By Gray Moran, Sentient Media
As avian flu quickly circulates within the U.S., Cal-Maine Meals, the nation’s largest egg producer, seems to be having a bumper yr, bolstered partly by taxpayer bailouts within the multi-millions.
The corporate’s shares lately soared to a report excessive, as its internet gross sales rose by a staggering 82 p.c final quarter. Cal-Maine Meals expanded its operations final spring, paying round $110 million in money to amass the belongings and services of one other egg producer, ISE America. Regardless of culling at the least 1.6 million hens on contaminated farms final yr, the poultry company is getting richer and larger.
U.S. taxpayers have given the poultry big a raise. The corporate has acquired $44 million in indemnity payouts to compensate for fowl deaths tied to the avian flu outbreak. Regardless of the corporate’s development, Cal-Maine Meals is the fourth largest recipient of indemnity funds for the continuing outbreak from the U.S. Division of Agriculture’s Animal and Plant Well being Inspection Service (APHIS)’s indemnity program.
The compensation system, distinct from the company’s program for livestock, pays poultry farmers and producers for the market worth of the birds and eggs. It doesn’t pay for birds that instantly die from avian flu. It solely pays for “infected or exposed poultry and/or eggs that are destroyed to control the disease,” — i.e. intentionally killed to stop the unfold of the virus. The company additionally gives compensation for different virus management actions, resembling destroying contaminated provides and disinfecting a barn after an outbreak.
Practically three years for the reason that first H5N1 outbreak in U.S. poultry, the USDA has concluded that the company’s compensation system has not labored because it supposed. By bailing out poultry producers with few stipulations, the system has, inadvertently, lowered the financial danger of biosecurity lapses on farms, encouraging the virus’s unfold. In different phrases, farmers haven’t been successfully incentivized to make modifications to guard their flocks.
Because the outbreak has continued to unfold, the federal government bailout of the poultry {industry} has ballooned too. As of January twenty second, 2025, APHIS has doled out $1.46 billion in indemnity funds and extra compensation over the outbreak’s course, in line with a determine supplied to Sentient by a USDA spokesperson. This contains $1.138 billion for the lack of culled eggs and birds and $326 million for measures to stop the virus’s unfold.
A big share — $301 million — of the indemnity funds have gone to only the highest 4 producers, in line with authorities spending knowledge.
Jennie-O Turkey Retailer, based mostly in Minnesota, tops the record for indemnity payouts: the favored turkey model has acquired $120 million for the reason that starting of the H5N1 outbreak in 2022, in line with authorities spending knowledge. Herbruck’s Poultry Ranch, which provides McDonald’s cage-free eggs, has acquired the second largest bailout at $89 million. Heart Contemporary Egg Farm, a part of a gaggle of farms owned by Versova, one of many largest U.S. egg producers, has acquired $46 million. (This knowledge displays the legally obligated quantity of indemnity owed to every firm, which signifies that the USDA could not have disbursed these funds in full but.)
By comparability, when the primary outbreak of avian flu swept the U.S. between 2014 and 2015, farmers and producers acquired simply over $200 million in indemnity funds.
“The current regulations do not provide a sufficient incentive for producers in control areas or buffer zones to maintain biosecurity throughout an outbreak,” APHIS acknowledged in December, which launched new emergency pointers in an try and treatment this incentive drawback.
One of many most well-liked strategies farms use to cull birds is by sealing off the air circulation to the barn after which pumping in warmth or carbon dioxide. Generally known as Air flow Shutdown Plus (VSD+), this can be a low-cost strategy to kill a whole flock by warmth stroke or suffocation, and is accepted by the USDA for indemnity funds solely beneath “constrained circumstances.” The highest 10 recipients of indemnity funds all used VSD+ to usually exterminate hundreds of thousands of birds without delay, in line with APHIS data obtained by Crystal Heath, a veterinarian and the manager director of Our Honor, by way of a FOIA request.
By compensating farmers for VSD+, this method has helped make what many animal welfare advocates contemplate an unnecessarily merciless loss of life a part of the {industry} customary.
The American Veterinary Medical Affiliation (AVMA) lately launched a draft of recent pointers for depopulation, which notes when the warmth fails, VSD+ may end up in an “unacceptable numbers of survivors” — birds which can be severely injured, however not but useless, after which should be killed by one other means. But the AVMA’s draft pointers, intently relied upon by the USDA, nonetheless embrace this methodology as an possibility.
Some animal safety advocates contend that poultry corporations mustn’t obtain indemnity funds in any respect, no matter biosecurity, arguing that the {industry} must be liable for its personal losses.
“Why should this high-risk business be bailed out?” Heath, a longtime critic of AVMA’s pointers, tells Sentient. As an animal safety advocate, Heath has additionally been intently monitoring indemnity funds all through this outbreak. “What we’re seeing is the largest corporations are receiving the most in indemnity payments, and they’re using the most brutal methods of depopulation,” referring to the culling strategies.
The bailout is ready to solely develop as H5N1 spreads, prompting the mass culling of extra home flocks, in what has develop into the most important overseas animal illness outbreak in U.S. historical past. The egg {industry} continues to be roiled: over 20 million egg–laying chickens died from both culling or the virus within the ultimate quarter of final yr.
