(This post originally appeared on The Washington Post)
Building a chicken farm isn’t cheap, with the average 40-by-500-foot ventilated barn costing about $300,000.
Which is why many poultry farmers – who are usually small businesses with well less than 500 employees – seek out loans that are backed by the Small Business Administration. Now these loans are being more closely scrutinized by the very agency that issues them.
A new audit by the Small Business Administration’s Office of the Inspector General has called into question about $1.8 billion of these government-backed loans that were made to the operators of poultry farms. The issue is whether these independent companies are really independent at all – or just “serfs” of a small group of much larger billion-dollar poultry companies that dominate the industry.
The farmers are usually financially responsible for the construction and operation of their farms. But the audit alleges that they’re not the ones calling the shots. They are contracted to grow the birds that are furnished on consignment by large poultry companies from chick to slaughter.
On top of that, the larger firms allegedly dictate how the independent farmers must design, build and frequently upgrade their facilities, with everything from their lighting, heating, ventilation, cooling, flock feeding, watering and the culling of birds falling under strict guidelines. All of this requires capital and it’s been coming from taxpayer -financed guarantees. Between 2012 and 2016, the SBA backed 1,535 loans to these small farmers.
The auditor’s report comes as no surprise to Mike Weaver, the president of an industry advocate group. Weaver, according to this report from Mother Jones, is calling for more actions to loosen the control the big poultry farms have over their independent counterparts. He wants to “ensure poultry growers can operate as small businesses” and to “stop subsidizing increased production for these multinational corporations by American taxpayers.”
The agency has until Aug. 31 to address its auditor’s concerns.
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