RAFI-USA
Contract Ag Reform Bulletin #7
August 2002
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1. Corporations hypocritical about arbitration clauses
2. Virginia turkey growers still waiting for assistance
3. Maryland turns down environmental co-permitting
4. CCAR meets in Pittsboro, NC
5. One Arkansas hog farmer's story
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Corporations Hypocritical about Arbitration Clauses
The Jere Beasley Report for August 2002 reports the interesting
finding that "large corporations like the courts when they are
suing other persons and companies. However, they want
mandatory, binding arbitration when the victim is an individual
suing them. The following is an agreement corporations use
called Alternative Dispute Resolution (ADR) when dealing with
each other.
In the event of a business dispute between our company and
another company which has made or will then make a similar
statement, we are prepared to explore with that other party
resolution of the dispute through negotiation or Alternative
Dispute Resolution techniques before pursuing full-scale
litigation. If either party believes that that dispute is not suitable
for ADR techniques, or if such techniques do not produce results
satisfactory to the disputants, either party may proceed with
litigation.
The right to trial by jury…is obviously preserved."
Agricultural production contracts now routinely contain a clause
that requires that all disputes between the corporation and the
farmer be settled by mandatory, binding arbitration with no
further access to the courts.
Poultry grower experience with arbitration shows that it is more
expensive than filing a lawsuit and may not provide a fair solution
to the problem. The August edition of the Washington Post
National Weekly Edition headlined an article on arbitration " No
judge, no jury, no appeal".
See: www.beasleyallen.com
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Virginia Turkey Growers Still Waiting for Assistance
Since the March outbreak of Avian Influenza in Virginia's chicken
and turkey flocks, the disease appears to have been stopped. At
this time no new farms have been quarantined and there are no
birds on a waiting list to be destroyed.
So far, 197 farms, mostly commercial turkeys, had to be
"depopulated". To date, nearly 5 million birds have been
destroyed costing the industry losses of nearly $140 million.
The US Office of Management and Budget has approved $69.2
million to indemnify funds for those in the Virginia poultry industry
that suffered losses in the epidemic. The USDA is working on specific
guidelines for distributing the money.
In Rockingham County, the hardest hit by AI, officials have given
farmers an extra 3 months from June in which to pay their real
estate taxes without penalty.
Some farmers have been without a paycheck since March and
must wait until December for a new flock. Even at that it will be
several more months after the flock is in before they get paid.
Some turkey and chicken farmers are going out of business
completely, and others are trying to sell off property to pay bills.
The farmers desperately need whatever financial help is
available NOW.
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Maryland Turns Down Environmental Co-permitting
On Friday, August 23rd, Administrative law judge, Neile
Friedman, struck down an environmental permitting plan as an
improper scheme to reduce nutrient runoff from poultry farms.
The judge wrote in a 38-page document that the Department of
the Environment could regulate discharges from processing
plants, but not from farms where individual contractors raise the
company birds.
The three largest poultry companies in Maryland (Perdue Farms,
Tyson Foods and Allen Foods) were targeted to test new
pollution-control permits drafted by the Maryland Department of
the Environment.
Under the new permitting plan, the three companies would have
been required to give state authorities a list of farmers who raise
birds for them, specify the amounts of manure generated on
each farm and indicate how the manure would be used. The
processors would be liable for the proper disposal of the
chicken waste from the farms. They would be prohibited from
contracting with growers who fail to comply with approved
disposal procedures, and the company would be fined for the
violations.
State officials reasoned that because the poultry companies own
the birds and the feed, dictate how the birds are to be raised,
and site the farms in the first place, they should be responsible
for the waste.
Most farmers and the companies themselves fought the new
permits. Companies didn't want the burden of policing the farms
for nutrient runoff which would have required additional staff and
record-keeping, and the farmers feared that the new permits
would be "one more ax in the hands of the company to use to cut
off our contracts".
Farmers say that they will do their best to comply with all waste
management plans, but that it is up to the state and the
companies to help them find ways to properly dispose of
whatever manure they can't use on their farms or sell to their
neighbors.
