Poultry firms in the US have access to detailed information about farmers’ pay that gives them extraordinary power over suppliers when negotiating the terms of their contracts, leaked documents have shown.

A report for poultry companies produced by a secretive data-sharing firm, reviewed in a joint investigation by the Guardian and the Food and Environment Reporting Network (Fern), shows sensitive market information including how much producers are being paid per chicken.

US anti-trust officials are currently conducting a grand jury investigation into poultry companies in response to a major class-action lawsuit alleging that the firms use information supplied by Agri Stats, a data company, to keep farmers’ pay low and chicken prices high.

Agri Stats produces daily reports for the poultry industry on chicken production, and has enabled companies to share detailed financial information with one another for decades.

The 2011 Agri Stats report seen by the Guardian and Fern includes information the industry considers proprietary, such as the time that elapsed between a farmer’s flocks and comparisons of regional pay with the national average.

Agri Stats says its information can’t be used to make decisions about future chicken production and pricing. But in lawsuits, farmers, wholesalers, distributors, and retailers have all begged to differ.

How chicken farmers lost control

The broiler chicken industry in the US is highly consolidated. In 2015, just five companies – Tyson Foods, Pilgrim’s Pride, Perdue, Sanderson Farms, and Koch Foods – controlled about 60% of the entire chicken market. The companies own and operate all the means of production, including the feed mills, slaughterhouses, trucking lines and even the hatcheries that develop the best strains of chickens.

Farms are the only part of the market these big companies don’t own. Independent farmers borrow millions of dollars to build sophisticated warehouses, where they raise hundreds of thousands of chickens at a time. Crucially, though, they are not entirely independent. Farmers raise the birds under contract with an integrated company, giving firms strict control over operations. The poultry companies own the chickens, the feed, and even control the chickens’ medical care. All farmers can do is try to raise the birds as efficiently as possible, even though most of the business is out of their hands.

Critically, none of the information in Agri Stats’ reports is available to the farmers themselves. This puts them at a severe disadvantage when they try to negotiate contracts or ask for pay rises, says C Robert Taylor, an emeritus professor at Auburn University and leading expert on anti-trust laws and enforcement in the meat industry, who calls it “the biggest imbalance in all of agriculture”.

The Agri Stats president, Brian Snyder, said in an email: “Agri Stats strongly denies any and all allegations by farmers or plaintiffs in the ongoing lawsuits that Agri Stats reports can be used to coordinate either grower compensation or broiler prices … The work at Agri Stats is important and it really does help make protein production more efficient.”

Charles Morris, one of the largest chicken producers in Kentucky, works under contract for Tyson and is among several farmers who brought a suit against Tyson in 2015that remains ongoing.

“We’re proud of what we do because we know we feed a lot of people in America and across the world,” he says of poultry farmers. “But we’re not proud of who we grow for any more.”

An obvious solution for farmers like Morris would be to sign up with another poultry company. Evidence suggests this rarely happens, however: a report from the National Chicken Council, an industry trade group, found that in 2014 just 5% of growers switched poultry firms.

One reason could be that poultry companies have an unspoken agreement not to poach farmers from one another. Farmers have alleged this, not least in a 2017 class action lawsuit.

Another reason for farmers’ loyalty is that many poultry growers live in regions where, as a result of consolidation, there are just one or two processors left.

“If we could go someplace else, we would grow chicken for someone else,” says Morris. But instead, “you can’t go anywhere. You’re stuck.”

In the face of anaemic competition, the take-home pay of chicken farmers has fallen. The National Chicken Council found that average farmer pay fell more than 6% between 1988 and 2015 when measured in 2009 dollars. Meanwhile, consumers spent $95bn on chicken in 2019, and poultry companies have logged record-breaking profits in recent years.

“We’ve all at one time or another contemplated having to file bankruptcy,” says Morris.

Asked to comment on farmers’ allegations and on stagnant wages, Tom Super, senior vice-president of communications at the National Chicken Council, said the body has “nothing to do with grower pay, which is determined by a business contract between two private parties”.

Gary Mickelson, director of media relations at Tyson Foods, said: “The average contract farmer has been raising chickens for us for 15 years. The compensation we provide is set out clearly in contracts the farmers voluntarily enter into and the contracts are typically three to seven years or longer. The farmers are free to discuss the terms of their contracts with whomever they want, including other farmers.”

The secretive data-sharing company

Morris’s suit names Agri Stats as a key player in the alleged scheme to reduce farmer pay. Morris has some experience with the company: he was once a board member of the poultry farmer collective Gold Kist, which was bought by Pilgrim’s Pride in 2006. During his tenure, Agri Stats reports were seen as “the bible [of] the poultry industry”

Agri Stats was founded in 1985 by poultry feed dealer Jim Cox, who told Bloomberg Businessweek in 2017 that the firm vetted its business model with an outside attorney to ensure conformity with anti-trust laws.

The Department of Justice has also looked into whether Agri Stats’ model violates anti-trust law. An investigation opened in 2010 closed two years later without the DoJ requiring the company to change anything about its business model.

Now, the Trump administration has seemingly reopened the case. On 21 June, the DoJ intervened in a private sector class-action lawsuit filed by food distributor Maplevale Farm. The agency asked the US district court for the northern district of Illinois to stop work on the case temporarily to prevent interference with DoJ’s own grand jury investigation.

Agri Stats argued during the 2010 investigation that it operates simply as a benchmarking service, and that it preserves confidentiality among processors by masking the sources of the data it reports. A manager at Tyson, say, would see their particular “complex” – the collection of farmers surrounding a particular processing plant – listed by name in their version of a report, but the other complexes would be listed only as a number.

In practice, however, there is evidence that the poultry companies can reverse-engineer the data to figure out which complex belongs to whom.

Rita Korn, who worked for Agri Stats as a senior executive assistant and office manager from 1996 to 2013, says it was easy for poultry companies to figure out which plant was which. This was partly because the plant numbers did not change from report to report, Korn said.

“Those people all know each other,” Korn says. “Anybody that followed those numbers and had a brain in their head – if they were in top management at one of those places – they knew who was who in those books. Your job is to figure out who was who in this book. I think they cared more about that than they did their own numbers.”

Agri Stats denied during the 2010 investigation that the data in its reports were identifiable to industry insiders and said they couldn’t be used by competitors in an anti-competitive manner because Agri Stats does not collect data on the nature of farmers’ contracts with processors.

Taylor says that in order for a collusive agreement to work, there has to be a mechanism in place to monitor competitors’ behaviours and ensure no one is breaching the agreement. “That’s where Agri Stats or something like Agri Stats can get in to a collusive arrangement,” he says.

In January, the two largest US food distribution companies, US Foods Inc and Sysco Corporation, brought lawsuits against Tyson Foods and other big poultry companies alleging that they used Agri Stats data as a tool to coordinate their production cuts, inflating prices for consumers. Food retailers Walmart, Kroger, Albertsons, and others have since brought similar suits. Agri Stats was recently dismissed as a defendant in a lawsuit that alleged it was used to facilitate anti-competitive behaviour in the beef sector.

This story was produced in collaboration with the Food and Environment Reporting Network, a non-profit investigative news organisation