U.S. Senators Chris Coons (D-Del.) and Saxby Chambliss (R-Ga.) introduced an amendment to the Food, Conservation, and Energy Act of 2012 -- the "Farm Bill" -- on Thursday to commission a pair of studies on the feasibility of insurance programs to protect America's poultry growers from catastrophic loss, such as disease outbreaks, and from bankruptcies of poultry integrators.
"Poultry growers and integrators play an important role in our local, regional, and national economies," Senator Coons said. "Between the recession and the volatile cost of chicken feed, the number of factors that can have a catastrophic impact on local economies but are beyond the control of our local farmers and integrators is rising. We saw this in Delaware when Allen Family Foods went bankrupt last year and 120 Delaware growers were put at risk. The studies we propose in this amendment would explore whether insurance programs make sense as a tool for helping our poultry farmers and integrators continue to thrive during an uncertain economic time."
Delaware is currently home to 800 poultry growers running more than 2,500 houses. According to a University of Delaware report, the poultry industry has a $3.2 billion impact on the Delaware economy, supporting more than 13,000 jobs in Kent and Sussex counties.
"As policy makers, we must insure that famers have an adequate safety net so that they may continue to provide Americans with the highest quality of food," Senator Chambliss said. This is even more important when we are talking about poultry producers, who risk losing their entire stock from an unexpected disease outbreak," said Senator Chambliss. "These studies are necessary to ensure that such insurance programs would benefit both the poultry farmer and the country."
The first study would focus on the impact of the growing number of bankruptcies of poultry integrators -- companies that hire local farmers to raise their chickens, then process and sell the chicken products in the market. Because local poultry farmers are typically only contracted with one integrator, if that integrator goes bankrupt -- as Seaford, Delaware-based Allen Family Foods did last year -- the farmer would be financially exposed unless able to secure a contract with another integrator. The Coons-Chambliss amendment would require the U.S. Department of Agriculture (USDA) to study the feasibility of an insurance program that would provide a safety net for individual growers in the event that their integrator files for bankruptcy and they are unable to secure contracts with another integrator.
The second study would focus on the cascading economic impacts of catastrophic events, such as disease outbreaks within America's poultry industry. While the poultry industry, state and federal entities have established the gold standard for poultry disease prevention, outbreaks are still possible, and can have significant impacts on integrators and local poultry farmers. Disease outbreaks can result in significant losses for both growers and integrators, including destruction of flocks, quarantined farms, and closure or restricted access to export markets. Often, a disease outbreak in one community can lead to prohibitions against imports from a much larger region, or the entire country. The Coons-Chambliss amendment would require USDA to study the feasibility of an insurance program that would provide support for growers and integrators in the event of a disease outbreak or other catastrophic event that results in significant losses.
The two studies would come at no additional cost to taxpayers.
Senators Coons and Chambliss have received assurances that their amendment is among those being strongly considered for a vote as Senate leadership works toward an agreement on amendments.
The National Chicken Council and the National Turkey Federation support the legislation, the full text of which can be downloaded as a PDF here: