The Atlanta Journal-Constitution
Chicken farmers claim big processors are fixing prices
Many pushed deep into debt seek class-action status in federal lawsuit.
DES MOINES, IOWA — Former chicken farmers in five states have filed a federal lawsuit accusing a handful of giant poultry processing companies that dominate the industry of treating farmers who raise the chickens like indentured servants and colluding to fix prices paid to them.
The farmers located in Alabama, Mississippi, North Carolina, Oklahoma and Texas allege that the contract grower system created by Tyson Foods, Pilgrim’s Pride, Perdue Farms, Koch Foods, and Sanderson Farms pushed them deep into debt to build and maintain chicken barns to meet company demands.
They say the companies colluded to fix farmer compensation at low levels to boost corporate profits, making it difficult for the farmers to survive financially. They are seeking class-action status for the suit filed in federal court in Muskogee, Oklahoma.
Even though none of the farmers are from Georgia, the state is the largest poultry producer in the country and seventh largest in the world, according to USDA data. The outcome of the lawsuit may have an impact on the state.
The scheme keeps farmers in a state of indebted servitude “living like modern-day sharecroppers on the ragged edge of bankruptcy,” the lawsuit filed on Jan. 27 says, quoting from the 2014 Christopher Leonard book “The Meat Racket: The Secret Takeover of America’s Food Business.”
Under the contract system, farmers provide the barns and labor to raise the chickens and the company provides chicks, feed and expertise to raise birds to slaughter weight.
The companies named haven’t yet responded to the lawsuit in court, but one denied the allegations.
“We want our contract farmers to succeed and don’t consult competitors about how our farmers are paid. These are false claims,” said Gary Michelson, a spokesman for Tyson.
He said the average contract farmer has been raising chickens for the company for 15 years and the compensation paid is clearly outlined in contracts farmers voluntarily sign, but declined to give more details.
The five farmers who filed the lawsuit have quit raising chickens, and some of them say they are tens of thousands of dollars in debt.
The farmers and their attorney declined to comment beyond the details in the lawsuit. But other chicken farmers who could be represented if the case is certified as class-action, spoke of going deep into debt to build modern chicken barns as long as two football fields with the
promise of generous profit.
“The farmers put their homes and their farms in hock to borrow the money to build these things. Once they do, the companies have control over them. Period,” said Mike Weaver, 62, of Fort Seybert, West Virginia, who’s is in his 16th year of raising chickens for Pilgrim’s Pride. “We’re hoping to bring about a change in this system. It has to be done. If not, the American family farmer is going to disappear.”
While Weaver said he does not have debt, he said that he knows farmers who have lost their farms.
The lawsuit asks a federal judge to find the contractual scheme and the alleged agreements to fix payments to chicken growers unlawful under two sections of federal law, the Sherman Antitrust Act and the Packers and Stockyards Act. Farmers are seeking damages, costs and interest.
The farmers said in the lawsuit their net incomes ranged between $12,000 and year and $40,000 a year despite working 12 to 16 hours a day every day of the year.
“Meanwhile, integrators like Pilgrim’s Pride and Tyson rake in more than $1 billion and $3.9 billion a year, respectively, in profits,” they said.
The lawsuit said it expects tens of thousands of farmers to qualify as members of the class.
The farmers are Haff Poultry in Oklahoma; Craig Watts, North Carolina; Johnny Upchurch, Alabama; Johnathan Walters, Mississippi; and Brad Carr of Texas.
The National Chicken Council said with any contracting situation there will always be a disgruntled minority.