Growers left without contract as chicken meat industry struggles with drought and COVID-19

Have you noticed how cheap chicken meat is?

It has remained cheap over the past 20 years while prices for other meat have been rising, putting a lot of pressure on growers and processors.

Now, farm lobby groups want an inquiry into the poultry industry, claiming it is going down the same path as the dairy industry and dollar-a-litre milk.

The chicken industry is dominated by two major processors, meaning that in some parts of the country, growers have no choice about who they can sell to.

Tony Mahar, chief executive of the National Farmers’ Federation, said there was the potential for misuse of market power and unfair bargaining, and it was putting pressure on growers.

He said complex contracts, a lack of competition in the processing sector and the small operations of many growers meant they lacked the power to strike a fair deal.

A graph showing chicken meat prices have been declining in recent years, while of meat has been going up
Chicken meat prices have been stagnant in recent years.(Supplied: NSW Farmers)

Growers left without a contract

John and Jennifer Courtney at North Casino in New South Wales were told at the end of last month that their contract was ending and it would not be renewed.

The Courtneys, without recourse, said the decision left their purpose-built chicken farm and millions of dollars of infrastructure laying idle.

“The farm was valued by the bank at $4.5 million in 2017 and now they say it is worth $1.1 million,” Mr Courtney said.

“All the chicken farm infrastructure is worthless; the company has taken away everything from us, including our income.”

Mr Courtney said it was an industry-wide issue and the situation was urgent.

“I have heard that 30 chicken farm in the Hunter Valley could be the next ones to lose their contracts as growers.”

Chicken grower John Courtney in a hat and sunglasses out the front of his sheds
John Courtney says his sheds are worthless now that his processor has cancelled his contract.(Supplied: NSW Farmers)

He said he did not have a lot of faith in the competition watchdog.

“By the time [the ACCC] get around to doing anything, we will all go broke as they are a toothless tiger.”

Calls for mandatory code of conduct

The NFF and the NSW Farmers Association are calling for a mandatory code of conduct, similar to the one introduced in the dairy industry.

NSW Farmers Association president James Jackson said demand for chicken had increased but returns for farmers were “paltry”.

Mr Jackson said he put that down to the closure of processing plants in NSW which had left growers with virtually no choice in who to contract to in their region.

Processors under pressure as well

Baiada and Ingham’s dominate the industry, processing about 70 per cent of the nation’s chicken meat.

In a statement, Baiada said it would cooperate with the ACCC.

A spokesperson for Ingham’s provided a similar response.

“We would never pre-empt the regulator and will make no comment until we have greater clarity of their concerns.”

John Cordina, who runs one of the smaller processors in Sydney, said the issue was far more complex than grower groups were saying.

He said processors faced many competitive pressures, not just the power of the big two supermarkets.

“Red Lea Chickens, which was a family processing company operating for over 50 years, lost their business without ever supplying the supermarket sector,” Mr Cordina said.

“In recent years, Sunnybrand (on the NSW North Coast), Baiada in Sydney, Ingham’s at Casula and Cardiff and Red Lea Chickens have closed down processing operations.

He described his family business, the oldest in Australia and a survivor or two World wars, as the last lifeline to chicken contract growers based in Sydney and the Central Coast.

“If we are made uncompetitive, growers will be the big losers as well as the company,” Mr Cordina said.

The NSW Farmers Association said it wanted the ACCC to establish a Treasury-directed inquiry into the poultry meat industry.

“This will clearly show the state of the industry and better highlight avenues of reform to support fair and effective competition,” Mr Jackson said.