When a Big Ag conglomerate buys an iconic niche meat company, who has to change?
The surprising story of Perdue and Niman Ranch.
In the summer of 2015, an unlikely acquisition upended the American meat business: Perdue Farms, one of the nation’s biggest vertically integrated poultry companies, purchased mission-driven pork, beef, and lamb supplier Niman Ranch. Founded in the 1970s by Bill Niman (who left his namesake company in 2007), Niman Ranch rose to prominence as a key partner in Chipotle’s “Food with Integrity” supply chain, one that championed progressive animal husbandry practices and fair farmer pay and seemed to have little in common with its new corporate parent.
Just months earlier, Perdue had been the subject of a rash of negative press for allegations of animal cruelty. In late 2014 and early 2015, the animal rights groups Compassion in World Farming and Mercy for Animals had released videos of alleged abuse on two of the company’s contract chicken farms. The MFA video in particular showed egregious treatment, as a farm employee slammed chickens into the ground and stomped and kicked them. For a company like Niman Ranch, whose tagline is “Raised with Care,” the contrast could not have been starker.
The acquisition dismayed critics of big agribusiness and seemed to herald the end of an era. Journalist and advocate Barry Estabrook, who’d travelled the country to see a wide array of pig farms for his book on the topic, told The San Francisco Chronicle that he was “worried” by the purchase. Some of Niman’s suppliers took things a few steps further.
Would Perdue let Niman be Niman?
“This is devastating for us,” rancher Jean McCormack, one of Niman’s suppliers for pasture-raised lamb, told the Chronicle. “Our continued participation in the sheep industry depends on our being with Niman…. Will [Perdue] continue to maintain and oversee the adherence to the Niman Ranch protocols, which is incredibly important?”
A fiercely loyal group of producers and distributors, not to mention chefs and eaters, were concerned that being folded into a larger company—one with a familiar large-scale agriculture reputation—would spell the end of Niman Ranch as they knew it. Would Perdue let Niman be Niman? Or would the company change the formula that had made Niman so special? The assurances that little would change, given by Perdue and Niman leadership, didn’t do much to allay the fears.
But much has changed since 2015. The relationship between the two companies is no longer new. And enough time has passed to look back at the legacy of the acquisition, to determine both whether Perdue has kept its promise to sustain Niman’s mission, and to look more closely at how the unusual partnership has changed both companies.
To accomplish this, I talked to farmers and executives from both Perdue and Niman Ranch, as well as industry experts. I attended one of Niman Ranch’s periodic farmer meetings in Iowa, and visited two of its contract hog farms. I also spent time at Perdue’s facilities on Maryland’s Eastern Shore, including at one of its contract farms, and interviewed third-generation company chairman Jim Perdue. Like many of the giant agribusinesses that produce the billions of pounds of meat Americans consume annually, Perdue hasn’t exactly courted the media. Being able to experience the culture of both companies firsthand gave me insights into the ongoing evolution of modern meat production, writ large.
The small guys
The annual Niman Ranch Hog Farmer Appreciation Dinner brings together farmers, customers, chefs, and the media in Des Moines, Iowa. It’s a September weekend of connecting and sharing ideas, as well as celebrating company achievements, awarding scholarships, and recognizing outstanding producers. The atmosphere is an energetic combination of Sunday evening church supper and Monday morning Tupperware rally. During the 20th annual event in 2018, I spoke with several farmers; most told me they wouldn’t still be farming if it weren’t for Niman Ranch. That made me wonder: Was it possible that Perdue really was letting Niman be Niman?
The polar vortex was slamming into Iowa on that January morning, and I was with Tim Roseland and his son Curt, walking around their family hog farm near Gilman. Outside, the temperature hovered in the single digits, and the 30-mile-an-hour wind threatened to rip the scarf from my neck. We stepped into one of the hoop barns, where the temperature was still cold, yet noticeably warmer than outside.