Carole Morison, Director of The Delmarva Poultry Justice
Alliance, suggests that the first step to take is to decide once and
for all who owns the manure. Once that is decided, it will be clear
what has to be done.
If the company owns the poultry manure, the company should
compensate the farmer for properly disposing of it or find ways to
dispose of it themselves as Perdue has done with its new
pelletizing plant. However, that plant can only handle about ten
percent of all the manure on the peninsula.
If the farmer owns it, he could start a small business
composting, bagging and selling it for garden fertilizer etc.
Farmers are afraid to invest in expensive equipment to make
something useful from the poultry manure if the company can
suddenly claim the manure is theirs and take it from the farms
for their own use.
The farmers have a saying, "As long as the manure is a liability,
it belongs to us. If it ever becomes an asset, it will belong to the
company."
CCAR meets in North Carolina
August 21-22nd, delegates of member groups of the Campaign
for Contract Ag Reform (CCAR), met in the small North Carolina
town of Pittsboro at RAFI-USA's new Dan Pollitt Conference
Center to review their work on the 2002 Farm Bill and make
plans for the next round of federal legislation.
Steve Etka, the CCAR coordinator In Washington DC, led the
discussion on the Farm Bill analysis and provided each
attendant with a notebook of the documents used in the
campaign.
In a survey of the present Ag landscape, RAFI-USA staff and
guests brought into the contract discussion NC's contract hog
production, the effect of contracts on tobacco growers, the
imminent loss of the peanut quota program with possible
contracting soon, and the GM crop production licenses and
contracts. All at the conference were grateful for those candid
presentations.
At one point the following question was posed. " What were the
barriers to getting the message out about the poultry grower
contract problems and the warning they send to others?"
The list of "barriers" to good communication came quickly from
everyone around the table.
- If the contracts are so bad, why do the poultry growers sign
them? We must find ways to explain that the contracts are
purposefully misrepresented; companies and bankers entice
growers to mortgage farms and homes BEFORE showing the
farmer the contract.
-There is name-calling and finger pointing at contract farmers;
the "family farms, not factory farms" apples-and-oranges
comparison.
All 7 contract poultry growers around the table were
family farmers. Some suggested that this conversation barrier is
not as bad now that mid-Western farmers are signing contracts
to raise hogs and other livestock just to stay on their family
farms.
-The message is too complicated. We need to keep it simple.
We must work up fact sheets, write a handbook for CCAR
members, hold regional meetings of contract producers to share
experiences and hone the message and get the word out to
consumers.
-The term "contract'" is misunderstood.
We must make it clear that these are contracts of adhesion, not freely
negotiated contracts.
- There are conflicting messages from different farmers.
Some say they like the contract arrangement; others say it is abusive.
People don't know whom to believe. It's true that poultry
companies always keep a few happy-campers so that they can
be the poster growers for newcomers to meet. However, survey
after survey shows that the majority, while happy with the work,
are not at all happy with the income from the contracts nor the
loss of control on their farms.
One Arkansas hog farmer's story
At first we heard that the shutdown of 159 Tyson pork facilities in
Arkansas and Oklahoma was due to old, out-of-date facilities,
inefficient farmers, and long distances to run feed to the growout
houses. However, reporters on the scene have discovered that
along with the large drop in the market for pigs and sows, Tyson
Foods has also been suffering from diseased hogs in their
Arkansas and Oklahoma herds. The company was losing big
money on these operations. Most of the facilities were between 7
and 10 years old; some nearly paid for; others just remodeled on
Tyson's recommendation; and others just sold to a buyer only
two years ago.
Here is a look at one farm that is being affected by the shutdown.
A Look Inside: Veteran grower Brad Chewning wonders if the
next truck will be the one that takes away his pigs.
By Sunni Thibodeau, Texarkana Gazette
Not so long ago, Brad Chewning bought into the American
dream of owning his own business.
Like others before him, he believed that if you worked hard and
saved your money, you would receive your rewards in the end.
