areimportant just to give -- to give aperspective on the industry.

First of all, we -- we -- most ofknow that the new top cool cell house haslargely been adopted by the industry bythis time. It's more efficient than theothers ones, particularly in terms ofenergy efficiency, which has been atremendous help to the growers, althoughthat it is a much more expensive facility.

Sometimes -- the last estimates Ihave on that was from 2007, 2008. Thosehouses are about $225,000, which wouldinclude all the equipment necessary to runthem. That's a fairly substantialinvestment for one of those houses. AndI'm -- I'm saying the typical house is

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40 feet by 400 feet.Average farm size has increased.

We now -- in my area we're looking at aboutthree houses is the average farm size. Ithink a decade ago that was probably twohouses.

The average market age ofbroilers is 47 days, the same as it wasabout 20 years ago. The average bird todayis heavier than it was ten years ago. It'snow about 5.63 pounds compared to aboutfive -- five pounds in 2000.

Feed efficiency has increased,slightly, but that slight increase is atremendous gain in terms of profitability.It's gone from 1.92 pounds to 1. -- sorry,from 1.95 to 1.92 pounds.

On -- on farm mortality ratedropped from 5% to 4.1%, which is -- whichis fairly substantial.

And if -- you know, for acow/calf operator to get below 5% would be-- would be a real -- a real thrill.

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Post-mortem condemnation rateshave dropped from 1.22% to .87% in 2009.And, again, that -- that has some realprofit potential.

And then the last thing is onthat trend is that per capita consumptionof poultry continues to increase from about80 at the start of decade to almost 90today.

So those are the, I think, thethings that would indicate improvement inthe industry, more profitability, moreefficiency.

On the other hand there's somethings of a wider nature that I think areimportant for all us to think about. It'sbeing interesting listening to all problemstoday. And believe me, those things didn'tfall short on me. I am sensitive toagriculture producers. I -- I spend agreat deal of my time -- I -- I -- I am anagriculture producer. I'm probably out inthe countryside. I give 50 to 60 extension

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presentations a year. And I -- and I do alot of work with producers.

So hearing your stories, I assureyou that I listen very intently to thosestories. They're not much different thanthe stories I hear from cattle producers,swine producers, wheat producers, cornproducers, et cetera.

While the trends that I've toldyou indicate that there is an increase inproductivity and efficiency, these othermajor trends that I think are -- areexceedingly important. And one -- and thethings that I think you really need tothink about. And I'm sorry that Mr.Vilsack has left because some of these fallon his doorstep as we heard this morning.

One of the things that's createdsome of the problems in the industry is --is -- started in 1994 with thereorganization of USDA. When USDA wasreorganized, they took Farmer's HomeAdministration and stuck into Farms Service

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Agency. Then ASCS.That reduced the staff and also

made changes in each one of those offices.And that trend has continued. The totalnumber employes in the FSA -- in the localFSA office has -- has dwindled, as well asthe number of FSA offices.

And that means there's lesspeople to service those loans and to lookand see if those loans are -- are worthy ofbeing delivered.

Also, as you-all know, we're in afinancial situation in this country and theworld. And a lot of that has to do withcheap and easy credit policies, not onlyfrom the federal government and the FederalReserve, but on down to the local banks.And I think that's had a tremendous impacton what you're seeing in the industrytoday.

One of -- one of the largestproblems I see and I've commented on thisbefore the Senate Ag Committee in 1997, was

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the Federal Agricultural Improvement ReformAct in 1996. That -- that farm bill, asmost people call it, the Farm Bill of 1996,eliminated -- essentially eliminated farmstorage programs.

So from that time on thegovernment virtually had no more commoditystorage programs. And I insisted at thattime -- because yields in the country areincreasing at a decreasing rate andbecoming increasingly more variable whiledemand continues to increase, at some pointthat means we're going to have pricespikes.

And if you'll go back and read mytestimony, I said that within a decade whenI was asked how long it would be, I saidwithin a decade we'd see some major pricespikes in commodities. Now I missed it bya year. It was 2008 not 2007. So I missedit by a year, but it is there and it'sgoing to happen again. And some of theproblems that you're facing today and that

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are coming down on the integrators arebecause we have gotten rid of commoditypolicy and we're not -- we're not managingsupplies any longer. And, so, we're goingto see much more variation in -- in feed --feed prices. Much more volatility andprobably a continuing trend upward in thoseprices.

So, I think, you know, again,those are -- that's a -- that's a majorpolicy we're about to revisit. The currentfarm bill is probably one of the mostcomplicated instruments that I've had achance to deal with. And I've been doingit for a long time. I know Bob might wantto contact -- comment on that himself.

I think also reaching peak oil inthe last couple of years, meaning the totalamount of oil that's all out, is nevergoing to get greater. And -- and we haveno energy policy. That's had a tremendousimpact. I don't know how many people havesaid that today, that those rising propane

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prices and rising electricity prices aresqueezing profits. That's certainly thecase.

If you enter into a contract in2004 for a set price, your propane pricebetween 2004 and 2009 went up from roughlyon the retail price for the nation a dollara gallon to two and a half dollars agallon. Now, that's a tremendous squeezeon profit. And most people did have aprofitability to warrant that increase.

That's something, again, that --that falls back in the lap of Congress andthe federal government, is coming up withthat energy policy.

Finally, just one last thing. Iwant to make sure that before I -- before Iget done that today I want to -- I want totalk about this financial performancesector. That's one thing that hasn'tchanged.

You know there is, and I've hearda lot of that today. There is one thing

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that is common is agriculture, and I knowyou've all heard this. There's an idiomthat come from 50 years ago I heard when Iwas a kid, "Cash poor and asset rich".

And that literally means I've gotgreat profitability, which the U. S.Agriculture sector does. Your --yourindustry, your -- you growers, mostagriculture producers in this country havea very high profitability. I'll explainthat if you'd like. But you have a verylow dollar sales per amount of fixed assetsyou have. And that causes you to have alow return on investment.

And essentially what I'm tellingyou is, you're making good money, butyou're using it all to pay for your assets.And I think you know that. That's true forevery part of agriculture.

MR. FAMILANT: Some follow-upcomments from Max Carnes.

MR. CARNES: I'll give a shortone. Thank you. Going back -- we started

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our family in 1977. And, at that time, webuilt three houses for about $26,000 each.The last houses that we built were 500 by50. And they're approximately a hundredand seventy-five or 225,000. I can'tremember which now.

But going back over some of thechanges that we have seen through theyears. When we started out we had the oldtime eight foot drinkers that you wouldslosh out or rub out with your brush andwhatnot. And, of course, now we've gone tothe nipple drinker that's a lot moreefficient and a lot easier to operate.

Our lighting program has changeddramatically. And to begin with, we had 24hours of daylight. And now we manipulateit for the different size birds that wewant. And we -- we've gone from anincandescent bulb to a fluorescent bulb andback to an incandescent. And that willprobably change again, too.

Also, when we first started, we

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had the regular pancake brooders in themiddle of the house. And then that haschanged to a forced air heater on the sideof the house. And that has gone back now.We have a combination of the brooders andthe forced air heaters.

Of course, a cool cell is onething that I think has helped us more thananything else in the world. To be able tocool the birds, I know always before whenthe chickens got about 93 degrees you mightas well -- or the inside temperature got tobe 93 degrees, you might as well plan onstart picking up some dead birds. That hasbeen, I think, the biggest innovation that-- that we have had since I've been growingchickens.

Also, now, we have the computersthat control everything in the house, whichmakes everyone's job a whole lot easier.It's just a -- a -- a big, big help to havethat temperature change so minutely so thateverything works out well.

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The other thing that we havechanged in our houses, when we first builtour houses we had posts in the house. Allof those have been changed now and we haveall clear span houses.

So we have seen tremendous amountof innovations in the -- in the farmingindustry. And it has been a big help.It's -- it's made our job a lot easier, butyou still have to pick up those deadchickens. I can't fix that for you.

Thank you.MR. FAMILANT: Any -- any brief,

follow-up comments by any of our panelists?On this question, yeah.Everybody okay?Alright, let's go to question

two. Let's get to the contracts. We'lldeal with the compensation aspects, thatis, the tournament ranking system andrequirements for improvements in additionalinvestments and the two questions thatfollow this one.

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But, first, let's address thebasics. Although there surely is variationin the contracts, what are the keynon-compensation terms in the contract withwhich you are familiar?

What's typical -- what's thetypical term of the contract?

When there is concentration --when there is -- excuse me. When there isa contraction in the market, do theintegrators cut back on the frequency offlocks in the contracts, or do they cutback on the number of chicks placed?

And I'm going to ask Mr. Bishop.MR. BISHOP: Thank you for the

opportunity to be here and speaking onbehalf of my company Peco Foods, and alsoon behalf of the poultry industry.

The key non-compensation termsthat we have in our current contract, ofwhich I'm most familiar with, there's a --or are a long list of these things.

But, first all, we've got to

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consider the terms of broiler contracts.And it's important to keep them inperspective the nature of a processor'sbusiness. And my company is the same way.

First of all, all us, as poultryprocessors, are producing chicken productsfor, not only the U. S. food supply, butalso a global market. It's critical theseproducts be wholesome.

And, second of all, we havecustomers and markets out there that demanda specific sized bird and a uniformed bird.We can't just arbitrarily go out and growany kind -- any size bird, any kind of birdwe want to, we have to have something tomarket.

Processors like us rely onhundreds of growers to help us grow thesevarious type birds and various sizes. Thechicks that we own, of course, asprocessors, are entrusted to growers. Theyhave to properly care for them, not onlyfrom a cost competitive standpoint, but

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also from an animal welfare standpoint. Weall depend on these animals for our veryexistence.

You talk about non-compensationterms of contracts, first of all, theprocessor provides chicks, feed andmedication. The processor also providesmanagement guidelines and technical servicesupport.

The grower provides housing,equipment, labor and utilities to care forthese chicks and grow them to the properweight. The contract prohibits the growerfrom having other fowl on the farm andprohibits the growers -- grower from usingany other type feed, rodenticidespesticides, insecticides, herbicides, anykind of medication that's not provided bythe company or the processor or approved bythe processor.

The processor is looking for thatgrower's individual skills and experienceon that farm. And the contract prohibits

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any successor or reassignment of thatcontract unless approved by the processor.

The processor is also given theright to access on the grower's farm forthe purpose of inspecting the flock and thegrower's operations. The contractgenerally provides that a grower is anindependent contractor and not an employeeof the grower or the company -- theprocessor or the company.

Any veterinarian's reportsconsidering -- concerning flock health isalso available to the grower upon request.The processor agrees to pay for damage onthe farm caused by his employees. Feed andlive birds are to be weighed by bondedweigh masters. Feed trailers will besealed if requested by the grower.

Growers have the right to be amember of and participate in anyorganization or association they choose.

The contract generally hasdefault provisions with an opportunity to

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cure, in except in circumstances wherethere is serious violations that mightthreaten the processor's property, the livebirds or the processor's employees.

The second part of the question,what's a typical term of the contract. Ican only speak for our company. And I'msure it varies throughout the industry.But the terms of our contracts at Peco arefrom flock-to-flock to up to 15 years andanywhere in between. Our new housecontracts are 15 years. Contracts on olderfarms, depend on the age and condition ofhouses, and, also, some circumstancessurrounding those houses.

Some lending agencies thatfinance some of our farms dictate the lienor the terms of the contract and we abideby those. We currently grow in houses thatage from brand new to 40 years old. Theaverage age of our 1570 houses is 15 yearsold.

Our company has been in business

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for 73 years. And in the last 10 yearswe've had 749 contracts. We've terminated3% of those contracts for just cause.

The last -- the third question,when there's contrast in the market, doprocessors cut back on the frequency offlocks and contracts are then cut back onnumbers of chicks.

