Chicken Growers Squawk Over Squeeze by Processors : Small business: They say they’re forced to bear ever-higher costs by big buyers who are squeezing profits and independence out of family operations.

Virgil Gardner came within spitting distance of the good life.

After working for a decade as a hired hand on a little farm here, he scraped together a down payment on it and became one of the few blacks on the Eastern Shore to run his own chicken-growing operation. Fifteen years later, he had almost paid off his mortgage.

“I owed less than $1,000. Then it got dark all at once.”

Gardner, a lean, powerful man with a gentle manner, said that chicken companies stopped sending him chicks because his chicken-growing sheds were outdated.

So he shook hands on a deal with a manager from Perdue Farms Inc. Gardner would remortgage his farm for money to renovate his sheds. After the repairs, Perdue would send him flocks to raise.

About a year later, Perdue canceled the contract, he said.

Now Gardner, 67, cannot make the payments on his $66,000 loan. He is working odd jobs to put groceries on the table. And to clear the debt, he is trying to sell the 43-acre farm and little green farmhouse where he raised his seven children.

Across the Delmarva Peninsula, chicken growers are telling similar stories of ruin as they are slowly squeezed dry as part of a quiet restructuring of the industry.

Like the chicken catchers who struck Perdue for four days last week over a pay cut, growers say they are being forced by the big processing companies to shoulder ever-higher costs.

Companies like Perdue, Tyson Foods Inc., Showell Farms Inc., Hudson Foods Inc. and Mountaire Corp. are squeezing the profits and independence out of the 2,700 family chicken-raising operations on the Eastern Shore, the growers say.

The unrest has become so strong that some of the traditionally independent growers on the Eastern Shore have started an organization in an attempt to negotiate or legislate better conditions. It is part of a nationwide revolt that has sparked creation of chapters of the Contract Poultry Growers’ Assn. in 13 states in the past six months.

The conflict between the small growers and the big processors was probably inevitable. Generations of farmers have had to confront similarly brutal economic realities: When there are lots of farmers, the competition is so fierce it grinds away at their profits. And when a few middlemen control the farmers’ access to markets, the middlemen can profit handsomely, sometimes even unfairly.

Just a few generations ago, growing chickens was a common but risky business. A farmer would buy his own chicks and grain, then sell the chickens to one of the approximately 200 processing companies on the Eastern Shore. A farmer could make, or lose, a bundle on each flock, depending on the market.

Then companies such as Perdue, Showell and Tyson offered the growers a safe haven. They would pay farmers to raise the company’s chicks and the company would even provide feed and fuel.

The farmer only had to build the chicken house, pay for electricity and take care of the birds for the seven weeks it took to grow from a chick into a 5-pound broiler. They were guaranteed a minimum price and could earn a bonus if their chickens grew fat without overfeeding.

Soon it was impossible to raise chickens the old way. A few companies bought out or broke the competition. Today, the eight remaining processors won’t accept chickens from growers not under contract.

Chicken processors say critics like Gardner are in the minority. Larry Winslow, vice president for fresh poultry operations at Salisbury-based Perdue, says his company dropped Gardner because he was an inefficient grower.

But Winslow says neither Perdue nor any other company drops growers often. If they did, banks wouldn’t grant loans to build chicken houses. And since the companies need more and more farmers to meet increasing demand for chicken meat, scaring the growers and bankers off “would be suicide.”

Payments to growers may be low now because there is a glut of chicken--industry analysts say many processors are actually losing money on chicken. But with eight processing companies competing on the shore, the demand for growers is so great that any good grower should be able to get flocks and make money, Winslow said.

Local bankers agree. Joel Boren, president of the Marva Farm Credit Bank, a major supplier of chicken house loans, said his bank is eager to make more chicken house loans because the repayment rate is very high, and the industry “has been good for the shore.”

The few farmers who are having trouble are probably bad managers, he said “As long as you maintain your operation and keep it up to date, the equity remains,” Boren said.

That view draws angry denunciation from many farmers, who are quick to list their grievances.

The companies, they say, are constantly pushing additional costs onto the growers, chipping away at the farmers’ profits to grab more for themselves.