The 3,000-square-foot barn was redolent with an earthy, piggy funk, and young pigs ran to greet us, curious about their visitors. Some of them rooted in the hay bedding, which, as it composted in place, could reach temperatures of 100 a few inches down, warming the space despite the winter. Others were playing with a large round hay bale that would eventually disintegrate into more compost bedding, while still others munched on the feed milled from corn grown on the farm. At around three months old, those 300 pigs were but a small number of the 5,000 the farm produces annually under contract with Niman Ranch.
The Roselands—Tim and his wife Deleana—joined the Niman Ranch program in 2005, after raising conventional confinement pigs for 20 years. After decades of losing money on every hog they sold, engendering the enmity of their neighbors for the stench, and dealing with extremely stressed-out animals, they made the switch. Roseland filled in the manure pits under the floors of his confinement houses, got rid of the floor slats and gestation crates, and filled them with hay and bedding. He also added eight hoop barns and began raising pigs according to Niman Ranch’s animal welfare standards.
As power has consolidated in the pork industry and the number of market buyers has dwindled, so has the number of independent hog farmers.
Unlike their confined porcine cousins, Niman Ranch hogs are raised on pasture or in roomy, deeply bedded barns; never given antibiotics (although sick pigs must be treated, but then removed from the program); and never fed animal by-products. Gestation crates—where confinement sows are basically pinned in place, unable to turn around for most of their lives—are forbidden.
“Niman completely changed our trajectory,” said Tim. “Now we have stability for our family.”
Niman Ranch offers more than just a contract to raise hogs. The company has a program to help the next generation of farmers get started. The Roselands’ 21-year-old son, Curt, recently returned home from three years in the Army; Curt learned Niman Ranch would not only co-sign a loan for him, but would also give him some weaned pigs so he could farm with his dad. “I was told in high school that I’d never be able to farm full-time,” Curt said. “Now I wake up every day really happy I get to do this.” With their son on the farm, the Roselands anticipated their production would increase to 7,500 hogs this year.
Niman Ranch offers its 700+ independent farmers a guaranteed contract with a premium over the market price and a floor price—something unheard of in the meat industry. Previously, when farmers were ready to sell their animals, they called around to several buyers who would give them the spot price for live-weight hogs. They could choose the best deal. Or, if farmers wanted to take a chance on the futures market, they could enter into fixed-price contracts, betting against a market upswing. It was a risky business.
Today, as power has consolidated in the pork industry and the number of market buyers has dwindled, so has the number of independent hog farmers. Many have become contract producers for integrators like Hormel or Smithfield. As Paul Willis, Niman Ranch’s founding hog farmer, describes it, “They [the integrators] own the pigs and the feed. The farmer might own the building, but basically they’re just the pig janitors and they don’t have much to say about anything.”
The poultry industry works in a similar way, with massive integrators controlling all aspects of production, treating farmers as economic units and animals as widgets in the production system. Some farmers live deep in debt and fearful they could lose their production contracts, which would put them out of business.
John and Beverly Gilbert, who own a hog and dairy farm near Iowa Falls, Iowa, agree that working with Niman Ranch has been positive for their business. They’ve been selling all of their pigs to Niman since 1998, when the commodity hog market crashed. To them, Niman Ranch excels in four key areas: keeping pigs a viable enterprise for small family farmers; building relationships between farmers and consumers so they can develop respect for each other; treating farmers as partners vital to the company’s success; and offering pride and dignity in the business. “I don’t know where dignity comes from,” says John, “but you know it when you see it, and Niman does that. What Niman has done is unique, and it’s really rewarding to see how it’s evolved.”
Were they worried when Perdue came to town? “At first I was pretty concerned. It was that fear of the unknown. All I knew was that Perdue was a big chicken producer,” John continues. “But as I’ve gotten older, I’ve become disinclined to jump to conclusions, and I’ve been pleasantly surprised.” From a farmer perspective, Perdue has offered stability, which was lacking under Niman Ranch’s previous private equity ownership.
The big guys
In February, I found myself sitting in a 1917 farmhouse in Salisbury, Maryland, where the Perdue family empire began. In 1920, Arthur Perdue and his wife Pearl started raising chickens for eggs in coops just behind the house. It has since been restored and filled with company and family memorabilia. An image of the house serves as the company logo.
