The Commercial Appeal

Poultry giant put its black farmers out of business

- Isaac Arnsdorf Propublica

After years of working as a sheriff ’s deputy and a car dealership manager, John Ingrum used his savings to buy a farm some 50 miles east of Jackson. He planned to raise horses on the land and leave the property to his son.

The farm, named Lovin’ Acres, came with a few chicken houses, which didn’t really interest Ingrum. But then a man showed up from Koch Foods, the country’s fifth-largest poultry processor and one of the main chicken companies in Mississipp­i. Koch Foods would deliver flocks and feed — all Ingrum would have to do is house the chicks for a few weeks while they grew big enough to slaughter. The company representa­tive wowed Ingrum with projection­s for the stream of income he could earn, Ingrum recalled in an interview.

What Ingrum didn’t know was that those financial projection­s overlooked many realities of modern farming in the U.S., where much of the country’s agricultur­al output is controlled by a handful of giant companies. The numbers didn’t reflect the debt he might have to incur to configure his chicken houses to the company’s specificat­ions. Nor did they reflect the risk that the chicks could show up sick or dead, or that the company could simply stop delivering flocks.

And that growing concentrat­ion of corporate power in agricultur­e would only add to the long odds Ingrum, as a black farmer, faced in the United States, where just 1.3% of the country’s farmers are black

The shadow of slavery, sharecropp­ing and Jim Crow has left black farmers in an especially precarious position. Their farms tend to be smaller and their sales lower than the national average, according to data from the U.S. Department of Agricultur­e. While white farmers benefited from government assistance such as the Homestead Act and land-grant universiti­es, black farmers were largely excluded from owning land and accumulati­ng wealth. In recent decades, black farmers accused the USDA of discrimina­ting against them by denying them loans or forcing them to wait longer, resulting in a class-action lawsuit that settled for more than $1 billion.

Along with these historical disadvanta­ges, black farmers say they have also encountere­d bias in dealing with some of the corporate giants that control their livelihood. In complaints filed with the USDA between 2010 and 2015, Ingrum and another black farmer in Mississipp­i said Koch Foods discrimina­ted against them and used its market control to drive them out of business.

After the complaints by the farmers, an investigat­or for the USDA, which is responsibl­e for regulating the industry, looked into Koch Foods’ dealings with those farmers and found “evidence of unjust discrimina­tion,” according to a 700-page case file obtained by Propublica. The investigat­or concluded that Koch Foods violated a law governing meat companies’ business practices.

The Trump administra­tion has cut back on enforcing this law, with the USDA now conducting fewer investigat­ions and imposing fewer fines, as Propublica has reported. Koch Foods hasn’t faced any penalty.

Koch Foods declined to provide an interview with any of its executives or to answer detailed questions about its dealings with black farmers in Mississipp­i. A lawyer for the company said it denies wrongdoing.

The five largest chicken companies now make up 61% of the market, com

pared with 34% in the hands of the top four firms in 1986. As the biggest companies expanded their control, they raised farmers’ average pay by a mere 2.5 cents a pound from 1988 to 2016, while the wholesale price of chicken rose by 17.4 cents a pound, according to data from the USDA and the National Chicken Council.

Mississipp­i is the fifth-largest poultry-producing state, with more than 1,300 chicken farms. In a state where the population is 38% black, only 96 of those farms were operated by African Americans in 2012, the most recent USDA data available. From 2009 to 2017, Koch Foods went from having contracts with four black farmers in Mississipp­i to zero.

Koch (pronounced “cook”) Foods is based outside Chicago and supplies chicken, often sold under other brands, to major restaurant­s and retailers such as Burger King, Kroger and Walmart. The company, which is privately held, is not part of the business empire of the conservati­ve billionair­es Charles Koch and David Koch. The owner of Koch Foods, Joseph Grendys, has a fortune that Forbes estimates at $3.1 billion.

‘There’s no way it could be fair’

After Ingrum signed his contract to grow chickens for Koch Foods, in 2002, different company representa­tives kept coming with lists of expensive modificati­ons they wanted Ingrum to make, according to an affidavit he provided to the USDA investigat­or. After Ingrum met all the specificat­ions, the next representa­tive went back on what the previous one said and wanted things done a different way, Ingrum said in the affidavit.

