The Australian Competition and Consumer Commission (ACCC) is investigating the chicken meat industry, including the bargaining power of processors compared to chicken growers.
NSW Farmers had called for an inquiry, arguing the consolidation of the industry had left growers out of contract and stranded with millions of dollars worth of infrastructure.
In 2014 there were 265 contract poultry meat farmers in the state, but NSW Farmers now estimates there are less than 190 contract growers left.
The loss of around 75 growers is linked to the closure of six poultry meat processing plants in NSW over the past 10 years, with only three still operating.
NSW Farmers president James Jackson said with no export market, the Australian chicken industry was left exposed to pricing pressure from the supermarkets, with the price of chicken barely rising since 1994.
"I would equate it to the dairy industry," Mr Jackson said.
"The profitability of processing has essentially been hollowed out, subsequently if you don't get one of those big supermarket contracts, you are out of business," Mr Jackson said.
"They're transferring that market pressure back to growers and we're seeing the incredible situation where a large numbers of people are left with stranded assets and nowhere else to go."
Mr Jackson said the ACCC had a "laissez-faire approach to competition" and had made a mistake in not taking geographical constraints of chicken farmers into account.
"Although there are two large processors in the state, the geography and animal welfare concerns prevent you from moving those birds to an alternate processor, so essentially they are monopolies," Mr Jackson said.
Chicken farmers left with no contract and millions of dollars worth of chicken-specific infrastructure
A couple of months ago, chicken farmers John and Jennifer Courtney, Fairymount South, North Casino, were told their contract with their processor was ending.
"The processors have pulled out of the Northern Rivers," Mr Courtney said.
"We all used to grow for a smaller company called Sunnybrand Chickens at Byron Bay, but it was taken over by Inghams (in 2011), a move approved by the ACCC. Now Inghams has pulled out of our contracts because the freight is too expensive.
"It costs 13 cents extra to grow a chook here than it does close to their Brisbane plant."
He said when a major processor shifted its operations from South East Queensland to Tamworth, where mega sheds have been built, it left a number of surplus sheds available in the Brisbane region.
"The companies involved with growers here figured they could get farms down the road and didn't need us anymore."
Mr Courtney said with a contract in place their chicken farm was valued at $4.8 million dollars. But, without a contract it dropped to $1.1 million, around $3.5 million of chicken-specific infrastructure valued at only $120,000.
He said they were looking at options for re-purposing the sheds, with aquaculture or laying hens their two best bets, but that would involve a large investment.
Idea for federal government levy
Mr Courtney does have an idea for how the government could help chicken farmers left without a contract and with stranded assets.
"The price of a hot chook has been $10 for 30 years," Mr Courtney said.
"I am suggesting there is a government-administered levy on every chicken processed in the country, a levy of 10c per chook would raise $50 million annually.
"That money could be administered by the federal government to pay growers the difference between bank valuation of chicken farms with a contract and the real estate value of a farm without a contract.
"Similar to the dairy industry post-deregulation."
The ACCC said its review of the industry would run from July to December.
A spokesperson from Inghams said the company did not wish to pre-empt the regulator and would make no comment until it had greater clarity on the terms of the inquiry.
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