The main office campus is just across the street, as is the house built by Arthur and Pearl’s son, Frank Perdue. During his tenure in charge, Frank was known to sleep on a cot in his office as he put in 18-hour days building the company to prominence in the 1950s and 60s. Frank was also the company pitchman, famous for his quirky commercials.
Jim Perdue, the third generation and current board chairman, popped in. He’s a trim almost-70, and the affable leader of one of the country’s largest poultry companies since 1993. John Gilbert, the Iowa farmer, told me he first encountered Jim Perdue at the hog farmer dinner in 2015, shortly after news of the merger was made public. “I told him, ‘I don’t know if you know what you bought, but don’t screw it up,’” Gilbert says.
Perdue had a slightly different recollection of the conversation. Paul Willis invited him to make an impromptu speech at the dinner to introduce Perdue to the Niman Ranch family, so he talked about his grandfather and the founding of the company, the multiple generations of the Perdue family still involved in the business, and how the company is driven by quality. He also told the assembled producers and distributors that he wanted to earn their trust. “At the end of the dinner,” he recalled,” a couple of farmers came up and introduced themselves. One of them said, ‘Mr. Perdue, I like what I heard. I think it sounds good, and we’re gonna give you a chance.’ I said, ‘Well I can’t ask for more than that. That’s probably all I can hope for, is that you give us a chance.’” No matter how the conversation actually transpired, Perdue came away from the dinner impressed by the mutual respect between Niman Ranch and its growers.
He was so impressed, in fact, that he and his senior managers took steps to improve the relationship with their own contract farmers. As he tells it, up until the 1960s, the farmers were the heart and soul of the company. In the early days, just as today, Perdue owned the chickens and feed and paid the farmers to raise the poultry to harvest age. But back then, Perdue sold the chickens to outside processors. It wasn’t until 1968 that the company became a true integrator and bought its own plant in Salisbury. Processing became the focus of its growth and energy. Even today, almost two-thirds of Perdue’s employees work in the plants, and while the relationship with rank-and-file employees is good, Perdue admitted the farmers have been neglected.
“I think Niman Ranch woke us up to the fact that if you want a quality chicken like in the old days, it starts on the farm—not in the plant—but on the farm,” Perdue told me.
The company has established regional farmer councils to give producers the opportunity to interact with and learn from each other, a practice inspired by Niman Ranch’s regular farmer meetings. According to Mike Levengood, Perdue vice president, chief animal care officer and farmer relationship advocate, 18 Perdue councils around the country meet twice a year to establish better communication with producers and educate them about the company, about their businesses, and about chickens. “We talk to them about building a better partnership; we want to understand and learn how we can make raising chickens a win for them and a win for us,” Levengood says.
So far, the efforts seem to be working. Kem Bloodworth, a farmer in Georgia who’s been raising chickens for Perdue for 14 years, credits Niman Ranch for the betterment of the grower-company relationship. “What Niman Ranch brought to the table with Perdue has improved the relationship between the farmers and Perdue,” she says. “The farmer council gives us a voice about issues we’re having, or they roll out new ideas and see how we receive it or what we think. And it does make you feel like a part of the decision-making process. I served a term and thoroughly enjoyed it.”
In myriad ways, Perdue is a progressive company, especially for a major player in the meat business. Employees have access to onsite medical clinics, and the company has an open-door policy so that anyone can reach the top-tier executives, who sit in cubicles in the company’s headquarters, just like the rest of the staff. For disputes or grievances, there’s a peer-review process in place.
Perdue is also working to become a good environmental steward on the pollution-sensitive Chesapeake Bay. The company is collaborating with ShoreRivers and several other local NGOs to reduce carbon emissions by 50 percent, divert 90 percent of its wastes and reduce water use by 25 percent, all by 2022, according to Steve Levitsky, vice president of sustainability at Perdue. “We’re not perfect,” he says, “but we’re committed to our goal of becoming a sustainable company.” A field of solar panels greets visitors to the corporate headquarters, and Levitsky says they produce most of the energy used there.