Chicken companies usually say they update their specificat­ions to improve animal welfare or respond to consumer preference­s like avoiding antibiotic­s. But Ingrum couldn’t find much logic in the changes Koch Foods wanted him to make. One service technician directed Ingrum to install lights in one place, the next one someplace else. Another time, the company wanted Ingrum to move a power line, even though it was out of the way of the feed trucks and bins. That cost him $6,000.

According to Ingrum’s affidavit, when he met with a manager about the shifting demands, the manager said, derisively, “I had a couple of y’all when I was at Sanderson,” another big chicken company. Ingrum asked the manager, who was white, what he meant by that. The manager didn’t answer Ingrum. Reached by Propublica on his cellphone, the manager hung up.

Ingrum suspected that the truck drivers who delivered feed were shortchang­ing him, so he installed sensors to alert him when the drivers arrived. In 2007, according to his affidavit, Ingrum caught a driver failing to fill a whole feed bin. The company brushed it off as an honest mistake. But Ingrum had heard of drivers asking farmers for payoffs to get more feed, according to the affidavit.

In 2009, Ingrum spent $50,000 on renovation­s that Koch wanted. Then the company wanted Ingrum to rebuild his compost shed. That was another $5,000. Then Koch Foods said the shed had to be certified by a government inspector. Ingrum called the agency, which said the shed didn’t require approval and they only sent an inspector out once a year.

With Koch Foods delivering flocks to Ingrum’s farm less frequently than expected, he was making less money and falling behind on his loan payments. He looked into selling his farm. When a prospectiv­e buyer from Florida called Koch to inquire about a contract with them, a Koch employee scared him off by saying Ingrum’s farm needed $100,000 in repairs, according to Ingrum’s affidavit. The employee also swore at Ingrum’s real estate agent and spread a rumor that the bank had foreclosed, according to the affidavit. That wasn’t true, but it was becoming increasing­ly hard to avoid.

In 2010, Ingrum heard that the Obama administra­tion was making a push to help farmers who were getting squeezed by consolidat­ion in agricultur­e. Attorney General Eric Holder and Agricultur­e Secretary Tom Vilsack were going around the country to hear from farmers about the problems in their markets. When they came to neighborin­g Alabama to meet with chicken farmers, Ingrum went and spoke on a panel.

At the hearing, Ingrum recounted how the company would pay him less if the birds were sick or underfed, even though the company supplied the chicks and the feed. Ingrum said he’d received a tray of 100 chicks with 35 to 40 already dead. Another time, he ran out of feed for three days and the chickens started eating one another.

“There’s no way it could be fair,” he said at the hearing, according to the transcript. “I had no control over the feed that they brought me.”

That night, when Ingrum returned home to Lovin’ Acres Farm, he found a note from Koch Foods saying his contract had expired.

The USDA investigat­or later inquired whether it was “solely a coincidenc­e” that Koch Foods left the note at Ingrum’s farm on the same day he attended the hearing 300 miles away. A company supervisor said he “could not say.”

“I never got another chicken after going to that meeting over there in Alabama,” Ingrum, 55, said in an interview. “They put me slap out of business.”

As Ingrum ran out of money, the power company cut his electricit­y, but he refused to leave for three months. His former colleagues at the sheriff ’s office had to come remove him. For the next five years, he stayed with relatives until he scraped together enough money from working at a car dealership to get back on his feet.

“Twenty years, everything I worked for, I lost it in one summer,” Ingrum said. “It just ruined me.”

‘I hate to say it, but they just don’t like black people’

Around the same time, two other black farmers in the area also stopped growing chickens for Koch Foods. Out of 173 chicken farmers under contract with Koch Foods in Mississipp­i, there was only one African American left. His name was Carlton Sanders.

Ingrum said he warned Sanders: “They’re coming after you, Carlton. You next.”

Sanders’ farm was in a nearby town called Lena. He had been in the business since 1992. Back then, he worked with a local family business called BC Rogers, which he said always treated him profession­ally. He used the chicken manure to fertilize his vegetable garden, and he took pride in his trees growing figs, pears and apricots. “I just had everything set,” Sanders said.

When Koch Foods bought BC Rogers in 2001, everything changed, Sanders said. Sanders’ performanc­e was above average, according to the ranking system that the company used to pay farmers. But he felt singled out for disadvanta­ges.

