SALISBURY — Last week, Salisbury-based Perdue Farms Inc., which is the fourth largest poultry producer in the country, announced a series of precedent setting reforms that aims to improve the lives of the 700 million chickens it raises and slaughters each year.
Many industry experts have pointed to this sharpened focus on animal care by Perdue as something that could spark sweeping change in the poultry industry.
Jim Perdue, the third generation leader of the family business that pulled in over $6 billion in global sales last year, sat down with The Dispatch to talk about the new “forever initiative,” cleaning up the Chesapeake Bay and how the consumer is drastically changing the way companies of all sizes are doing business.
Q: Let’s start with the big announcement last week: the four part plan called “2016 and Beyond: Perdue Commitments to Animal Care.” The word that stands out the most to me in the report is ‘transparency.’ Talk about why this is not only a progressive step forward but also an important step forward for where Perdue is headed in the future.
A: We have a history of trust as a company. As a matter of fact, our vision for the company is to be the most trusted name in food and agriculture products. My dad imbedded that trust to say, ‘the quality is always going to be there, I’m going to make sure of it.’ So, this I think follows on to that history and tradition of trust within the company.
Transparency is a big deal with millennials. They don’t just buy anything anymore. They want to know a lot more about the company, what’s in the product, how is it produced, how were the animals raised, what about the farmers, and even beyond that, what are you doing for the environment and the community that you are in. So, there are a lot more expectations out there today than there were in the past.
Q: We’ve seen, from an economic standpoint, many large corporations and small businesses shifting the way they make up their workforce or the strategies they are implementing. Talk about what consumer shifts, coupled with the changes in how to keep a corporation solvent in this day and age, change the mindset or the strategy for you.
A: We always focus on the consumer. We hope and believe if we are supplying products and running our business that way, our customers will keep us in business. That’s what we learned 14 years ago when we started the antibiotic removal process. That was showing up in our tracking studies and in our 3,000 or so contacts we have every month with consumers and this was no different. I always talk to our folks about being a learning organization. Every day you have to learn something, and if you don’t, you aren’t going to survive. This is also about making sure we know where the consumer is at, and that we are providing products to meet that. This shift began some time ago, just like the “No Antibiotics Ever” initiative, and this is just a follow-up to that because this is another area of interest.
This is just a little more complicated because it involves the entire company, including the farmers who raise the chickens. It’s not just figuring out a way to remove antibiotics, this is very comprehensive and that’s why it’s going to be a journey. We have to get everyone in the company to understand that we are not going back. This is a forever initiative in the company.
Q: Let’s talk about what that journey is going to look like. On the short end, I read that the plan is to retrofit 200 chicken houses to ensure these better or more natural living conditions for the birds. For many years, this was looked at as too expensive for the poultry industry to pull off, but like many things in the past, agri-recycle or no antibiotics in the products for instance, Perdue has taken the first step forward in the industry. So, explain how that is going to look and how you plan to work with the farmers to make this better environment for the birds?
A: As you mentioned, we have a series of short-term or first step goals and one of them is to double the activity of the chickens in the next three years. We are going to retrofit the first 200 chicken houses with windows and putting in enrichments in those houses to give the chickens things to play with, basically.
And then, we are going to be looking at different breeds, for instance, some heritage breeds that have been going into chicken houses as we speak. They’ve gone through the hatchery and they are going into houses now to see if they are more active as a breed. The one thing we learned with organic (we are the largest organic producer now after buying Coleman Organic in 2010), we always think that organic is more expensive, and it is more expensive because of the feed.
But, if you take that element out, and just look at the growing conditions, (organic) is not as expensive as we thought. They have a little more room, they have access to outside, natural sunlight and they have six hours a sleep each night with no lights. We are finding, in our world, that they are healthier in many ways, and perform very well with our consumers as far as tenderness of the product.
Q: But, that improves the perception as well doesn’t it? Going back to what we were talking about earlier, about the consumer wanting that assurance of quality of life in the bird they are about to consume. That’s different than what things were like 25 years ago when you took over the company as fewer people seemed to care. Is that a challenge for the industry to not only feed the world, but also to make them feel good about what they are eating?
A: Actually, we started with chickens in the pasture. I have a picture of my grandfather’s house and the chickens are all outside. So, in some ways we feel like we are going back to the future. But you are right, any business is looking for more efficient ways to improve their products and may forget other aspects. So, in this case, the consumers are telling us that this is important to them and that is really the driving force as I said before.
Q: When you took over the company 25 years ago, Perdue had grown into quite a massive corporation whereas concurrently, when your father Frank Perdue took over from your grandfather Arthur, there were only a handful of employees in the company. In the past several years, many of the headlines that included the poultry industry were talking very much about Maryland. Some call it forward thinking while others refer to it as a too regulatory approach to the industry.