Whether consumers will buy intensively-produced organic chicken as opposed to what’s grown by the family farm down the road is still unclear.
Perdue’s biggest efforts lately have been directed toward two interrelated issues: animal welfare and the elimination of sub-therapeutic antibiotics in poultry production. The push to end routine antibiotic use started in the late 1990s, when the company noticed consumers were starting to pay attention to the issue. It took more than a decade of research and painstaking work with farmers to finally end the use of all antibiotics in the production system, and now all of the company’s products carry the “No Antibiotics Ever” label. Perdue was the first major poultry integrator to accomplish the feat. If a flock needs to be treated for a disease outbreak, they’re given antibiotics and nursed back to health, but the meat doesn’t enter the Perdue supply.
In the process of eliminating antibiotics, the company also developed an interest in organic chicken, which—according to USDA rules—must be raised without antibiotics. So, in 2011, Perdue bought Coleman Natural Meats and has become the largest U.S. producer of organic chicken. One immediate result of the Coleman purchase was realizing that the meat quality was different. “[T]hat’s one thing Niman Ranch taught us—the way [animals are] raised and harvested relates to meat quality, said Jim Perdue. “So, everything we do, we try to equate to the eating experience. That’s what we’re in the business for.”
He added that consumer demand for organic and pasture-raised chicken continues to increase. “If organic chicken is five percent of supermarket consumption now, I think it will grow as we lower the cost and make it more affordable. I think people would like to buy organic, but in some cases it’s too expensive to go to Whole Foods and buy an organic chicken. But because we’re in the grain business, we can lower the number one cost in organic, which is the feed.” Perdue is the only poultry company to include a grain subsidiary in its corporate holdings; Perdue AgriBusiness is the 10th largest grain company in the country.
Whether consumers will buy intensively-produced organic chicken as opposed to what’s grown by the family farm down the road is still unclear. One reason eaters clamor for organic meats is the perception that the animals are treated better in some way, but as New Food Economy contributor Lynne Curry explained in a 2017 article, USDA’s existing organic rules don’t include much about animal welfare. New requirements that would have addressed those issues were dropped by the agency in 2018.
Perdue’s focus on animal care came through a convergence of several events. Not only did stopping the use of antibiotics require improved animal husbandry practices, but a number of welfare issues surfaced within a short time: The Humane Society of the United States (HSUS) filed a class-action suit in 2010 alleging that Perdue’s “humanely raised” labels were false advertising; Compassion in World Farming—with the help of Perdue farmer Craig Watts—released a video in 2014, allegedly showing deplorable conditions in his chicken barns that he claimed were a direct result of Perdue’s protocol; and Mercy for Animals released the aforementioned video alleging animal cruelty on another Perdue contract farm.
In a marked departure from the way large agriculture corporations generally approach antagonistic situations, Jim Perdue told me that his company invited the animal welfare organizations in for a conversation. Perdue’s first Animal Care Summit was held in the summer of 2016. “It was a bit brutal because they were bringing up the videos. One of them was truly a horrible situation. We had to terminate the farmer and pull the contract,” he said. “But it opened our eyes, and as we shared information, we realized there was probably more we were in agreement on than we disagreed about when it came to raising chickens. That was kind of the first ah-ha.”
“Americans, now more than ever, are looking at farm animals as a concern in society.”
Josh Balk, vice-president of farm animal protection for HSUS, believes Niman Ranch influenced Perdue’s change of heart. “Niman already had a great relationship with us and worked with us in a very positive way, so they could vouch for the fact that we were thoughtful, good partners and that we represent consumers,” says Balk. “To give Perdue credit, rather than shutting down when we had the concern about their labeling, they were more open to talking and saying ‘Hey, what does it look like if we start talking and hearing the concerns you have, rather than having walls between us?’”
