Growers suing Pilgrim’s Pride

BY STACEY ROBERTS

Posted on Wednesday, February 13, 2008

URL: http://www.nwanews.com/adg/Business/216672/

More than 40 contract chicken growers and farms in Sevier County filed suit contending Pilgrim’s Pride Corp. lied to them before requiring expensive equipment upgrades without promise of future flocks.

The suit, filed Friday by Clark Mason of Clark Mason Attorneys in Little Rock, contends the chicken company misuses its power as the nation’s largest chicken producer to bully growers into investing thousands of dollars in poultry houses that are abusive to the birds, environmentally wasteful to operate and economically unworkable for the growers.

The suit was filed in southwest Arkansas’ Sevier County Circuit Court in De Queen.

Ray Atkinson, Pilgrim’s Pride’s director of corporate communications, said Tuesday that company policy does not allow comment on pending or threatened legal action.

The suit states that the company required enormous investments of time and money for growers to establish houses as exclusive providers to Pilgrim’s Pride. After the houses were operating, the company then required further upgrades to a style of grow house that increases the humidity in a dark environment, resulting in greater spread of poultry disease, ammonia buildup and more bird deaths.

Since farmers are paid on a scale for the delivery of live birds, profits are reduced although the cost to raise the birds is increased, the suit states.

If growers do not upgrade the houses, Pilgrim’s Pride refuses to provide future flocks, the suit states. Without the income from the promised flocks, growers have no way to repay the loans on the construction of the original grow houses, the suit states.

Susan Watkins, associate professor and Extension Poultry Specialist for the Center of Excellence for Poultry Science at the University of Arkansas at Fayetteville, said Arkansas law does not allow production companies to cut off growers without working out some type of solution.

“These companies, it is to their advantage to treat growers well,” she said Tuesday.

Although construction and other start-up costs are high for the newer houses, the environment the new houses provide are better for the birds and, in the long run, for the grower because of lower utility costs, Watkins said.

“And with all the scrutiny these companies are under for their animal welfare practices, there is no way they would promote something that would go against the birds’ welfare,” she said.

Pilgrim’s Pride reported $ 7. 6 billion in net sales in 2007 and ranks 432 on the Fortune 500 list of largest U. S. corporations, according to the company’s Web site.

Pilgrim’s Pride operates 37 chicken-processing plants, 12 prepared-foods plants, a turkeyprocessing plant, 36 feed mills and 49 hatcheries in the United States and Mexico. About 6, 400 growers provide the birds for the company across the two countries, according to the company Web site.

In Arkansas the company has about 790 contract growers mainly around Batesville in Independence County and Clinton in Van Buren County in north-central Arkansas and De Queen. The company’s Clinton hatchery was heavily damaged and about 10 growing houses were destroyed during last week’s tornado outbreaks, Atkinson said. Mason has previous experience in filing suits on behalf of contract growers against major meat-producing companies. He was among attorneys at Hare, Wynn, Newell and Newton of Little Rock who filed suit on behalf of 85 hog farmers in 2002 against Tyson Foods Inc. That suit went to the state Supreme Court but was settled before trial for $ 42. 5 million. Pilgrim’s Pride shares closed at $ 24. 78 Tuesday on the New York Stock Exchange, up 0. 85 percent from Monday’s closing price of $ 24. 57.

To contact this reporter: sroberts@arkansasonline. com