Again, I can only speak for ourcompany. During the recent severe marketcontractions, and there have been a few inthe last several years, Peco Foods hasattempted to manage through thesecontractions by simply cutting back thefrequency of flocks grown. That's the onlything we have done.

In an effort to mitigate theimpact of these contractions on ourgrowers, we've offered an increased outtime pay to help the growers' cash flow.

As a result of this action, ourcompany, rather than the grower, has bornethe principle brunt of these market

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contractions.Thank you.MR. FAMILANT: Mike Weaver.MR. WEAVER: There's several

different aspect of contracts that directlyaffect growers. And I'm going to try toaddress those here.

They're talking about thesenon-compensation aspects of the contract.Probably one of the most significant for usas growers is the term of the contract. Ibelieve Mr. Bishop here says that theirsflock-to-flock. And, as a general rule,from what I've seen, and I've seen manycontracts from many different companiesaround the country, flock-to-flock is aboutthe standard.

You may see on your contract,I've had one myself in the past, where itsaid the term of the contract is five yearsor ten years or 15, but in reality, that --that contract is flock-to-flock. Andbecause it also goes on to give the company

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the authority to terminate that contractwith or without cause. And they vary alittle bit on that, too.

Some of them say, however, someof them say with cause, some of them saywith or without cause.

One of the biggest problems Ithink with the poultry contracts is thatthere is no input from the growers. Wehave no say so whatsoever in that contract.As -- as all you growers know here, and I-- Mr. Bishop's company might be different,I don't know, I hope it is, but they aremore or less take it or leave it contracts.When they bring it to you, you sign it, yougrow chickens, you don't, you don't growchickens.

There's termination requirementsor stipulations in those contracts. As Ijust mentioned, capital investmentrequirements, which never used to belisted, but now, thankfully, under the 2008Farm Bill that has to be included in the

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contract. All it does, though, is tell youthat you may be required to make capitalinvestments. It doesn't say how much it'sgoing to cost you, how long it's going totake you to pay it back or how much moneyin addition they're going to give you topay you for making those capitalimprovements.

One of the -- one of the realproblems with the contracts is, and Iexpect most growers here have experiencedthis is, that it's only a contract untilthey bring you the next one, you know. Itmight say 15 years, but two months from nowthey might decide to change that contract.So they bring you a new one and you sign itor you don't grow chicks, you know. To me,that's not a contract. If get one for 10years, it should been for 10 years.

We also have no control over theage they take the bird for processing.It's up to the company. It's their -- inmy case -- in my case, I grow a four pound

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bird. And recently they've been taking ourbirds as early as 34 days. We're lucky toget a three and a half pound chicken inthat amount of time. And that loss of thatweight, we don't get paid for it, is ourloss. They don't get -- that doesn't madeup to us in anyway whatsoever.

We have -- we have no say so inthe number of breeder chickens. It saysspecifically in the contract that that --the number of birds they place on your farmis up to them. And you have nothing to sayabout it. So if they bring you 10,000chickens or they bring you 2,000 chickens,it's completely up to the company.

The transferability in thatcontract, we have no input into. If Idecide to sell my farm and I have somebodywants to buy my farm, I can't transfer thatcontract to them without the approval ofthe company. In reality, that company hasa new -- or negotiates a new contract withthat person.

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And that's -- the requirement forupgrades has become a real problem as faras any growers that want to try to selltheir farm because somehow the company hasfigured out that if they want to forcesomebody to make upgrades on their farmthat they're trying to sell, they'll --they either make those upgrades themselvesat their expense so that they can selltheir farm or the person that buys thefarms is forced to make those upgrades.And I think that's absolutely wrong, too.

In my particular case, under the2008 Farm Bill, we were given the right toopt out of binding arbitration, which is awonderful thing, and I hope nobody in hereagrees to binding arbitration, youshouldn't. If you do, you need to talk toyour attorney about that.

But we -- my company restrictedme, even though I can opt out of bindingarbitration, from a jury trial. It says myonly right is through a trial in front of a

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judge. So I got out of bindingarbitration, but now I can't even go beforea judge. And I thought this was America.I thought we are able -- we were allentitled to a jury -- a trial by jury.Under my contract, I'm not.

MR. FAMILANT: Any other quick --quick comments before we move on?

MR. TAYLOR: I'd like toemphasize one point Mike made.

In recent years contracts aregoing for longer and longer periods. Thereare 3-year contracts and seven and someten.

15-year contract mentioned, Ihave yet to see a multi year contract thatrequired the integrator to provide morethan one flock of chicks. It could be fora thousand years, it doesn't matter.You're guaranteed one flock of chicks. Andthen after that the integrator can changethe contract or whatever. That's when whateconomists called hold it up can occur. I

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have not seen Peco's contract, but all ofthe others I've seen.

MR. FAMILANT: We should turn nowto the key compensation aspect of thecontracts: The tournament ranking system.

First, let's get a briefdescription of a typical payment scheme.When did this compensation aspect of thecontracts emerge? When -- when did we getterms? And why do you think these emerged?

And this last question isparticularly of interest to me as aneconomist, why do we observe it souniversally in broilers, but not so inraising other animals?

And I'm going to turn JohnIngrum.

MR. INGRUM: First of all, I wantto thank everybody for being here today.I've grown poultry for ten years. And theproblem I see in the ranking system is it'snot fair. And there's no way it could befair, you know.

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A lot of the growers will tellyou that the companies tell you that theranking system is a fair way of judging thegrower on their performance, but there's noway it could be -- it could be fair becausewe don't have any control over the birdsthey bring us.

Sometime's I've -- I've dumpedchickens that -- you know, there's ahundred chickens in a tray. And I'vedumped the chickens where's there 35 to 40of those chickens dead in that tray. So --and I -- and, also, one of the growers saidearlier I have been out of feed for two orthree days with six-week old chickens. Andit's based on the breeder chickens you getand whether they're male or female. And italso is based on how long you out ofchickens. If you're out of chickens 14days, and you're out of chickens 21 days,that has an effect on how your chickens aregoing to be perform based on your litterquality. So I don't -- I don't see how the

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ranking system could ever be a fair system,you know.

The poultry industry has reallybeen strange to me because I have a sonthat's a computer expert. And we use totry to figure out how to come up with ourfeed conversions on -- based on what ourchickens should weigh. This kid is amaster on a computer, never could figureout the chicken business, never couldfigure out the feed. And, so, I knew thenthat it was something wrong.

But, as far as a ranking system,there's -- there's no way it could be fair.And to base our performance if -- if thecompany -- I was out of feed one time aslong as three days when my chickens startedto eat on each other, but when I sold thosechickens they still based my performance onwhat I done, but I had no control over thefeed that they brought me. So there's noway that the ranking system could ever befair. That's in my opinion.

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MR. FAMILANT: Professor Taylor,any follow-up on this?

MR. TAYLOR: Well, your questionabout why is that in the poultry industryand not others, is simply because theintegrators require it. They set it upthat way.

There's the myth that this systemtakes grower -- eliminates grower's risk.It doesn't. It actually -- the common paysystem -- if you have a high cost, you geta low unit price, or if you have a lowcost, you get a high unit price. And itdoubly penalizes or doubly rewards growersfor good or bad flocks.

A very troubling aspect is agrower cannot verify any of the numbersused to calculate pay.

The second thing is feed qualityvaries, chick quality varies. Economistscall this pay system a tournament, to meit's a lottery. And the problem is, it canbe a rigged lottery, I'm not saying it is a

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rigged lottery, but it can be and a growerhas no way of figuring out if they weresingled out for good chicks or if they hada sweetheart deal and were singled out forreally good feed and really good chicks.

So it's a very troubling aspectthat a grower cannot verify the numbersused to compute their pay.

MR. FAMILANT: I've seen somediscussion that we're -- we're beginning tosee tournaments in some other animals.

Have -- have -- have -- are youfamiliar with any evidence of that?

MR. TAYLOR: Not like the poultrysystem.

MR. WEAVER: I have a comment onthis.

MR. FAMILANT: Sure.MR. WEAVER: There's -- stop and

think about this my fellow growers.Under the ranking system if

you're provided with poor -- poor qualitychicks and poor quality feed, which is an

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input from the company that we have nocontrol over, you're going to have poorproduction.

This means you're going to haveless pounds than you should have if you gotinputs from that company. So you're goingto lose money on the weight that you don'thave. Plus, under the ranking system,you're going to have points deducted fromyour pay because you -- you producedpoorly.

So under the ranking system weget hit twice, we get subtracted on twice.And there's no way that that is fair.

Another way that it's not fair isthe fact that it robs Peter to pay Paul.Why should it be fair for -- for thecompanies to be allowed take money awayfrom you to give it to me because I didbetter than you did. There's no way thatcould be fair and it shouldn't be legal.

We've -- we've got to have abetter system of paying our growers here in

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the United States.MR. FAMILANT: Professor Taylor,

what's the problem?MR. TAYLOR: Let me mention one

thing I've observed about the tournamentpay system. There are a lot of subtletiesdealing with whether an average is used orwhether a median is used or whether aweighted average is used. And theintegrators exclude some flocks, sometimeshigh, sometimes low. They completelydetermine what is excluded. They have minand max pay.

The point I'm getting up is, incontracts, most of them have a stated basecontract pay. Let's say it's five cents.And there are bonuses for those that reallyhave good flocks above that and penaltiesfor those below. But a base pay of fivecents, if you take a weighted average ofall of those for flocks, it usually comesout to be less than what a contract says.And to me, that's deceptive and unfair.

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MR. FAMILANT: Benny Bishop.MR. BISHOP: I just wanted to

make the comment, there's been somecomments talked about poor chick quality,poor feed quality.

And, first of all, you know, fromthe company's standpoint, it's not in thebest interest of any company in thisbusiness, and, again, I'm speaking for ourcompany, but for the industry as a whole,to send out poor quality chicks and badfeed to any grower. I'll say that toanybody in this room or in this industry.

And if you look at what'shappened in the industry over the last tenyears, we've improved livability by over1%. Back in 1999 and 2000 the averagelivability was only 95%. Today 2009, 2010,we've raised that livability to 96% plus.

USDA records show that wholebirds condemns are over 1%. Ten years ago1.2, 1.3. Today, the last 12 months, theaverage whole bird condemned is less than

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one-third of one percent.And the industry does not achieve

this with poor quality chicks and poorbirds coming off the farm.

MR. WEAVER: I'd like to makeanother comment about that if I could.

MR. FAMILANT: Go ahead, briefly.MR. WEAVER: The reason industry

is allowed -- is able to achieve that isbecause of good growers.

MR. BISHOP: I agree, good farmmanagement, but there's some good inputs,they're not all poor.

MR. DICKS: If I could just makea couple of comments.

MR. FAMILANT: Go ahead.MR. DICKS: You know, you asked

about the -- you know, I grew up in thetomato industry. And I can tell you thatthey have the same kind of a tournamentsystem basically in the tomato industry interms of providing those tomatoes to the --to the processor. And that's what we did.

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And you're -- you're paid based on how muchsun scald there is; how much rot there is;how much different than -- if it's lessthan -- if it's more than 12%, they turnthe whole tub back around, 40 somethingtons of tomatoes, and back to the fieldsand you get to dump them. So it's the samekind of deal, but a little harsher.

In the beef industry I'm prettyglad that we've gone to the grid system. Iget paid, not only the quality of mycarcass, but the yield of my carcass interms of also the rib eye, back fat, allkinds of characteristics on that. So,again, there is -- there is something tothe merit system.

And I want to follow-up on whatBenny says. You know, one of the thingsfor me, as an economist, is try to figureout why things are the way they are. Andjust so you understand, you know, I don'twant to put a lot into all the nuances ofthese -- of these -- of this tournament

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system. And I know there's lot of ways itcould be improved probably and they'reprobably some things wrong with it, but --but let's look at why it's happening.