Extra lately, on January 17, 2025, HPAI was detected for the primary time in a industrial poultry flock in Georgia, the highest producer of poultry within the U.S., deepening considerations in regards to the battle to comprise the extended outbreak.
Too Indemnified to Fail: How Funds Can Incentivize Danger
The indemnity system was designed to incentivize producers to undertake practices that assist curb the unfold of the virus. As APHIS states, the funds are supposed to “encourage prompt reporting of certain high consequence livestock and poultry diseases and to incentivize private biosecurity investment.” Biosecurity measures embrace a variety of practices to stop illness outbreaks, from latching dumpster lids and disinfecting tools to dearer measures, like putting in netting and screens on barns to discourage wild birds.
These biosecurity measures are particularly essential on condition that H5N1 is mostly launched to poultry flocks by way of wild birds, in line with a 2023 epidemiology evaluation carried out by APHIS. The virus’s transmission from wild birds can occur both instantly, or not directly by way of contaminated feed, clothes and tools.
By sheltering producers from danger, researchers have noticed that indemnity payouts can, beneath some circumstances, inadvertently encourage lapses in biosecurity, enabling the unfold of illness. And this may doubtlessly create a system the place farms are too indemnified to fail — the dangers of working a enterprise extremely vulnerable to illness are absorbed by the federal government.
“What we are finding is that ‘unconditional indemnity’ disincentivizes livestock producers to adopt biosecurity because they know that if the disease strikes their system then they would be indemnified,” Asim Zia, a professor of public coverage and pc science on the College of Vermont who researches livestock illness danger, tells Sentient. In keeping with Zia, “unconditional indemnity” means indemnity funds with next-to-no necessities to qualify.
It stays to be seen whether or not APHIS’s new interim pointers — which would require that some high-risk producers efficiently cross a biosecurity audit previous to receiving indemnity — can be sufficient to treatment this concern and encourage producers to alter. In contrast to the earlier system, the brand new audits will embrace a visible inspection of the premises, both just about or in-person. Nevertheless, the scope of the brand new rule is proscribed to large-scale industrial poultry services which were beforehand contaminated with HPAI, or which can be shifting poultry onto a poultry farm in a “buffer zone,” a higher-risk area.
Different large-scale industrial services will nonetheless comply with the sooner rule’s extra lenient audit course of. This requires an audit of a producers’ biosecurity plan on paper — not an inspection of the particular poultry farm — each two years. It has been remarkably straightforward for farmers to cross this audit: the failure price of this program was zero, in line with APHIS, which made it so there have been successfully no strings hooked up to the payouts. And smaller-scale poultry operations are completely off the hook, exempt from each guidelines, and even from creating a biosecurity plan.
Up to now, APHIS has repeatedly bailed out most of the similar poultry companies, spending $227 million on indemnity funds to farms which were contaminated with H5N1 a number of occasions. This has included 67 poultry companies which were affected at the least twice, and 19 corporations which were contaminated at the least 3 times, in line with the company’s personal data.
APHIS has not launched the names of the businesses which were repeatedly contaminated, although the indemnity funds present a glimpse into this.
Take Cal-Maine Meals’ poultry farm in Farewell, Texas. On April 2, 2024, Texas’s Commissioner of Agriculture Sid Miller introduced its flock examined optimistic for H5N1, requiring the culling of 1.6 million laying hens and 337,000 pullets. The very subsequent day Cal-Maine Meals, headquartered in Mississippi, acquired an indemnity fee of $17 million for HPAI detected on the Texas operation, in line with authorities spending knowledge.
The Poultry Business’s Dangerous Enlargement
Final November, Cal-Maine Meals’ executives joined different enterprise leaders throughout industries at an annual funding convention, ringing within the yr on an optimistic word. As avian flu decimated flocks, the corporate’s high executives had been targeted on the longer term.
“We still think there’s going to be good opportunity to grow,” Max Bowman, Cal-Maine Meals’ vice chairman and CFO, instructed enterprise leaders. “We got a playbook for the whole market. And so right now, things are great, but we think we can continue to build this company,” which, because it stands, controls one-fifth of the home egg market within the U.S.
The corporate is already within the technique of constructing 5 new cage-free services, including 1 million hens to their flock, in Florida, Georgia, Utah and Texas.
Bowman, Cal-Maine’s Vice President, didn’t reply to Sentient’s request for remark.
Different poultry corporations are increasing too. As an illustration, Demler Farms in San Jacinto, California is constructing a triple-story egg operation proper subsequent to a dairy farm, which can be vulnerable to the avian flu now that it has unfold to cattle. Including to this danger, the San Jacinto Valley is a essential habitat for migratory water birds, the first hosts of avian flu.
Most of California’s circumstances of avian flu in poultry have been clustered alongside this water fowl migratory route, referred to as the Pacific Flyway. But this seems to not be sufficient of a deterrent for Demler Farms’ enlargement. As Heath noticed, this danger is softened by the indemnity fee system, able to bail out contaminated poultry farms by the hundreds of thousands.
This text initially appeared in Sentient at https://sentientmedia.org/us-taxpayers-poultry-industry-avian-flu/.
—
This story was initially printed by Sentient Media.
***
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