Some say the poultry industry has been playing defense quite a bit, when it comes to the number of regulations that are being levied against it. If we look at this past legislative session, there was a lot of talk about who owns poultry litter. In conversations or debates like that, do you feel that the company or the industry gets wrongfully caught up in this sometimes divisive back and forth, politically speaking?
A: Well, it’s a very large issue. The poultry litter ownership question is not a question. The farmers want to keep it because it’s a great organic fertilizer. When we go to places like Kentucky and build an operation, the farmers think they’ve died and gone to heaven because now they have a free organic fertilizer to put on their hay fields. Now, this thing needs to be based on science and if there is too much phosphorous, etc. then yeah, but I think we as an industry have responded to that. We’ve put in phytase, which reduces the amount of phosphorous coming out of the chicken, buffer strips, you name it. The state has done a lot of good things by fixing the wastewater systems of a lot of these towns through the flush tax under (former Maryland Gov. Bob) Ehrlich.
But, please understand, whatever happens on the Eastern Shore is not going to fix the Chesapeake Bay. It isn’t going to happen because only 8% of the water that goes in the Chesapeake Bay comes from the four rivers here on the shore. Eighty-five percent of the water comes from the three biggest rivers: the Susquehanna, the Potomac, and the James River. So, if there is stuff coming into the bay, those have to be dealt with and they aren’t being dealt with. Everyone thinks that if you do something here it will fix the bay and it won’t. Truthfully, the problem with the bay is that you have no filter in it anymore: there are no oysters in the bay and that’s the big effort to get more oysters back in the bay.
You can’t have a Chesapeake Bay without a filter, otherwise the algae is going to keep growing but there is nothing that will eat it. Then, when the algae dies, that’s when it becomes a dead zone and that’s when you have problems. So, whether it’s the coastal bays or the Chesapeake Bay, you’ve got to have the natural filter back in there. Too many people are spending time on that versus just nutrients. You aren’t going to reduce nutrients in the Chesapeake Bay. It’s just not going to happen. There are too many people moving into the area. That’s new wastewater systems being built, and that’s new nitrogen going into the Bay. You can’t fix the nutrient side, you have to fix the filtration side.
Q: How has that conversation changed over the years between those in the agriculture business and environmentalists? It’s in everyone’s vested interest to have a healthy Chesapeake Bay, but the conversation about how to fix it has often gotten as divisive as what conversations in our country about anything political has become in this day and age. How do we change that?
A: You have to get around the table. That’s how you change it. For years, going back to the oyster, you couldn’t get anyone to do the right thing on the oyster side of the business until (former Secretary of Natural Resources) Dr. Torrey Brown got a group of people, including environmentalists, Chesapeake Bay Foundation, waterman, seafood businesses and agriculture around one table. Now, there’s tons of progress being made. That’s how you make progress. But, when you have one group that is trying to go after the weak link, like farmers because they aren’t an organized group and are easy to go after, or try to make a demagogue out of poultry companies. That’s the traditional way they’ve done things, but it doesn’t make any progress. Nothing gets done, it’s just adversarial, but I think there are a lot of people who are thankfully starting to think differently about that and think that we have to work together to get things done.
Q: I’d be remiss if I didn’t ask you about the growing outcry from folks in our region about the proliferation or even the existence of mega-farms or CAFO’s. What’s your take on the conversation and what would you say to people who are concerned about large scale farming operations, not the traditional family farm, popping up in their region or neighborhood?
A: Two parts. On the factual side, we have fewer chicken houses (on the Eastern Shore) than we did in 2000. We have half the farm families that we had then growing chickens, and as an industry, we lose about 70 chicken houses a year, whether that’s retirement or a big snow storm will cave in older houses. So, we have to build 70 chicken houses a year just to keep up. There are significantly less chickens on the shore than there were in 2000. That’s a fact that doesn’t get out there.
Secondly, I applaud what Wicomico County is doing. I think you have to have common sense, and again, I think it’s good to get around the table and listen to both sides, and come up with something that makes sense. So, we are not against that at all. As a company, we have our own rules about how many chicken houses we will support, because again, it goes back to animal care. I think if you look at the rest of the industry across the country, there’s more being done here positively on the environmental side, than anywhere else.
Q: When you took over the family business, you were a marine biologist in Washington and I’ve read that you were somewhat reluctant to come back. Now, you are leading the charge and taking steps that some experts say could change the entire poultry industry. Do you believe this step forward will change the industry, and perhaps more personally, did you ever think that in running a family business, you could change an entire industry?
A: No. That’s not my objective, for sure. We are going to do what’s best for us and I can’t speak to the industry, the industry will have to decide, or the customers will decide. At the end of the day, they are the ones who make all the decisions.
(To listen to the entire conversation, click over to https://mdcoastdispatch.com/d3-podcasts/qa-with-perdue-farms-chairman-jim-perdue/)