First of all, the -- theintegrators don't make a large profit.That's a lot -- you know, a lot of -- buthere's what I want to tell you. And I knowyou're all rolling your eyes about that.

If you take the cash sales anddivided by the cash expenses or, sorry, youtake the cash sales and minus the cashexpenses and divide by the cash sales,that's profit, okay. That's not return onassets. These -- these integrators aremaking 1 to 2% profit. The thing thatthey're -- the way they're making returnstheir return on assets is by lots ofquantity.

What they have to do is run thoseplants at a hundred percent capacity. Theycannot afford to produce chicks and nothave those chicks come back live, as big as

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they can.And, so, what they're doing is

they're reimbursing those growers to try toinduce the biggest birds they can get inthe most efficient production. Now, thatjust makes sense. So that's what -- that'swhat that whole tournament process is.

Now, I want to -- the reason I'msaying this is because if you have a betterway, right, of -- of -- of -- of coming upwith a formula -- and you're in thebusiness -- I always tell farmers that,you're in the business, you're on theground, if you have a better way of comingup -- a way of paying yourself for beingefficient, bring it forward, bring itforward, let's talk about it. Maybe --maybe that's what the industry will go to.

MR. WEAVER: I have a suggestionfor that. If you don't mind, I'd like takea couple a minutes here.

MR. FAMILANT: We have talked --we've got to move along. So just try to do

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it real quickly in 30 seconds.MR. WEAVER: Well, okay, plain

and simple. What we need is a base pay, atrue base pay for growers that can't besubtracted. Once we get that, we'll be ina position to where we know what our pay isgoing to be at least. And the companieswon't be at their will to take away from uswhen they want to.

If we -- we have a set amountthat we know we're going to receive, we canbudget ourselves and operate on that.

And it has to be an amount thatallows us to pay our bills and make it areasonable amount of return.

MR. FAMILANT: Okay. As -- as Isuggested earlier, we also want to addressanother aspect of the contract, situationsin which integrators require upgrades andadditional investments by growers in orderto hold their contracts.

How often does this occur? Whatdo the processors cite as the reason for

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these demands they make? What is theevidence on whether these upgrades lead tocost effective improvements in the quantityand quality of poultry grown to maturity?And what is the effect on the growers?

So we'll turn to Mr. Weaverfirst.

MR. WEAVER: Just to go down thelist there.

The first one is, how often doesthis occur, that varies tremendously.You-all know that as well as I do. But, asa general rule, major upgrades are prettymuch on the five to 10-year cycle. Itdepends on how old your houses are and thewhim of the integrators essentially is what-- what it comes to.

Integrators -- I -- I -- it saysprocessors. And I'm assuming you mean allintegrators?

MR. FAMILANT: Yes.MR. WEAVER: Cite reasons for

these demands as typically can improve

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production, but one of the problems with itis they never delineate who the -- who theimproved production is going to be, is itgoing to be for them or is it going to befor us as growers, but we're the ones whohave to bear the cost for it. And that's-- that's the true problem that I see.

The integrators don't bear any ofthat cost typically. Now, sometimes theydo cost share a little bit.

One good example I can give youis one of our growers was forced to do$600,000 in upgrades in his poultryoperation and they cost shared with him.They gave him $78,000. So that was areally big cost share, wasn't it?

AUDIENCE: Good return oninvestment.

MR. WEAVER: Yeah, that's right.Another thing they don't do is

give us a cost projection on how this isgoing to help us, you know.

I would -- I would -- if they

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could -- if they could come to me and saywe want you to make this hundred thousanddollar improvement. And here's a costprojection as to how you're going to getpaid back for that, and here's how muchincrease we're going to give you, and ittake you this amount time to make thisback. If they could show that to me inblack and white and make it reasonable, I'dagree to do it. They wouldn't have toforce me.

And that -- it should telleverybody who -- who even pays anyattention to that situation at all, and youall have heard it all day in here, theybring that contract to you with thatupgrade in it and tell you if don't signit, you're going to get -- you're not goingto get chickens, well, that's forcingpeople to do it, isn't it?

But if they came to me and showedme this cost projection and said we'regoing to pay you this much more. And we

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can prove to you that this improvement isgoing to make you this much more money andhere's how long it will take you to get itback, I'd gladly do it, but that neverhappens.

What's the evidence on whetherthese upgrades lead to cost effectiveimprovements and quantity and quality ofpoultry growth? From what I've seenthere's very little evidence.

You all know, as well I do, thatat times it's just the whim of theintegrator. We all have our opinions as towhy they force us to do them upgrades andgo into additional debt.

A lot times there is justspeculation on the part of the companies.

Like I said, if they brought --brought me a spread sheet and showed methis is how much it's going to cost you andthis is how long it's going to take you toget your -- recoup your investment, itwould be a whole lot easier for me to make

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a decision on whether I do that or not, butthe way it is, my decision is not too hardanyway because they can come to me and say,"If you don't do this, you're not going toget chickens". And that's -- like I saidearlier, this is the United States ofAmerica, I don't think we should have tosuffer through that.

Where they're asking us to takeon additional debt for these improvementsthat -- that many times is not funded. Andeven when they do give us an increase forit, it doesn't cash flow, there's no way topay for itself.

More times than not theseimprovements that they force us to dobenefits the integrator 100%, or at least awhole lot more than it does the growersthat are being forced to make theseupgrades.

So I think we need to encouragepackers and stockyards to create someregulations saying that if poultry

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companies have upgrades, that they'd liketo make, if they think it's worth it tothem and their production is going toincrease that much, they should pay for it.

MR. FAMILANT: Cindy Johnson.MS. JOHNSON: Thank you. I guess

you folks were starting to wonder whether Iwas going to talk today or not.

I'm Cindy Johnson. And think I'mthe token lawyer, maybe the token woman onthis panel as well. I'm humbled, I'mhonored to be here today. I want to, firstof all, thank whoever turned theair-conditioner off because I thought I wasgoing to have to chatter through this. AndI also want to thank especially my husbandand my law partner publicly, for havingtraveled down this road representingchicken farmers for a very long time withme at great risk to our family. Thank you,honey, I love you.

I was talking to our 24-year olddaughter back a few weeks ago because I was

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trying to remember how long I've been doingthis. And I said, "Elsa, how long have Ibeen representing these chicken growers?It seems like forever".

She said, "Momma, I don't know".She said, "All I know is when I

was little girl I used to think thatConAgra must be a very bad man".

So it's been a long time, butI'll get to upgrades.

Back in the '90's I was assistingsome other attorneys and some people thatwere active in the industry trying toorganize poultry growers in the State ofGeorgia. And I went to a lot of meetingsand did hearings around the state.

And one of the things that alwayscame up was upgrades and how the companies,the integrators would keep growers in debtwith upgrades. And that's the same songand dance I hear today when -- from thesegrowers is we just can't get out of debtfor the upgrades.

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From a legal perspective, as alawyer, it's always puzzled me that thechicken processing companies call poultrygrowers independent contractors and at thesame time control the manner and the methodof how they grow chickens. The legaldefinition of an independent contractor inthe State of Georgia is by definition,"Being able to control the manner or methodof how you produce a result".

If the integrators want toexperiment with new technology, they shoulddo that at that their own expense, not atthe expense of the grower.

If -- if a grower is growing asgood a chicken as the man down the roadwith the fancy new equipment at the samecost to the company as the guy with the newfancy new equipment, why should he have togo and get into a lot more debt to put inthe fancy, new equipment when it's notgoing to result in any additional money tohim? I don't understand it.

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And I think it's a symptom of theproblem we have with the lack of power ingrowers who have invested more than half ofthe capital in chickens in this countrycollectively.

And there's a problem when youhave a group of people who have investedmore than half the capital in chickens andhave no power and no say and get as littlemoney as they do compared to the profits ofthe processors.

MR. FAMILANT: John Ingrum.MR. INGRUM: It always puzzled me

the word upgrade. Upgrade to what?I have a -- my farm is down the

street from another guy. And his farm isprobably 35 years old and my farm is 15.And this guy repeatedly beat me every batchafter batch after batch. Me and him wasgood friends. I go down there to try findout what he was doing differently from me,but his houses was older than mine.

And my serviceman came out one

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day and he said, "We're going to close soand so down the road down".

And I said, "Why"?He said, "Well, his houses is too

old".I said, "Too old"?This guy is kicking my butt month

after -- batch after batch. I mean, thatshouldn't have nothing to do with how oldhis houses is. And they ended up puttinghim out of business, closing him down.

Then I had another friend. Hehad $600,000 he owed on his farm. He had a10 house farm. And he had to do upgrades.

When he got through upgrading onthat ten house farm he owed 1.2 milliondollars on a farm that was 15 years old.He upgraded his self slap out of business.He ended up -- he couldn't -- when he'dmake a chick it ended up costing him moneyto grow chickens. He simply walked away.

You know who suffered, SBA,because the SBA guaranteed his loan to get

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that upgrade.And then I had another friend --

there was four brothers in chickenbusiness. And they upgraded and upgradedand upgraded to where these guys owe amillion dollars on a farm that's 15 to20 years old.

When -- I mean, when do theupgrades get to the point to where we don'tupgrade to the standard? It's -- we onlyupgrade to the -- to the point of ourservice tech because every service techthat comes requires us to do differentthings.

I had to put lights down thecenter of my chicken house, half house. Myservice tech said, "I want these lightsdown to make it brighter, the chickens willdo better".

I said, "Okay".Did it. It wasn't very much

expense, $1500.The next service -- this guy was

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only there three or four months.The next service tech came out

and says, "Why did you put them lights onlyhalf way down that chicken house"?

I said, "Well, because the guytold me before to do it".

He said, "Well, you know, I don'tlike that, I want them all the way down thechicken house".

And then I had another servicetech after that, it's about six monthsafter that, because, you know, they rotatesthem around to keep you from jumping onthem.

And he came out and he -- I mean-- I -- I work on poultry houses. So I hadmy stuff in order.

So he comes out and he's lookingup in the air because they don't reallyneed -- they was trying to figure out a wayto extend my out time because they reallydidn't need me to be in rotation at thattime. So he was looking up in the air.

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And I said, "Hey, the chickensare down here, tell me what the problemis".

He said, "Do you see that powerline up there"?

I said, "Yes".He said, "I want that down".I said, "Well, I'm sorry, bud,

but that belongs to Mississippi Power. Idon't have no control over that".

And he says, "You're not gettingchickens until you take that line downbecause our feed trucks might hit it".

Well, my feed bins are not evenclose to the power.

So I said, "I can't do that".So I go to Mississippi Power.

And they said, "Yeah, you can do it, we cantake them down, but it's at your expense".

$6,000. When do the upgradesstop? Was than an upgrade or was that justa want? And that's what we have -- wehave. And, I mean, I see this grower after

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grower after grower.I've got a friend Charles --

Charlie -- Charles Moore. He's suppose tohave been here today. He cried on thephone last night because he couldn't behere.

He was a Wall Street investor.When he bought his chicken farm he had over$300,000 in the bank, cash. He was gettinga retirement check and -- about $2500 amonth with $300,000 in the bank. He wasdoing pretty good, wouldn't you think?

He messed around and got into thechicken business.

MR. FAMILANT: Mr. Ingrum, if youcould wrap up pretty quickly.

MR. INGRUM: They -- theyupgraded him out to where he's broke.Upgrades, so when do upgrades stop?

MR. FAMILANT: Okay. I want toturn to the topic that's come up today.Let's talk about the options that growershave to choose among alternative processors

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with which -- with whom they mightcontract.