Lauri Torgerson-White, senior animal welfare specialist with Mercy for Animals, concurs that Perdue is leading the way on the humane animal care issue. “Most companies, like Tyson, blow us off. We’ve done multiple investigations of their farms, and they refuse to talk to us,” she says. “But when Perdue learned what was going on, they reached out to talk to us, and since then we’ve had a really positive relationship with them. Every year they’re doing more to improve the welfare standards on their farms. It’s been a very, very good, cooperative, productive relationship.”
In 2016, Perdue released The Commitments to Animal Care in 2016 and Beyond, a document spelling out the company’s pledges in four areas: incorporating the wants of the animals—in addition to their needs—into the husbandry protocol; building better relationships with producers; transparency with stakeholders; and continuing company improvement. In successive Animal Care Summits, key executives, animal welfare representatives, animal scientists, farmers and consumers have come together for updates on the commitments and the progress the company is making.
While Perdue’s animal care commitments look good on paper, I wanted to see what they’re like in practice, so I joined Dr. Bruce Stewart-Brown, senior vice-president of food safety and quality live operations, and Mike Levengood for a farm visit.
On the inside
We donned our white Tyvek coveralls, booties and hairnets before we entered one of the chicken barns at the Delaware farm of Laura Hill. Biosecurity is of prime importance, so we covered up to prevent the spread of any pathogens we might have been carrying on our clothes or shoes. A disease outbreak could quickly wipe out a whole flock of chickens. We stepped in a bucket of powdered chlorine and then entered the house.
The air was filled with a soft chorus of peeps—the sound of more than 27,000 month-old chickens. At that stage, their adult feathers were coming in, and like kids everywhere, they played in the “dirt” and on the propped-up wooden pallets scattered throughout the house. They scratched and pecked like any backyard flock would do. Large windows provided natural light, and some of the birds basked in the patches of sunlight like they were at the beach. Most surprising was the air. There was a slight tinge of ammonia, but mostly it just smelled like a farm, not unpleasant or overpowering as one might expect in a closed space with that many confined animals.
Levengood explained that the ventilation system was important, but the lack of stench was also due to the dryness of the substrate we were standing on, known as litter. The nipple watering system gave the birds plenty to drink, but prevented drips that would wet the litter and encourage the growth of foul-smelling anaerobic bacteria and fungus. Also, he informed me, chickens don’t urinate. They eliminate urea as solid crystals in their poop, so again, there was little, if any, dampness in the litter.
The system is more effective and much less stressful for the birds, as well as for the plant employees.
Stewart-Brown talked about how the company’s focus on animal welfare had evolved since the acquisitions of Coleman and Niman Ranch and as a result of work with the animal welfare organizations. Perdue is now installing windows in all of its chicken houses, which allows the chickens to become more active and follow their natural sleep cycle, in addition to making the houses more pleasant places for the farmers. The growing chickens are also given more space than in the past. Additionally, the company is running a contest for farmers to design “enrichments,” aka places for the birds to hide, roost and play. The winning entry will receive $5,000 when the contest ends this summer.
Efforts to keep the chickens content in life continue to their last few moments. Perdue has invested in a controlled-atmosphere stunning system at the Milford, Delaware, plant, which replaces live shackling and electrical shocking. Once the birds are gathered into their shipping crates and loaded on a specially designed truck, they aren’t touched by human hands again until, at the plant, they’re irreversibly stunned by increasing levels of CO2. The system is more effective and much less stressful for the birds, as well as for the plant employees, and reduces damage to the meat that can happen as a result of panicked birds being hung upside down while conscious.
One long-term, ongoing project on the animal welfare front is the quest for a slower-growing chicken. Modern conventional chickens have been bred to grow fast and put on heavy breast weight, so the animals suffer from skeletal problems and cardiac anomalies. Stewart-Brown and his team are investigating heritage breeds and crosses that will be more active, grow more slowly, alleviate the current health issues, and also produce high-quality meat.
