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The perils of vertical integration

February 12, 2009

For years the commercial chicken industry has set up a nice scheme for themselves. They have individual farmers build high dollar commercial chicken houses, then offset their own risk by contracting with those now in debt and desperate farmers to raise the chickens they supply, at the farmer’s risk, and at a predetermined price. It looks like the downturn has got some chicken giants canceling their contracts, leaving the farmer with highly specialized houses and mountains of debt. WSJ has put up a video telling the story.
SPOILER WARNING: There’s a sob story plea for bailout money at the end.

LINK: This farmer can’t get the embed to work.

I’ve talked here about how I think the proposed Cow Tax is a corporate supported scheme to get break independent cattle ranchers and get them vertically integrated like chicken producers. No thanks.

Bonus: Personal hero, chicken rancher, self made millionaire and libertarian farmer Joel Salatin is thriving, and under no threat of corporate induced bankruptcy. His troubles are of the bureaucratic kind.

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