What is the distance span from agrower within which the grower can considera processor? Do further distances impactthe market weight? How typical is it forgrowers to have two or three options withinthat business plan? And has -- and hassuch choice become less comon over the lastdecade?

Some obvious related questions ifwe can get to them. Does grower profitincrease as the number of availableprocessors increases? And how often dogrowers switch processors?

We've heard over here aboutdifficulties they face, but I'm -- I'minterested if -- if -- in any data, thatanybody, any of the panelists have abouthow often growers do switch.

And I'm going to turn Max Carnes.MR. CARNES: I feel fortunate

where we are, there are four or five

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integrators that I could choose from. ButI can tell you this, the best time tochoose your integrator when you're buildingthat brand new house. It's a lot harder totalk to somebody else once you've beengrowing birds for a single integrator.

Distance that grower can considera processor. Of course, you could lookaround from your house and see if there areany other -- different type integrators ordifferent types farms from you. But, as ageneral rule, I would think probably 75miles is going to stretch it pretty closeto the -- how far they want the feed trucksto come.

Do distances impact marketweight? Absolutely. The longer that birdis sitting in that haul truck the -- he'slosing weight the whole time. Of course, Iknow the people that I work with, and Iassume everybody else, the first thing whenthat truck gets through the processingplant then he is weighed then. So your

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weight loss turns to your integrator afterit's weighed then.

And do -- does profit increasewith the number of integrators? And I -- Ireally don't think it does. I think we'vealready talked about this earlier todaythat the contracts are going to be verysimilar. It's hard to sell a chicken a lotmore expensive than -- than somebody elsehas. So I -- I don't think there's a wholelot of difference, it's just the typeperson that you want to fit in with, thetype integrator that you fit with. You --you can be comfortable with all of them,but you -- you need to talk with the peoplewho grow for those -- for that company andfind out whether it's a good fit or not.

And I -- there are very fewpeople who switch integrators from one tothe other. And I would think that the onesthat do switch are -- will be switching allthe time. You have some people who arenever satisfied, I think, but -- I feel

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very fortunate where I am.MR. FAMILANT: Professor Taylor.MR. TAYLOR: Okay. There are

five sub questions here in a couple ofminutes. So I'll try to hit them fast.

On the distance issue, it'sroughly 40 miles out is as far. And theywould prefer only 20 or 30 miles out.Tyson had a web page up for quite a whilethat said 40 miles.

The main reason, minimize feedhauling costs. So the location of the feedmill is the number one consideration.Processing plant is number two. So theywant to minimize feed and bird haulingcosts. And that concentrates the poultryoperations.

Does grower profit increase?Well, the publicly available data indicatesthat there's no profits. Grower profitrelated to the number of integrators.There's no public data on grower pay, none.Integrators have it, but they share it with

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each other by complex and by region.That's not available. So there's

no publicly available data with which toanswer that question. My impression is,no, it doesn't matter.

On the whole switching issue, no,publicly available data on that either, butswitching is very, very low. My crudesubjective estimate is it would less than1% per year.

The real problem with switching,you build a house that's got an economiclife of, let's say, 30 years. You have twointegrators, A and B. If you start withintegrator A for a few years, you mighthave 25-year life remaining. You look atswitching to B. Well, it's the samecontract and basically the same pay. Andif a grower for A switches to B; then theymake integrator A mad and they're stuckwith B forever.

So switching is very low,tremendous barriers to switching, including

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the mandated upgrades. Switching rarelyoccurs without a grower, even with fairlynew house and equipment, being required tomake some kind of expensive upgrades.

MR. FAMILANT: Before we leavethis area of contracts, I -- we have onequestion from the audience that seems tofit in here. The question is: Why don'twe observe at least one or two processorsowning -- owning growing facilities?

Why don't we see thatexperimentation? It just seems sosystematic that -- that we have the growercontract system.

Do any of you have any responseto that question?

MS. JOHNSON: I would like torespond to the question because I've hadthat come up in trying to organize farmers.And I'll tell you, it's about as easy toherd cats as it is to organize growers.

And the reason for is, that it'san atmosphere that is permeated by fear.

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Growers don't like to be seen at growerassociation meetings. They don't like thecompanies to know they're talking to eachother. They fear retaliation and, hence,they don't get together and try tocoordinate efforts.

MR FAMILANT: No, no. But why --why doesn't the processer just decide toown farms and --

MS. JOHNSON: Oh, I see thequestion, I misunderstood the question.

Because it's much cheaper to talka farmer in to doing it. Of course, it's acost decision, of course.

MR. WEAVER: It's because of theinvestment.

MR. FAMILANT: You think that theprocessor is not willing to make those --that scale of investments in the growingfacilities?

MS. JOHNSON: If there was moneygrowing in chickens, the processors wouldbe growing chickens.

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MR. FAMILANT: I think we shouldnow step back and pull together a lot ofprevious discussion into a really importantquestion. What do we know about thecurrent state of grower profitability?

What are the key factors thatwould lead to a prediction of growerprofitability, which grower is going to beprofitable, which is not? How sensitive isgrower profitability to a reduction in thenumber of flocks he or she raises eachyear? And what is happening to the abilityof growers to meet the terms of theirexisting loans and secure the loans?

And I'll turn to Professor Dicksfirst.

MR. DICKS: Well, I think I --you know, first of all, I want to -- sorry,is that working?

I want to define profitabilityagain. You know, I think there's adisconnect between what some people thinkprofitability is and what we, as economists

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or finance people think it is. And I thinkwhen -- when people talk aboutprofitability one thing that you'rethinking at is my return on -- to myassets, my total return.

And when we say profitability,what I'm talking about is when I take thosegross sales and divide by those -- or thecash sales and divided by that -- orsubtract out those cash expenses and divideby cash sales again. That's myprofitability, that's my profit margin.

And, again, I've already saidthat for the growers that profit margin is15 to 30%. And -- and -- and, so, if youthink about that, what am I telling you?You know, if you'll take -- if you'll takeyour revenue and consider that a 45 to 50%of that revenue is going to go to youroperating expenses. Alright.

AUDIENCE: (Inaudible).MR. DICKS: Then -- then that --

yeah -- you know -- again, I can only go

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off what data I have.And here is the -- here are --

the other problem is, and I want to getthis right out front is, we have verylittle data. Okay. Most of the data we'vecollected on -- on -- on -- on farm -- onpoultry growers comes from Schedule F's,Schedule F's or Schedule K's. And that --that data is not poultry enterprise data,that's farm data. A lot of times there'scategories on there that have nothing to dowith the poultry enterprise. So we have tokind of nitpick about it.

I've -- I've probably done, Idon't know how many, hundreds of poultryfarms in Eastern Oklahoma and WesternKansas -- Western Arkansas. And I'm goingto limit my comments to that, but I wouldbe willing to bet that given the state ofthe industry, that that will not toatypical for the rest of the United States.And, again, I'm telling you what we'velooked at, that's what that profitability

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measure is, is about 15 to 30%.But the problem is, again, is

that sales to fixed assets ratio. How manysales am I generating per dollar of myfixed assets and that's incredibly low.It's low by every standard that was set forfinancial -- for the financial standards.And that should be in the neighborhood of80 cents to 90 cents and it's only 20 to 30cents. So you have tremendous -- you'reover capitalized. And that is true for allof agriculture, you know.

I'll -- I'll tell my studentsover and over again that buying land is apoor business decision if you're a cropfarmer. Buying a poultry house is a poorbusiness if you're a -- if you're a poultrygrower, but it's a great -- it could be agreat investment.

So remember that what you'redoing is, again, you're -- you're usingprofitability to pay for those assets inthe hopes at -- at some point those assets

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are paid for and I'm going to get both thegains from the profit margin and from thatsales of fixed asset ratio. So -- sothat's -- but that's -- that's the --that's the reality of it.

So let me just wrap this up. Youknow, what affects profitability? The two-- probably the biggest -- the biggestexpense that you have is your -- is yourelectrical expense, your -- your energyexpense, electric and propane.

MR. WEAVER: No, your mortgage.MR. DICKS: Well, that's --

that's a fixed expense. So I'm talkingabout just the variable expenses right now,the cash expenses.

And -- and you have no controlover them, none of us do. And that --that's stung you hard in the last -- in thelast three years. And, of course, thebudgets that I'm telling you -- the dataI'm talking about, I haven't updated itsince 2006, 2007. Of course you know that

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those costs have gone skyrocket since thatpoint in time. I, as a producer, can tellyou also that the fertilizer prices havegone through the roof. And that's -- it'skilling us.

Those are the things that I thinkI want to make -- make sure I get acrossnow.

In terms of profit per flock.You know, the -- the profit that you makeper flock is a function of the number ofbirds you get; correct. But the profit you-- but then the return on assets that you-- that you make is both a function of thenumber of birds that you get and the numberof flocks that you get per year. So -- sothe control of those two numbers is goingto affect your return on assets, you know.

Why is it that you would -- wouldyou -- that you would get less birds orless flocks? The poultry industry, becauseit's a vertically coordinated industry, istrying to manage your supply.

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Why is it trying to manage thatsupply? Because market conditions existthat warrants doing something with supplyto maintain a price, a price that'sacceptable, a price that will give you somekind of return and give the -- give theintegrator some kind of return.

And when the market dies, as itdid, because exports dropped from almost20% down to 16% of supply, it droppedfairly substantially, they have to dosomething to make up that difference.

If they continue to put out thenumber of birds, you're going to have ahuge drop in price in order to get rid ofthem or you're going to dump them in aditch, one or the other. So the only thingyou can do is cut back on -- cut back onoutput. And if they do it uniformly, theyhave two choices, they can give you lessbirds per flock or they can give you lessflocks per year, both of which affect yourprofit margin.

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But they also, again, remember asI told you, the integrators have to try toget a hundred percent of capacity. Theyhave to try to manage those plants at fullsteam in order to make a profit themselves.And when they cut back birds, they knowthey're going to lose money, they have toknow that. You're losing money, they'relosing money, the industry is losing money.

You know, that's -- that's theway the market works. I don't -- I mean, I-- I don't know what else to say. But, youknow, I understand I'm -- I'm in the -- I'min the business myself of raising cattleand the market is pretty tough on us.

You know, I had a hundred andsixty-six head in 2000. I'm down to 30 andwish I had them down to zero. For the samereason that -- that some -- some of you,I'm sure, wish you were not in the poultryindustry because it's been pretty hard inthe last five years.

Alright. Now, we're back being

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in a turnaround and maybe I'd like to beback to a hundred head after the pricesI've seen. But, unfortunately, it's goingto take me five years to get there becauseI can't move them every 40 days.

So, anyway, I'll let -- did I dookay?

MR. FAMILANT: John Ingrum, quickcomments.

MR. INGRUM: You know, I sit uphere and I listen to all of these thingsthat comes around, but the bottom line isthat our -- is our market on the chickensis based on our weight and our feed and thenumber of flocks we get versus the numberof chickens we have placed in the houses.

And the -- a lot of theintegrators are cutting the number ofchickens we get in the houses or increasingour out time to a longer period of time inwhich resulted in us missing chickens andthat has something to do -- a greateraffect on what we get paid, but most of our

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payments are still based -- it's the same.I bought my farm from a guy that

was in -- in the farm 30 years, in thechicken business 30 years. And he told us-- told me that we get paid the same thingthat they use to get paid when they weregrowing chickens, but the difference is thehouses cost 200,000 now and 50,000 when hebuilt his, but we get paid the same.

And when you talk to a lot ofgrowers they'll say, "Well, we use to makegood money". And they did.

But when you -- when you pay50,000 for a house and -- and then you pay220,000 for a house, it's -- and you getpaid the same, I don't see how anybody canmake money in chickens.

And when we go in to talk to thatbanker or we talk to that integrator, theydon't tell us these things, they just showsus the numbers and our head swells and wewant to get into the chicken business.