“I’ve never been treated like that by anybody,” Sanders, 63, said. “It was just like I was in hell with them.”

In 2014, Koch Foods wanted Sanders to make $105,000 worth of improvemen­ts, according to the USDA case file. Then Sanders borrowed an additional $93,000 to buy new curtains, insulation, cables and heaters. Suddenly, he owed a total of $295,000, but he made his payments on time, according to financial records reviewed by Propublica.

The next year, Koch Foods informed its farmers of a new requiremen­t for the ventilatio­n in their chicken houses. Sanders went to his bank to see about another loan. The loan officer called the manager at Koch Foods and sent a follow-up email asking for “a listing of needed improvemen­ts that Koch Foods is requiring.”

The manager never responded directly to the banker. Instead, the company gave Sanders an “update list” with 23 items. Sanders gave the list to his banker, who understood it to be the company’s response to his inquiry. Sanders obtained work estimates for the 23 updates, amounting to $318,000, according to the case file.

The banker advised Sanders not to apply for another loan and to consider selling his farm instead. Meanwhile, Koch Foods stopped giving Sanders chickens to raise.

Sanders asked around and realized other farmers hadn’t gotten the same 23-item “update list.” So in December 2015, he filed a complaint with the USDA.

The complaint was assigned to a government attorney in Atlanta named Wayne Basford. Basford had also looked into Ingrum’s case, stretching back to 2010. Over the years, Basford had collected affidavits attesting to Koch employees’ calling black farmers “niggers” (the employees denied it), and he observed that the office staff was all white. He also noted that the Equal Employment Opportunit­y Commission was suing Koch Foods, alleging sexual harassment, retaliatio­n and discrimina­tion against Hispanic employees in Mississipp­i. (The company later paid $3.75 million to settle the lawsuit, though it did not admit wrongdoing.)

In February 2016, Basford notified Koch Foods that he was investigat­ing a new complaint he’d received, without mentioning Sanders. Koch Foods’ lawyer responded by criticizin­g the condition of Sanders’ farm and, at the same time, denying that the company asks farmers to make “upgrades.”

As Basford inquired about the 23item “update list” that only Sanders received, Koch Foods said these were optional. The list used the word “must” six times and never said the updates were voluntary.

“I hate to say it, but they just don’t like black people,” Sanders said. “There are no black people in the office — they don’t even want black people cleaning up after them.”

Basford, who declined to comment for this article, submitted the case for the USDA’S lawyers to evaluate possible next steps, such as seeking a fine against Koch Foods. The agency hasn’t taken any action so far. A USDA spokesman said the investigat­ion is “ongoing” and the agency is coordinati­ng with the Department of Justice.

Meanwhile, Basford tried to mediate between Koch Foods and Sanders. In the months following Basford’s presentati­on in 2017, he pushed Koch Foods to resume delivering chickens to Sanders’ farm so that Sanders could save it from foreclosur­e.

Pedigo responded with a list of 10 repairs that Sanders would have to make first. Seven were among the 23 fixes that the company had previously insisted were optional.

Basford wanted Koch Foods to assure Sanders that if he spent the money to make the latest repairs, the company would start bringing him chickens again. The company wouldn’t agree.

In the end, all Koch Foods agreed to was “reviewing its policies and programs.” Pedigo told Basford the company has a “commitment to treating all of its independen­t contract growers equally and with dignity and respect.”

A downward spiral: Foreclosur­e, bankruptcy, food stamps

 ??  ?? John Ingrum was one of the last black chicken farmers working for Koch Foods in Forest. He spoke out about the practices of the poultry giant. “I never got another chicken after going to that meeting over there in Alabama,” Ingrum, 55, said in an interview in Brandon on June 10. “They put me slap out of business.” PHOTOS BY ANNIE FLANAGAN/FOR PROPUBLICA
John Ingrum was one of the last black chicken farmers working for Koch Foods in Forest. He spoke out about the practices of the poultry giant. “I never got another chicken after going to that meeting over there in Alabama,” Ingrum, 55, said in an interview in Brandon on June 10. “They put me slap out of business.” PHOTOS BY ANNIE FLANAGAN/FOR PROPUBLICA

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