For farmer Kem Bloodsworth, the improvements are a welcome change. “It’s been good for our company, good for us, and of course, last but not least, it’s good for our chickens,” she says. “There are so many changes that we’ve gone through, and it’s exciting to me because I care about the chickens I raise.” She’s also happy that the improvements aren’t coming at a cost to the farmer’s bottom line: Perdue is paying for upgrades like windows and adjusts the farmers’ compensation so that the extra space requirements and slower growing birds don’t take money from their pockets.
How do the welfare improvements affect Perdue’s bottom line? Because it’s a privately-held company and not subject to public reporting, it’s hard to tell. But agricultural economist Dr. John Ikerd says that it may not be making much of a net difference. Due to the nature of the commodity broiler market, an increase of as much as 2 to 3 percent in production costs would be barely noticeable at the retail level, and if the company is doing a good job of differentiating themselves from competitors like Tyson, Sanderson, and Pilgrim’s Pride, the added consumer preference would more than offset the costs.
It becomes obvious rather quickly when talking with everyone from executives to farmers and interested third parties that Niman Ranch has had a major impact on much larger Perdue. But that came as a surprise, not least of all, to Jim Perdue. Coleman, purchased for its organic chickens, also had a small, but robust pork program. When demand for those pork products outstripped processing capacity, Perdue set out to find a processing plant in Iowa. “The whole Niman story wasn’t that big of a story for us,” said Perdue when I visited. “They had a plant, they had the capacity, and we had done some Coleman pork there. That was one of the driving forces [for the acquisition], but afterward, wow! What a great story!”
So, what has Perdue done for Niman Ranch? There ae obvious advantages that come with economies of scale in purchasing; improved worker safety protocols; and infrastructure like IT support, human resources, and legal and accounting help. But Jeff Tripician, former general manager of Niman Ranch and now president of Perdue Premium Meats, says the most critical pieces are stability and commitments to producers, distributors, and customers. “The quality of the meat has improved because people would say ‘I’m going to invest in better genetics’ or ‘I’m going to improve the field and the feed and equipment. I’ll invest in a little bit more.’ And so that little bit more has really rolled up to much better performance.”
Niman Ranch announced last September that it plans to double its number of farmers to 1,500 over the next 10 years, mainly by encouraging and enabling young people to begin farming. Perdue’s financial backing will allow the company to continue to guarantee loans and provide weaned pigs and sows to help the next generation get started. And it will all happen on top of the original four pillars that have provided Niman Ranch’s structure since the beginning: family farmers and ranchers, humane animal care, sustainability, and high-quality products.
Perdue has no plans to give up the conventional, intensive poultry business, but Jim Perdue emphasized that the company intends to remain a learning organization and stay consumer-focused. “Whether organic, pasture-raised, outdoor access, non-GMO or you name it, we have to figure out first what’s important, and then how do we do it as economically and efficiently as we can so consumers buy the products.” For the combined company, the future will be focused on premium proteins, which could include products besides meat. “We want to stay on the leading edge of what consumers are looking for,” said Perdue.
The world is facing myriad problems in the way we produce food—climate change, environmental degradation, loss of biodiversity—and the lines of communication between the agricultural-industrial complex and the regenerative, sustainable movement are clogged with fear and recriminations from both sides. Could the Perdue-Niman partnership be a step forward and a bridge to the future? Dr. Fred Kirschenmann, distinguished fellow at The Aldo Leopold Center for Sustainable Agriculture in Iowa and president of the Stone Barns Center for Food and Agriculture in New York, thinks it could be. “My own assessment of Niman Ranch and Perdue is that this relationship couldn’t be more timely in the sense that they’re early adopters of this new way of participating in a food system that’s going to be the direction the future takes things,” he says. “Maybe I’m overly hopeful, but I see this happening already.”
He adds, “This relationship is going to have much bigger effect on Perdue than on Niman Ranch, and that’s going to be a positive thing for all of us.”
Correction | April 3, 2018: An earlier version of this article said that Perdue was working with the Waterkeeper Alliance and other NGOs to reduce carbon emissions. That was incorrect. Perdue is working with ShoreRivers, an independent affiliate of the Waterkeeper Alliance. We regret the error.