My son is 22 years old. He asked

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me one day, he said, "Daddy, how could youanybody talk you in to being in the chickenbusiness"?

And I said, "Son, they told mehow much money was I going to make".

He said, "Yeah, you might cashflow that money, but the bottom line isthis".

I gave up a job making $80,000 ayear to go into the chicken business tomake 30. There's something wrong withthat. And -- but it's based on thenumbers.

MR. FAMILANT: Professor Taylor.MR. TAYLOR: Well, the only set

of information on actual profitability forcontract poultry producers done withmanagerial accounting, rather than taxaccounting, is the Alabama Farm BusinessAnalysis Association, which I have nothingto do with. But trained farm managementexperts sit down with participating farmersand ranchers and growers who have to pay

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quite a bit to participate. And they gothrough everything, every little receiptand decide what percentage of the pair ofgloves you buy goes to cows and to poultryand so forth. Those records go back to1995.

10 of the 15 years, after takingout basically minimum wage, there is anegative return. They've lost money, onaverage, 10 out of 15 years. And the losesare much larger than the gains.

Another set of publicinformation, is a highly detailed surveydone by USDA. It's called an ARMS Survey.And you can go, even online, and get asummary for different productionspecialties.

For the poultry specialtyaveraged over 1996 through '08, 13 years,the average rate of return on equity, theytake out a charge for unpaid family andoperator labor, after taking that out,there is a negative return on equity.

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Part of the deception that goeson, and I've seen this in a writtenrepresentation made by an integrator togrowers, they show 20% return, you'remaking 20% on your money.

They're not using the sameaccounting concept that they're required touse in their own financial statements.They're including what little you get foryour labor there. If you take minimum wageout for labor, it's probably negative.

MR. FAMILANT: Let me -- let mecontinue with this thought because this isgoing to be a question for ProfessorTaylor, too. What information do growershave when they enter into the business andsign those very first contracts?

Are there significantopportunities for the integrators to exertwhat economists call post contractopportunism and impose unanticipateddemands on the -- on the growers? And withwhat frequency do we -- do we observe this?

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Do we -- is there any data on the -- on thefrequency?

MR. TAYLOR: Frequency isbasically is every one of them.

The -- there is very littlepublic information on contract poultryproduction. There's all kinds on wholesaleand retail chicken prices weekly, highlydetailed.

You can go to your USDA web sitesor listen to the news and you can getmorning and afternoon cattle and hogprices. There is nothing on averagecontract pay, not even annual.

You can go to USDA and get costof production budgets for corn and cottonand hogs and cattle, nothing on poultry.

So potential growers are reallyat the mercy of representations made tothem by integrators.

MR. FAMILANT: Mr. Bishop, yourcomment?

MR. BISHOP: What information do

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growers get when they first enter thebusiness and signed the contracts?

Of course, we have a list ofthings that we furnish any potentialgrower. And that grower also has to make adecision to sit down with his banker andget a lot of the information there, too.So if they're misguided, I think it wouldbe from the lending institution.

First of all, whenever we get anew grower, a potential new grower, we givethem a packet that offers a copy of ourcontract. We don't hide anything. They'reeligible to take a look at it, read it.

Copy of the buildingspecifications. List of contractors andbuilders that service the area. List ofequipment suppliers. We furnish a list ofbanks and lending agencies that financepoultry loans.

We show and discuss any companycost projection and calculations.

We tell them to sit down with the

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bank and let them go through this totallyagain and decide if they want to get in thechicken business and if that bank wants toloan them the money.

We file a list of other itemsthat are needed such as the amount ofproperty, permits, utilities, dead birddisposal provisions, litter storage, dirtwork, road construction. Even have toremind them about the equipment they'llneed like tractors to operate their farm.

We want to them know everythingthere is before they get into the business.A copy of our live production program isgiven to them. We encourage everypotential grower to go and visit with othergrowers, go and talk to them, see what theythink about the business.

Take your contact and discusswith whomever you want to, your family,your friends, your attorney. We'll offerto take you to visit the poultry operation.We offer to take you on tours of our

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plants, our hatcheries and our -- our feedmills.

It's all about post contracturalopportunism and unanticipated demands.Again, I can only speak for our company.

We look at the relationships ofour growers as being long-term. If it'snot mutually -- something is wrong if it'snot mutually beneficial to both of us.It's not in the best interest of ourcompany or any other company, I don'tthink, to impose economic hardships on agrower. And as long as we keep continuingto put growers out of business, the bank isnot going to loan money to get new growersto replace them.

A productive grower network isimportant for us. It's essential for us tocompete in the marketplace. We have tohave good growers.

Our management feels stronglyabout upgrades for the ones that arelowering costs or improved efficiencies on

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our live operations. We'll offerincentives to offset those costs. It hasto be mutually beneficial to both us andthe grower or we're not interested inlooking at it.

These changes in technologyimprovement -- improve managementpractices, not only in this industry, butas in any other business. And to whatfrequency, I think it's varying.

MR. FAMILANT: I think this leadsto a natural follow-up question that atleast three of you have submitted in someform.

In most areas there are -- therestill are numbers of -- of people whowanted to grow broilers and wanted to --they want to secure loans.

How are we suppose to integratethis fact that there are -- there are thesepeople lined up to get in the business? Ifgrowers don't expect to see a return ontheir investment, why are they getting into

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the industry? And, again, as many peoplehave asked from the audience, why do bankslend to these people?

Let's -- let's turn to Mr.Weaver.

MR. WEAVER: Is that my question?MR. FAMILANT: Yes.MR. WEAVER: I have some other

comments I'd like to make as far as thegrowers income and such that we wereaddressing earlier and I didn't get toaddress.

But current growers areincreasingly discouraging their families,their sons and daughters, their nieces andnephews to get into the poultry businessbecause they, plain and simple, will notmake money doing it.

I'll use myself for example. AndI think the statement has been made herethat the biggest cost you have is yourfuel. And outside of your mortgage, that'strue.

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But my mortgage on my poultryoperation is $84,000 a year. Last year Igrossed a hundred and nine thousanddollars. And I was the number one growerthree times last year.

So what does that tell you folks?Part of that was -- one -- one of

the previous questions was that thecompanies cut back on the number of flocksor placing the number chickens you get.

Part of that drop in my incomewas that I lost the equivalent of a wholeflock of chickens last year because of thecutbacks.

We're -- a lot of our growers inour area are so frustrated, they've lost somuch money, that they intend to close downtheir operation in the very near future.Luckily for them, they're most of thepeople who have their operations paid forand they can do it without losing theirhome and their farm. But most of us are indebt to one degree or another. And if we

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do that, we're probably going to lose ourhome and our farm.

Somebody this morning made thecomment that that farm had been in theirfamily for eight generations. Those arethe kinds of situations we're placed in.

And the question being what --you know, why would people want to get intothese contracts like this?

As a general rule, the majorityof growers I've talked to that have donethat, when the companies that -- nodisrespect to Mr. Bishop, I don't know howhe runs his business, I hope everything hesaid is true, and I wish it -- I wish itwas that way industry wide.

But, as a general rule, thefigures that growers get when the companiestrying to talk them into building housesare misrepresented.

Now -- and I've seen them do it.They'll say, "Well, now, here's -- here'sthe average that growers make, but if you

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do real good, you can make as much money asyou can". And that's another 30, $40,000 ayear.

Well, unfortunately I have nevermet a grower that is on top every time. Ifthere's one out there, I wish you raiseyour hand, I'd like to shake your hand, andI'd like you to tell me how you do itbecause I've never met anybody else whocould do it. I don't think this happens.

And I read statistics that DoctorTaylor here did that show that it doesn'thappen.

MR. FAMILANT: If we could movealong because we've got -- I really want toget in at least one more question and let-- and let Professor Dicks respond to this.

And we're coming up on our hardstop on our time.

MR. WEAVER: This last questionhere says, if they don't want theseparticular contract terms, why do they signthem?

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MR. FAMILANT: Yeah.MR. WEAVER: I think we've

already answered that. They get anultimatum, you sign here or you don't getchickens.

MR. FAMILANT: Professor Dicksfor some -- some quick thoughts.

MR. DICKS: Well, just a coupleof things.

You know, Mr. Weaver, if I'll askyou, you know, you said you had aneighty-five -- $84,000 dollar mortgagepayment. How much of that was interest?

MR. WEAVER: I don't know. Letme think a second here. It's like $25,000of that was interest.

MR. DICKS: So that's the onlyexpense. The other part is principle.That doesn't -- you know -- that's --that's the same as money in the bank.

MR. WEAVER: It's not principle,but --

MR. DICKS: You know -- you know,

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but look here, folks, this is -- you know,one of the problems in America today, andyou know this is true for all of America,is we have a real problem with financialliteracy in this country. And that's why-- that's why we're having the problems wehave with all the mortgages crisis andthat's why we're having a problem havingthis conversation.

You know, if we're going to tap-- if we're going to talk about finance, weought to talk about using the same terms.You have to look at the same things; right?

If you were making a principlepayment that's no different -- you've madethe decision to investing in a poultryhouse rather than invest in the stockmarket. That's an investment. That's not-- you can't make that -- you can't usethat as a deduction. I understand thatthat means you have less money, butnonetheless, but that principle payment isnot -- not considered in finance as an

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expense. So you can't use that.And that's one of the things I

want to come back to --AUDIENCE: Well, look at --MR. DICKS: -- excuse me, let me

finish.MR. FAMILANT: Let him finish,

please, please.AUDIENCE: -- is down by 76%, it

is an expense.MR. FAMILANT: Let him make his

point.MR. DICKS: Well, let me just say

this, I'll just make it real easy on you.You know, I -- I -- yeah --

again, I -- I can tell you -- I can't -- in-- in my twenty -- 21 years plus atOklahoma State University, I don't know howmany farms, both my students and I, haveanalyzed doing business plans for.

But I will tell you this, acrossthe country I've -- you know, I've farmedin four different states, I've been all

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over the United States and all over theworld, and I can tell you that of all thefarms in the United States that I've lookedat, I bet you less than 2% of them have thefinancial records necessary to run abusiness. And I'm not dissing anybody,that's a real problem, that's one that I'm-- I'm trying to fix.

You know, I'll just ask y'all outthere, how many people have an incomestatement on hand, a balance sheet, a cashflow statement, enterprise budgets and thefinancial ratios necessary to look at youroperations?

And I guarantee you this, if yourbank doesn't have it, your bank shouldn'thave lent you any money. And I've lookedat a lot of the Farm Service Agencyguaranteed loans and they don't have them.

And, in fact, just to let youknow our state office, our state office,our state FSA office this week has sent outa notice that provided guidelines to the

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banks on what was necessary in order togive loans for concentrated feedingoperations.

So it -- it -- it indicates thereis a problem out there. And one of theproblems that -- that this question isgetting at is why are people -- why arepeople getting into the poultry industrywhen you-all have these problems.

Well, number one, is they're notbeing told -- they're talking to you andthey're getting -- they're getting a formthat's only giving them that gross profit Iwas talking about. So it looks prettygood.

And they go down to the bank.And what does the bank give them a loan on,their collateral, plus it's a guaranteedloan.

All of those things set in motionsomething that we're seeing here today is alot -- a lot of problems in the industry.

If you're not -- if you're taking

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out a loan, right, and you can't cash flowwith 60% of your variable expenses, youshouldn't have taken out that loan in thefirst place because if you took it out withthe understanding that you were going toonly have 45% of that be variable expenses,and the propane expense went up or the feedexpense or something else happened, you'regoing to be underwater and you're not goingto be able to pay your note.

And if I'm a banker, I don't wantto do that. I don't want to give you thatbecause I don't have want to own a poultry-- I don't want to own a poultry farm.

