Hoping to help beleaguered farmers and waterways, the Chesapeake Bay Foundation has begun planning a cooperative of Delmarva chicken growers that would have its own processing plant, a small but significant alternative to the current system controlled from egg to supermarket by large poultry companies.

The venture, which will probably need at least 1 1/2 years of planning and organizing before it could begin raising chickens, secured on Thursday the last half of the $100,000 it needs to get started. At least $1 million more would be needed later to build or renovate a plant.

But if history is a guide, industry opposition could be a greater obstacle than finances.

"There is an enormous burden of trying not to raise expectations before we're more certain we can succeed, because the reality of retaliation is so big," said Michael Shuman, a fellow at the Institute for Policy Studies who has worked closely with the foundation in planning the cooperative.

Shuman and Michael Heller, the foundation's agricultural expert, have worked out the draft plans for the venture, which would initially employ an estimated dozen growers producing about 1.5 million chickens annually.

Those are tiny totals when measured against the approximately 2,400 growers producing 600 million birds per year on the Delmarva Peninsula. Most of those farmers work under contract for five major poultry companies, including two of the nation's largest -- Tyson Foods Inc. and the Salisbury-based Perdue Farms Inc.

The cooperative's significance, organizers say, will be in the way it does business -- the way it treats its farmers, its plant employees, its chicken catchers, and the way it treats the soil and water of the Eastern Shore.

Although the bay foundation is better known for more environmentally oriented projects, it has also taken up the cause of alternative agricultural efforts, especially when they result in better stewardship of the land.

"We are examining the question, is there a viable alternative to the status quo, economically," said Shuman, who wrote the 1998 book "Going Local: Creating Self-Reliant Communities in a Global Age."

The current system demands much from farmers, both financially and emotionally, while offering them little by way of control or job security in return.

A farmer starting out today must invest an average of $256,000 to build two new chicken houses before he can secure a contract. The company guarantees him a minimum price for the birds he raises.

The company, however, owns the birds, the feed and the scales on which both items are weighed. That's important because the size of the farmer's paycheck depends on how well his flock stacks up against others.

Farmers who raise the heaviest chickens on the least feed get top dollar. The others earn less, and minimum pay often won't even pay the bills. Farmers who consistently fare poorly lose their contracts, whether they've paid off their loans or not, and even those who do best can expect an income well below the poverty level until they're out of debt.

The bay foundation's venture hopes to provide a more equitable pay system, with less emphasis on the cost-cutting that the industry carries out to the 100th of a penny per pound.

Heller said the cooperative would also pay more attention to methods more friendly to the environment, such as using feed containing fewer metals and taking more care in the spreading and storage of manure.

Farmers, along with workers in the co-op's processing plant, might also be shareholders in the venture. Shuman additionally foresees the community as having a heavy ownership stake.

"I'm more interested in the Green Bay Packers model," he said, referring to the National Football League team owned by its fans, "a shareholder company with shareholders being residents of the area."

In the meantime, the bay foundation will be scouting for a site to build or renovate a small processing plant.

Doing business this way would likely result in higher prices at the supermarket. But other smaller, alternative poultry operations around the country consistently outperform the bigger companies in taste tests. And with 80,000 members of the bay foundation as an initial customer base, Heller said, "I don't think marketing will be a problem."

A thornier question, he and Shuman said, may be how to keep the larger companies from crushing their venture. They anticipate a struggle in getting their product into supermarkets, a battleground fiercely contested among the region's poultry companies.

Tyson and Perdue "are able to exert undue power on the marketplace," Shuman said, "and they can and do punish growers who start thinking of alternatives."

Such worries are unfounded, said Richard C. Auletta, a spokesman for Perdue. "We do want to see the industry thrive on the Shore," he said, "and if they can do this, we really wish them well."

Lorenzo Whaley, however, offers a cautionary tale.

Whaley, 66, was president and chairman of a cooperative effort by 126 growers on the Eastern Shore that began in 1974 -- and failed 17 months later.

"I truly believe that from the day the doors opened, the word had been put out by the industry at all levels: 'Kill it,' " Whaley said.

Their cooperative began when Esham Farms went under in summer 1974. Its growers and others, led by Whaley, banded together to secure loans from the U.S. Department of Agriculture to get the plant running again. Only this time, Whaley said, "the co-op idea was to give the profits back to the individual growers and not to build a conglomerate."

Whaley invested $1.5 million in the venture, and after a few years of struggling, the plant resumed full production in 1977.

Then, USDA inspectors shut down some of the plant's production lines, saying more spending was needed on upgrades. But when the cooperative asked the agency for more loans to pay the cost, the government said no. Without the needed capital, the venture failed.

Whaley blames the big companies on the Eastern Shore for pressuring the Agriculture Department.

"They were saying, 'Why should the government fund this group when their plants were funded with their own money?' " Whaley said. "It was very important for them to destroy it. They were not going to have us as competition."

Bill Patrie, a guru of agricultural cooperatives in North Dakota, also knows a thing or two about going up against agribusiness giants. He has put together 20 co-ops during the past eight years -- everything from bison meat to durum wheat, turning the former into burgers and the latter into pasta -- and nearly every one has succeeded.

But after he spent a year working with the Northern Plains Premium Beef Cooperative, the venture failed. Beef farmers were so intimidated by the large beef processing companies, he said, that they were too timid about putting their own money into the effort, and it failed for lack of capital.

"The advice I would give to them," he said of the Delmarva chicken cooperative, "is to look once again to the story of David and Goliath and understand the lesson. Don't try to put on Saul's armor. Don't try to look for the size and scope of a Tyson or a Perdue. The public wants there to be profitable farms raising a healthy product. If they do this, they can be successful."

Pub Date: 3/20/99