MR. WEAVER: Mr. Dicks, here'ssomething right here I'd like to offer foran example. And anybody that wants to iswelcome to come and look at this.

This is a grower settlement from1985. In 1985 these growers could make asmuch as 4.85 cents a pound for theirchickens. Today the company I grow for ourbase pay is 5.05, that's two-tenths of a

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cent more than it was 25 years ago in 1985.That's the problem, that's part of theproblem.

Another part is this right here.This -- this is a receipt for KentuckyFried Chicken for a 12-piece bucket ofchicken that was purchased last week. This-- this 12-piece bucket of chicken costs$26.99. And out of that -- out of that$26.99, the grower that raised the chickengot 30 cents.

MR. FAMILANT: Alright. Let's --MR. WEAVER: The -- the state and

-- and the city that sold this, where thiswas purchased, got $2.16 and they didn't doa thing for it.

MR. FAMILANT: Alright.Everybody -- everybody wants to keeptalking, but indulge me here. We've got tostop very, very shortly and I want to getthis last question in because it's veryimportant. This will be our last question.

We've recently had court rulings

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stating that producers must provecompetitive harm before succeeding in acase alleging an unfair practice under thePackers and Stockyards Act.

What are examples of how allegedunfair practices might and might not berelated to competitive harm? In view ofthese decisions, what will growers or USDAhave to do differently in order tochallenge a possibly unfair practice? Andwhat could a grower, an ordinary grower beable to put together? What kind ofeconomic evidence could that grower puttogether to support such a complaint of anunfair practice?

And I'm going to turn to Ms.Johnson for that.

MS. JOHNSON: Thank you. Iappreciate it.

As I said, I've been representinggrowers for a long time, about 20 years.And back in the 90's when we were trying toget these growers in Georgia organized I

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use to go to meetings and I would be thefeatured speaker most of the time.

And they would get up and theywould introduce me and they'd say, "Ms.Johnson here has won every case she's hadfor every poultry farmer she's everrepresented". And that wasn't quite true.I'd lost one, it was on a technicality.

But I would get up and I wouldwave the flag and talk about how there'sthis wonderful sword that growers haveavailable to them. And it's called thePackers and Stockyards Act.

And it prohibits any unfair orunjustly discriminatory or deceptivepractice.

And when they terminate yourcontract because you're at this meeting wecan go forward and we can file this claimunder the Packers and Stockyards Act and wecan get your chickens back. And that gavea lot of comfort to the farmers who stucktheir necks out in Georgia back in the

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'90's.And it grieves me to have to tell

you folks who are sitting here today thatthat sword that we had available to us touse for all those years has turned intomore like a feather than a sword.

I don't see a single grower herefrom Georgia. And I know why that isbecause the growers in Georgia who took onthis battle have been pretty much cut downand stomped on.

The fellow who was here earlier,the gentleman from the Council, PoultryGrowers, what's that called again?National Broilers Growers, or whatever,Council -- Chicken Growers. I can't getthe name right.

He made a good point. TheCouncil has spent a lot of money on lawyersto convince our courts that growers oughtnot have any federal rights. And that is-- that's a snowball. It's keeps onrolling down the hill and gathering up more

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and more snow and keeps rolling overfarmers.

The most recent decision is theTerry Case out of the 6th Circuit. Andthat case isn't over yet. And I'm not realcomfortable talking about a case that's notover, and, especially, when the lawyers forTyson are sitting over there on the secondrow.

But suffice it to say, there'ssomething wrong in America when a growerlike Mr. Terry over here in the red shirtcomplains to the -- to GIPSA, to the USDA,the federal agency that's charged with theresponsibility of making sure that growersreceive adequate pay for their effortscomplains because Tyson is stealing fromhim, gets cut off for his efforts and hasno remedy. There's something wrong withthe laws in America if he has no redress.

MR. FAMILANT: Thank you. Anyquick comments from any other panelists onthis, on this particular topic?

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MR. CARNES: We do have onegrower from Georgia. Thank you.

MS. JOHNSON: Or the panel. Andif I can make an observation. And I have alot of respect for Mr. Carnes. We talkedbefore the panel today. And he seems to bea very capable grower, a very astutebusinessman, but I believe he's a -- alsoin another business. And that's the pavingbusiness.

And it's possible to growchickens when you have another business anddo it profitably. And it's -- it's calledwriting off some of your losses.

And I don't know whether you'veever lost any money in the chickenbusiness, but I want to address -- thequestion that you had a little while agothat I misunderstood, I've had a littletime to think about that question. And itreally goes to the upgrade question aswell.

And that is, why don't -- why

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don't companies go out and build their ownchicken houses and hire their own employeesand put their own employees in thesechicken houses and grow chickens and I'lltell you exactly why they don't. It'sbecause of supply and demand.

It's because if they wereinvesting more than half of what they'vealready got in processing plants, they gotto turn around and put the same amount ormore money into the houses to grow thechickens. First of all, they have thathuge capital outlay in the -- in theassets.

And then they've got to hire allthe employees to grow the chickens. Andthose employees are entitled to benefitsunder federal law as employees, includingunemployment if they're laid off.Including workers' compensation if they gethurt in the chicken house. All thosebenefits that you get if you're employed,you don't get if you're an independent

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contractor; right?AUDIENCE: Right.MS. JOHNSON: What was -- when

was the last time you got a check from thegovernment when the -- for unemploymentwhen the chicken processor left you out ofchickens. It doesn't happen. Okay. Soit's a way for the processing companies tocontrol costs and to adjust for the ebbsand flows of the market.

And I'm not an economist, I'm alawyer, but that's what I have observedover the last 20 years.

MR. FAMILANT: Thank you.I want to thank the panelists for

a truly spirited exchange here.And I want thank the audience.

You guys were as attentive as any panelaudience I have ever seen in my life. Youguys paid great attention.

Thank you very much.Ten minutes -- ten minute break

now before the next open discussion.

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(Whereupon, the taking of theproceedings was recessed fromapproximately 3:53 p.m. toapproximately 4:16 p.m., afterwhich the following proceedingswere had and done:)MR. FERRELL: We're going to go

ahead and get started again. And for thenext hour we'll have another round commentperiod.

And we'll use the same form as wedid before, if people who got a ticket whowanted to have -- provide some comments,could just line up in front of eachmicrophone.

And I -- I would -- I ask foryour all's cooperation in trying to keep itas two minutes as close to possible becausefor each persons that provides a longerterm amount of comments means fewer peopleget to actually provide comments. So ifyou could keep it closer to two minutes thebetter.

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And, so -- oh, and I just mightmention, just to help you keep stayingcloser to two minutes, we do have a timerthat has a light. And it goes from green,yellow to red.

And, so, anyway, we'll go aheadand get started right here.

MS. LYNN HAYES: Hi, I am -- Iwant to thank you all for this opportunityto be here. And appreciate the fact thatboth the DOJ and USDA are playing veryclose attention to this issue.

My name is Lynn Hayes. I'm anattorney with the Farmers Legal ActionGroup. We're a nonprofit law firm thatrepresents farm -- family farmers andranchers. We've been working with contractpoultry growers for probably 15 to 20 yearsnow. And since I'm a lawyer I have a veryhard time with two minutes, although, I'muse to seeing those lights.

But let me just try to make somesuggestions on how DOJ and USDA should work

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together on -- particularly to enforce thePackers and Stockyards Act.

And I think the first thing thatwe need to -- that the Department ofAgriculture needs to be very firm on is theunderstanding that the Packers andStockyards Act is different than everyother antitrust and unfair practices act inthis country.

The emphasis of that act was notjust to protect consumers, but separatelyto protect producers. And, therefore, weneed DOJ and USDA to develop a very clearpolicy analysis of how they are going toprotect producers under that act.

We need to have them develop, indetail, how they're going to take all thesescenarios that have been presented in thepoultry industry today, from the rankingsystem to the insecurity on the duration ofthe contracts, to the upgrade issues. Andtake those scenarios and develop the legalanalysis that will be used under the

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Packers and Stockyards Act to address thoseissues, which aspects of them can youaddress and how.

And I think that it's absolutelyimperative that the agencies have a clearanalysis of that.

And my suggestion would be withthis joint task force is that you put yourbest and brightest lawyers and your bestand brightest economists together and yousit down and you have the lawyers do thelegal analysis for each individual scenarioor practice that has been raised.

And to the extent that you don'tautomatically have the information, inpart, because there's so limitedinformation in the industry, you ask theeconomists what do we need and how would weask the question and how do we get it.

Then you use the very broad andeffective investigation and informationgathering authorities that USDA has andforce the integrators to give you the

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information. That has never been done, tomy knowledge, was the attempted effort tohave regular reports from the integrators.

And my understanding, I believeunder the Packers and Stockyards Act, youhave the authority to ask the integratorsfor any information on their relationshipwith the growers that you want and need toassess their practices and whether they'relegal under the act.

With that regard, I don't want --I -- I also think that it's absolutelyimperative that in these regulations thatUSDA will be issuing in the near futurethat they take -- that the Agency maintainit's position. That under A and B ofSection 192 that you don't to proveanticompetitive effect. That has been theposition of the Agency, I believe, from dayone in the passage of the Act. You shouldmaintain that position.

In addition to that, you shouldgo the next mile and define how it is at

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that -- how the various practices that youwill be addressing in the rules do, infact, affect competition or injure, causeadverse competition.

And when you do that it needs tobe looking, not at the consumer, whichtraditional antitrust law does, but, infact, at the producer and the monopsonypower of the integrators and how thataffects the producer.

And I think that's the uniqueaspect of the Packers and Stockyards Act.And that we need to develop a very strong,clearly defined policy and guidelines onexactly how you're going to enforce in eachof the livestock and poultry industriesunder the specific -- to apply it to thespecific scenarios that you're hearingabout.

And that, then, in addition tothat on a long-term basis -- that can bedone right now. But on a long term basis Ithink you should be issuing regular orders

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requiring packers -- or integrators in thiscase to report to you the information thatthe Agency needs to investigate andmaintain a handle on exactly what ishappening in the markets.

And I think that you have theauthority to do that. Have a system thatyou will then use that information, analyzeit on a regular basis and bring anyenforcement actions between USDA, referringthem to DOJ, that that information on anongoing basis presents.

My time is up. Thank you verymuch.

MR. FRED PARRISH: My name isFred Parrish. And I had a statementprepared, but pretty much most of it hasbeen covered real well. But -- so I justwanted to share some experiences under thistournament pay or performance pay.

I've had add some flocks ofchickens that were delivered that weresick. One had aspergillosis and the

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company knew it, it come from the hatchery,and I had a high mortality and the birdsdidn't perform. And I had one that hadrickets and a high mortality and the birdsreally didn't perform. And I wound up witha, I think one of them was a hundred andsixty-seven and one of them was a hundredand eighty-four points below average. Andthe company knew that it wasn't anything Idid, but I'm the one that suffered theloss.

They took my performance andsubtracted it from base pay and that's whatI got. But it wasn't anything I done, itwas something that happened to the birdsbefore I got them.

I've had them bring feed out thatwould be molded and you couldn't get it outof the bins. To them it doesn't matter,you know. You'll hear them say, "Well,yeah, it does matter, why would they dothat"? They do it, I don't know why, butthey do.

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And I wound up on the -- theprobationary thing. They cut placement,which cuts my pay because I had fallen downto the six block average of 60 points belowaverage.

And -- but, now, you know, whenthey wanted something out of me the nextbatch, they wanted me to take birds backearly because somebody wasn't going to beready. And I told them, you know, isyou-all done this to me, you knew it wasyour fault that I'm here, you know. I'mnot doing you no favors if you're not goingto help me. I told them, "You know, if yougive me back my birds, you know, take meoff probation then I will take them back".

Well, I reckon they needed badenough at that time and they did give themback to me on my next flock and took me offof probation.

As it was them, and I lost a lotof money off of that because I've got sixhouses that holds -- well, now, I was

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getting 12 -- was getting 20,000 for thehouse, but they've cut it back to 19, but,at that time, we were only getting sixteenseven. And when we originally started withthem we were getting 20,000 to the house.And the only thing that changed was thenumber of birds we got. The weights wentdown when they was suppose to go up.

And whatever they say they makethings so that you can't hardly get out ofdebt. It keeps you in debt one way of theother, you know. They may give you araise, but they cut weights and you stillain't making no more money.

I made as much as $50,000 thefirst year I put in a batch. Now, afterI've spent close to $200,000, I think mybest check has been 52 or $53,000. That'swith an incentive pay. And that's been12 years that I've been with them, youknow.

It's just not right the way theydid it. I mean, it's manipulative.

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Thank you.MS. PATTY LAVERIA: Hi. My name

is Patty Laveria, but I'm actually going toread a statement for someone who -- agrower who is very interested in comingtoday, but couldn't make it to thismeeting.

His name is Reed Phifer. Andhe's grown turkeys and broiler chickens for23 years under three different integratorswith -- with many contract changes.

And, so, what he wrote was that Ibelieve when a poultry company entices agrower to borrow and a lending institutionto loan a very large amount of money tobuild what I consider to be no more than acompany farm, the company should be forcedto see that the debt is paid in full.

I think this should be done evenit means making the poultry company aco-borrower and as much as responsible asthe primary borrower. This means that ifmoney is borrowed to be paid back in a

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10-year time frame, the contract shouldstay in place for that period of time.

What the company can accomplishthrough this channel is to have inpossession a facility that produces theirpoultry with cheap labor and no capitaloutlay. This is labor the company knowsthey cannot afford -- this is labor thecompany knows cannot afford to questionanything asked of them.

I feel making the integratorsstand behind their contract until the debtis paid in full should be mandatory. Thisis the -- this is for when the contract waspresented to the lending institution. Thiswas the major factor used in calculatinghow this very large amount of money will berepaid.

The integrator is selling thelender a bill of goods that the loan willbe repaid on the premise that the paybacknumbers are generated by the integrator'scontract are exact and guaranteed.

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I understand from talking with aprevious grower that Tyson is going to aguaranteed payback contract. This is notto say they want a burden of thismagnitude, but it is saying the lendinginstitutions are not loaning money unlesstheir payback is guaranteed.

A second point that he makes isjust that a poultry company should neverhave authority to require mandatoryupgrades without measures in place to fundthe additional work at no cost to thegrower.

The company should feel confidentin their ability to define the exactprocedures needed to produce their poultry.This should be clearly defined in theirinitial contract wording so as to make surethere is no need to add amendments whichcould cause the grower undue stress.

When and if the company learns ofnew technology that will help profit theproduction of their poultry, they should be

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responsible for the additional capitaloutlay.

And one last point that he makesis that the grower should have some pieceof mind concerning contract security. Theyhonestly have no idea what may happen fromone day until the next.

This is one reason I wouldsuggest that companies needing additionalspace for growing their poultry be requiredby regulation to stand behind any loanacquiring monies for this purpose untilpaid in full.

UNIDENTIFIED SPEAKER: I'mreading a comment on behalf of a grower whowould not come here today, was not able tocome here today because of fear ofretaliation. I'm reading his conclusionfirst.

These comments are real andserious. I cannot reveal my identity forfear of severe consequences, like no morechickens. There is, incidentally, a

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blacklist among integrators so any growercut off will not be picked up by anotherintegrator.

The subject for this memo is,"Input as a contract poultry grower theSecretary of Agriculture and the AttorneyGeneral for USDA Poultry Workshop". Thisis an uncommon opportunity and I thank youfor it.

Unpaid mandatory upgrades.Requirements prefaced by you will notchickens get back until 36 months ago newcool cell pads 20,000 -- $2,000. 24 monthsago demand arms, $2500. 20 months ago newfeed bins $8,000.

Requirements prefaced by, perhapsyou should just stop growing chickensbecause you're old and it would cost toomuch to bring your houses up to standard.12 months ago new ceilings, new ceiling,new heaters, new baffles, new cool cellsdoor, a hundred twenty thousand dollars,and four months lost production.

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Req uirements prefaced by, youwant to sell farm, new controllers will berequired: Two months ago new controllers,$14,000.

Summary, a hundred and fiftythousand dollars over three years for theprivilege of remaining to be a contractgrower.

Recommendation: Integrators arepaid in full for required upgrades.

Two, lack of contract security.I get a one year contract, which says thatif I fail to respond to any requirement,they can refuse to put chickens back in myhouses.

Summary: Integrator hasdemonstrated numerous times by you will notget chickens back until that there is noteven 1-year security.

Recommendation: Integratorshould be required to give real contractwhich extends through the amortization ofhouses and improvements.

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Unfair payment system: Thetournament method of payment has been usedfor years. This means that the integratorcomputes the flock average cost, covers howthat's done.

Summary: There's a common thingthat the integrator than can send the checkwith the chickens, meaning that all thefactors are controlled by an integrator.

Recommendation: USDA shoulddeclare this practice as unfair.

Insufficient base rate increases:Got a token raise of about 5% two years,which brings compensation for over amillion dollar facility to just underminimum wage.

Summary: Why do I do this? Mychildren will have no part of it.

Recommendation: For the industryto survive, there has to be bettercompensation to contract growers.

Financial institutions arerapidly slowing the number of poultry farm

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loans and requiring more security. Thiswill bring the industry and this country toits knees.

Finally, lack of Packers andStockyards action. I had a visit fromPackers and Stockyards about ten years ago.They listened to my story and thanked mefor my time and left. Do they still exist?

Summary. As it currentlyoperated, it has not effect on the poultryindustry.

Recommendation. Congress shouldamend the Packers and Stockyards Act togive USDA full enforcement over unfair anddeceptive practices in the poultry sector.

Congress should prohibit poultrycompanies from cancelling contracts withoutadequate cause.

Packers and Stockyards should berequired to enforce growers rights ratherthan uphold poultry companies.

Thank you for your time.UNIDENTIFIED SPEAKER: Thank you

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for the opportunity. The purpose, myfriend could not make it, he just got cutoff of chickens last week. They pulled hiscontract. And he asked me to come and givethis testimony of what me -- what he hasproposed that might would help all of us inthe chicken business.

The purpose of this is to protectand give security to the livelihood and thesource of retirement for each farmer whohas worked for years, years of nocomfortable future for their family.

He said one permit should beissued to each existing poultry house undercontract at present by the federal or stategovernment before any more houses to bebuilt.

A new person interested shouldhave to purchase a permit house per housesolely from the owner who has permit inhand, one permit to a house.

Example, if there was 975 housesin a state, the integrators could not build

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no more houses unless a new fellow, a newperson interested should have to find afarmer that wants to get out of thebusiness on his own terms, buy hispermitted houses from him so that nointegrator could cut him off for little orno reason.

This is to ensure that thepermitted farmer has a little security forhis or her future. No more houses could bebuilt in the state without a permit.

One permit equals one house. Ifa farmer has four houses he has fourpermits. One permit is valued at $30,000.

People in cities and counties arecomplaining about the smell, flies andenvironmental impact to these communities.

The chicken companies want tobuild new houses every year so houses thathave a little age can be cut off or made toupdate to comply with their rules,regulations so they have you so deep indebt that you cannot make a rational

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decision.At present farmers have put up

all their land, houses, everything theyown, their parents and grandparents to getinto this operation with no say so at allto where someone else pushes the pencil tohow much you make.

This is the first million and ahalf dollar investment for a minimum wagejob that I've ever had with no security atall.

I thank y'all.MR. BILL RONICK: Good afternoon.

My name is Bill Ronick. I'm with theNational Chicken Council. And I appreciatethe opportunity like many of the otherspeakers and panelists today, we appreciatethis opportunity.

I'd like to mention a couplethings for the record, they've been saidbefore, but I'd just like to reemphasizethose and I have a couple of otherthoughts.

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Companies have tremendouseconomic and competitive incentives toproduce good chicks and good feed. If theydon't, they're at a competitive andeconomic disadvantage to other companies.And, so, they want to produce the bestchicks and the best feed that they can, butit's a biological process in the case ofthe chicks, and that makes it much moredifficult.

For 35 years, until last year,broiler production increased. We talkabout volatility in agriculture, therecertainly is that, there's certainly isthat in broilers. But if there's stabilityin agriculture, I would suggest that thebroiler industry offers more stability thansome other parts of agriculture based onthat 35-year record. If you go back 35years, I would suggest the reasonproduction was adjusted downward then wasbecause of government policy. And I'm notsuggesting the reason we adjusted

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production down last year was governmentpolicy, but I think it was part of it.

This year broiler production,luckily, is increasing again, USDA says 2%.I think maybe we can do a little bit morethan that, but every other meat, beef,pork, turkey, their production is down thisyear. Broilers is the only one that'sgoing up. Next year we're going up againmore than 2%, 3%, maybe more. So we'recontinuing to get back on this track ofcontinually growing year after year.

One of the questions is why don'tcompanies grow -- own grow out facilities.

Well, a large company inCalifornia, one of the largest companiesdoes, in fact, grow its -- own essentiallyall their grow out production. InCalifornia they're one of the mostprofitable companies, I haven't seen theirbooks, but I understand they're one of themost profitable companies.

There's a small company in Ohio

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-- I've already spoke for two minutes.A small company in Ohio does

that, owns their own production, so whetherlarge or small. And then there's othercompanies in between that grows -- thatowns some of their own production.

And just quickly, Brazil, Mexico,China, a lot of other countries would notonly just like to take our export marketsoverseas, they would like to export theirproduct here.

And I'm going to say -- and we'renot going to get into the word if, I'mgoing to say when these companies meetUSDA's inspection requirements, theirproduct will be coming here. And we willbe competing against not just theirproduct, but their growers, their feed,their chicks. So it's a global worldcompetitively and it's getting more so.

International trade, our exportstake about 20% last year. Russia andChina, as we speak, are disrupted, they're

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our two biggest markets. They account for40% of our exports. We hope those marketsreturn, but, as I speak, they aredisrupted. And, luckily so far, I don'tthink that problem has gone back to thegrowers, I think there's some insulationthere.

The one question I was asked thatI didn't hear a good answer is, when I talkto companies, most companies, manycompanies, if not most companies, have alist of people who want to grow chickens orwant to add to production.

Now, I understand in the shortrun, perhaps, you can misrepresent theinformation, but we've been doing this forfour, five decades. And as Abraham Lincolnsaid, "You can trick some of the people orfool some of the people some of the time,but it's very difficult to fool all thepeople all the time". So I'd like to hearan answer about, if this such a bad deal,why have we've been able for four or five

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decades to continue to have people whowould like to get into the business.

And I appreciate thisopportunity. Thank you.

MR. KIRBY NASERY: I'm KirbyNasery. I've been in the business for 21years as a poultry grower.

To answer your question that youjust asked. When I got in it in 1989, Iwas working offshore on an oil rig. Myfather had retired. My wife had a reallygood job and we were doing really good. Weput every dime back we made back intochicken -- six chicken houses for sevenyears. We paid for them in seven years.That's -- that's unheard of, but we putevery dime we made back into them.

I wasn't even going to bring thatup, but the reason I got up was for theranking system. Right now I'm number nineout of 333 growers on a six block average.I've got two three house farms. I'm alsonumber 126 of 333 farms.

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Now, how is the ranking systemfair? Everything I have got is the same.I've got the same equipment. Get thechickens the same day, sell them the sameday. How is this possible if the rankingsystem is fair?

Do I spend more time in threehouses than I do the other three houses?Do I better -- do I do a better job?

My -- my opinion of it is we geta lot of split loads of feeds. And I havenever called the Packers and Stockyardsabout this, but we will get three farms --three different farms on one truck of feed.

You've got a driver that comesout there, stays on the cell phone thewhole time he's unloading feed, you know.6,000 pounds on three houses, which is onebin of feed, makes two points feedconversion. Two points feed conversion cancost me $3,000.

I just -- you know, I don't -- Idon't know the answer for the ranking

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system, but what we've got is not fair. Ihave been on top and I have been on bottom.

And, like I say, I don't have ananswer for it, but, anyway, thank you.

MR. DONALD RAY WILKES: I'mDonald Ray Wilkes from Geneva County,Alabama.

There's been a lot of thingsdiscussed here; a lot of things that I'vedealt with. One thing that I'd like tomention, a lot of it's been talked about,is upgrades.

And the biggest thing in ourinput into chickens are feed. Thetechnology that's available today, whyaren't there some sort of technology onthat truck to let them know that this houseand this bin putting this much feed in it.If they can do it at a feed lot wherethere's cattle running across the troughthere and he moves a foot and knows he's atthe wrong spot, why can't this be done withchicken feed because I had it happen to me?

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A load of feed came in on aSaturday. When it -- so I had the bestfeed conversion of anybody, wasn't nobodyaround me.

So they came down and I told themto go back and look for the feed tickets.

He said, "We haven't got it".I told him to come back on that

Friday if they didn't get it because allthey was going to do was hurt anothergrower.

So I produced the ticket for him.He said, "We haven't got it".A week later in the mail they

made up a ticket and sent it to me. So thetechnology that's available today, whyaren't they upgrading the feed trucks.

Thank you.MR. ALTON TERRY: I guess a lot

of you might know who I am. I'm AltonTerry. All I wanted to do was watch mychickens get weighed. The company wasn'tdoing it, it wasn't letting us watch our

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chickens get weighed.I was on the horn to Jim Baker,

the former GIPSA administrator.He said, "No, you have the right

to watch your chickens get weighed".I knew that they were messing

with the weights in our complex, I knewthat they were doing that, but every time Iwanted to go and watch my chickens getweighed they would never let me weigh it.And, as I understand it, the complexmanager even had to sign off that we got towatch our chickens get weighed.

I want to know why the Packersand Stockyards Act isn't working --administration does not have real penaltiesfor me asking this question, for me towatch my chickens get weighed, and for afew other little things, they cut me offfrom growing business and cost me hundredsof thousands of dollars.

Where is the penalty to them?If they can't weigh a chicken

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right should they even be allowed to weighthe chickens, you know? Maybe thatfunction, that part of vertical integrationshould be taken away from them. If theycan't weigh the feed right and give aticket right to us, maybe that should bediversified -- you know, divested fromtheir part of their integration. If theycan't handle their business correctly andwant to cheat the farmer with their power,their market power that they have, that --those parts just need to be taken away fromthem.

Now, I understand the Packers andStockers Act is being undermined by thisproof to harm to competition. When they'recheating all of these farmers out here,they're getting a monetary advantage in themarket.

When they're all doing it they'recolluding in that -- that -- in gettingthat advantage from the farmers. They'remaking money off of the farmers by farming

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the farmers and that gives them acomparative advantage to any new entrant inthe market that wants to come in.

And, so, you know, they'recolluding already. And that's the excusethat the federal judges say that we -- youknow, that we can't have this law enforced.

I want to know something, dothese guys not know the difference betweenor and and? Do they not think the peoplewho legislated this law know the differencebetween or and and? I mean they did knowthe difference.

These prohibitions were there sothat these companies right here could notcheat the farmer to gain value and to be inthe marketplace competing with each other.It reduces the price of the market that allof the people get in the market. And if Iget cut off of chickens I can't get tenother growers and go and compete with thembecause they're cheating growers to get alower price.

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I mean, this is ridiculous what'sbeen happening with these federal judges inthe court cases.

And, you know, if Congress needsto act -- I mean, they've acted time andtime and time again, maybe we need to getrid of a few judges, maybe we need to getthe House Judiciary Committee to take outsome of these judges who are just sidingwith these corporations and cheating thefamily farmer.

I mean, what else can we do?That's what the Constitution

allows, maybe the Justice Department shouldask for that.

MR. WEAVER: I don't know ifgentlemen were here for the last panel thatI was on. There's a couple of points thatI didn't get to finish on that panel thatI'd like to clarify for the folks here ifyou don't mind. And it's directed to you,too, because these are things that you canhave input on, too, and, hopefully, make

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some changes on.They didn't give me the

opportunity to express my example about theKFC price, $26.99 for a 12-piece bucket ofchicken. And us, as growers, got 30 centsof that. And that being the case, there issomething fundamentally wrong with -- withour private enterprise system here in thiscountry.

But when I do -- I had thesechickens if I raised them, I had them forat least 35, 36 days. The integrator hasthem for three days; the day they get themfrom the layer; the day they take them outof the hatchery and bring to me; and theday the process them. So, you know, whereis the equity in that?

We've got them ten times longerthan the integrators do and they make, Lordknows, how much more profit than we dobecause they'll never tell us.

And the example that I had of asettlement from 1985. I don't know if you

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gentlemen saw that. We have proof that in1985 growers were making 4.85 cents apound. And today our base pay is 5.05cents, two-tenths of a cent a pound morethan it was in 1985. How is that fair?

Look -- look how much all ofother costs have increased, fuel,equipment, labor, taxes, insurance, buttwo-tenths of a cent a pound increase.

So we -- we have to rely -- we --we can't do it as individuals. Even asassociations, we don't have the power orthe authority over the mega corporationsthat run agriculture in this country thatyou folks do. And to me, that's your job.

We need your help to change theway that agriculture is run in thiscountry, you and the Department of Justice.I forgot, we got the Department of Justicehere, too. Please help us. We need yourhelp.

MR. MARK HUDSON: Hello. My nameis Mark Hudson. I'm a poultry grower from

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Red Boiling Springs, Tennessee up near theKentucky line got involved in the poultryindustry 2004. And, probably, as many herewould tell you, I picked the absolute worstyears to get -- to get into the poultryindustry.

The issues I'd like to -- like tobring to light probably isn't as pertinetto GIPSA as it just the finances of thepoultry industry.

As Professor Taylor alluded toearlier, one of the unintended consequencesof vertical integration is that it hascreated a blackhole of information.

In other words, those people that-- that would be on that waiting list toget into the poultry industry do not havegood and accurate information that isunbiased from the industry.

Looking back into my ownmistakes, that would the chief mistake. Idid search at great length to find thepertinent information, not just necessarily

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just -- just the costs, but the units, howmany kilowatt hours of electricity, howmany gallons of gas per -- per house top.I tried to find that information and thatinformation did not exist. Both myself andmy lender relied on the cash flow statementas delivered by the -- by the integrator.

Now, I think we've heardtestimony numerous times today that those-- those particular cash flow instrumentsare not accurate. And both myself and thelender based their -- their decision to gowith the loan and go into production onthat particular document. That documentwasn't accurate from the first flock that Iplaced and set. I think their estimate, atthat time, was that it would be a 28 -- 28cents out of every dollar would go to covermy variable costs. And that would leave meabout at 72 -- 72 cents out of every dollarto handle my fixed costs, you know, mypersonal income and to maintain thefacilities.

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And the situation that we've gotinto on the facilities is that we have farexceeded the threshold of diminishingreturns.

The capital investment of thesefacilities, while they may be greatlybenefiting the integrator, are notreturning any value to us whatsoever. Whenyou compare that to the fact that we'remaking to within a very small fraction ofwe were generating in income in 1985. Thepoultry industry is in great danger ofself-regulating itself because these truthsas to how much it costs to operate things,and also the overhead cost and ability ofincome to sustain that, will tell on itselfeventually unless something is changedabout the industry.

So the industry representativesare here. This is a great threat to you.It's already a present threat to thegrowers, but if you want to continue togrow in the United States, you're going to

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have to find out how to overcome this.Either it has been mentioned, you

cosign on, you become a full partner withus, or you pay for the part that's going toreturn you some money and leave us the partof the investment that returns us somemoney, but we will have to partner on this.

And apart from any GIPSA issuesthat may come up, you're facing a realeconomic problem in the United States onoverhead and the inability to sustain thatoverhead with the income that you'rereturning to us.

So that would be my statement.Thank you.MR. FERRELL: Well, seeing no

more folks wanting to provide comments,suddenly you got bashful. No, I'm justkidding.

Well, I just want to thankeverybody for coming to today's competitionworkshop. I think we heard a number ofissues today and we learned a lot from our

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panelists. And I thank them for taking thetime to participate today.

I especially want to thank thepresident of Alabama A&M and all the folkshere at the University that did everythingthey could to get everything ready and theydid a great job, and I thank them greatlyfor doing that.

I also thank our folks at USDAand DOJ for helping get all the logisticsand everything put together. And, as Ihave said at the Iowa workshop, Iappreciate the good working relationshipwe've had with the Department of Justiceworking on these issues and looking forwardon that.

I want to thank Congressman Davisand Alabama Agricultural Commissioner RonSparks for attending this morning.

And I will just mention that ournext competition workshop will be held onJune 25th. And it will focus oncompetition in dairy issues in Madison,

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Wisconsin. Then we'll have a livestockcompetition workshop on August 27th in FortCollins, Colorado. And then a workshop onmargins on December 8th in Washington,D. C.

I will turn it over to, Dudley,or, Bill, if you have any comments.

MR. STALLINGS: I just want toreiterate on behalf of the Department ofJustice our thanks to the Alabama A&MUniversity. It's been truly a privilegefor us to be here. And a lot of people putin a lot work behind the scenes to get this-- to get this event going and -- and Ithink we had a really good and productiveday today.

I especially want to thank all ofyou for coming here. We have heardthroughout the day that there -- there is areal hardship in you being here, either forfear of retaliation or just the mere factof having to take a day off of work to comehere and tell your story. We have -- we

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have heard your stories, we -- weunderstand them, we appreciate them and weunderstand the importance of the issuesthat have been talked about here today. Soonce, again, I just want to thank you allfor -- for being here.

MR. DUDLEY: I'd just like to saythat -- I want to reiterate and tell you afact. The last time that the Packers andStockyards Act was on a presidential agendawas on Woodrow Wilson's agenda. That'sback when it was passed.

The Act is on President Obama'sagenda. I think we have shown today thatwe are serious about this. To have theSecretary of Agriculture, to have theAttorney General, the Assistant AttorneyGeneral here. If for nothing else, itcosts a lot of money to get them down here.

But they are very, veryinterested, as we are, in solving problemsin agriculture. It is very important, notonly to the industry, but to the producers,

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the farmers and the consumers and we'recommitted to do so. And I want to thankall of you for taking time out of your busyschedules to come and visit with us andmake comments.

MR. WEAVER: We owe thanks tothese people right here. So they need areally big hand.

END OF HEARING

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C E R T I F I C A T ESTATE OF ALABAMA )SHELBY COUNTY )

I, ROBERT KEITH KENNEDY, Notary Public for theState of Alabama at Large, hereby certify that I am theCertified Court Reporter who made machine shorthand notesof the foregoing proceedings at the time and place statedin the Caption thereof; that I later reduced my shorthandnotes into typewriting; that the foregoing pages numberedseven through three hundred seventy-two, both inclusive,contain a full, true, and correct transcript of proceedingshad on said occasion.

I further certify that I am in no way relatedto nor employed by any of the parties, the witnesses orcounsel, and that I have no interest in the outcome of thismatter.

Given under my hand and seal this the6th day of June 2010.

____________________________Robert Keith KennedyCCR License No. 318

My Commission ExpiresSeptember 5, 2010