So Chewning quit his job at the paper mill and invested
$237,000 in a 300-sow hog farm under contract to Tyson Foods'
The Pork Group. He worked hard, seven days a week, 365 days
a year for more than 13 years.
Less than a month ago, his dream came crashing down around
him.
The company went through a restructuring that eliminated 159
hog farms and an estimated 200 jobs statewide.
"If I had stayed at the paper mill, I would have been able to retire
with a pension in two years. Now, I've worked hard and invested
money into this and I have nothing to show for it," he says. "I feel
stupid."
Chewning said he hates to complain because many others are
worse off than he is.
"You see people, and it has hit them hard. Everyone is walking
around like they're in a daze," he says.
But while Tyson sent representatives to offer options to most of
the growers who were eliminated in the mass restructuring, no
one came to talk to Chewning.
Instead, he was one of at least eight growers who were placed
on a 13-week probation at the end of July, two weeks before the
restructuring orders struck down the rest of the grower
community.
"I came in and my cooler (to store semen for artificial breeding)
was gone," he said. Thinking the cooler had stopped working
and had been taken for repairs, he went to a neighbor's to see if
the semen had been left with them, as it often was in the case of
a malfunction.
It wasn't.
Chewning's neighbor offered to call Tyson corporate offices in
Grannis, Ark., and although Chewning thought he had probably
been terminated, his neighbor couldn't believe that someone
who had been loyal to the company for 13 years would be
eliminated in such an impersonal manner.
"When he got on the phone, I saw his jaw drop and he just
handed the phone to me and walked away," Chewning says.
"They (Tyson) told me to call John Van Houden."
Van Houden is Eastern Operations manager for The Pork Group,
a wholly owned subsidiary of Tyson. The Pork Group is
headquartered in Holdenville, Okla.
Chewning was unable to reach Van Houden immediately.
"His secretary didn't even know my name or phone number," he
says.
Hours later, Van Houden returned his call, only to tell him that he
had been put on a 13-week probationary contract pending an
improvement in his production rates. Days later he received a
registered letter informing him of the move. The letter had been
mailed but had not yet arrived when Chewning learned of his
new status within the company.
"You can't do anything in 13 weeks to improve production,"
Chewning said, "But that would give me time to look around for
something if he would let me farrow out the bred hogs. He said
he'd call me and let me know, but I haven't heard anything."
He is not happy about the way he was informed of the action.
"I was real disappointed," he says. "After 13 years, someone
could have called and told me. The way it happened
embarrassed my neighbors."
Chewning thought it was bad when he was only one of a few
growers who were effectively terminated.
Instead, his neighbors received their notices of termination just a
few weeks later.
In the contract-grower arrangement with swine farmers,
producers may opt for farrow or finishing operations.
A farrowing operation means the sows are bred and cared for
through the farrowing, or birthing, process, then the piglets are
sent off to a finishing farm when they reach a certain weight.
Producers have little control over the inherent breeding potential
or initial health of the sow as the animals are developed, bred
and raised by Tyson, and brought to the farrowing farms ready to
breed.
A finishing operation handles the piglets until they are ready to
go to market.
While Tyson is responsible for providing the pigs and the feed,
the grower is responsible for providing the facilities, updates as
required by the company, maintenance work, labor and the
utilities.
And although Tyson oversees every operation and requires that
the company approve all equipment purchased and that
day-to-day operations are handled according to company
specifications, the growers are considered independent
contractors rather than a part of the company.
Although Chewning signed his last contract, he says he was
never sent a copy of the contract.
Over the years, the contract changed, and with hundreds of
thousands of dollars invested, hog producers had no choice but
to sign the contract.
Early contracts read that supplied swine would be healthy, later
contracts read only that the company would supply swine. The
pay schedule changed from once a week, to bi-monthly, and
finally, once a month.
"We were never offered benefits," Chewning says. "They'd let us
buy from the company store, but offered no health insurance,
although I think they may have offered to let us buy stock once."
A notice on The Pork Group Website invites growers to join
forces with Tyson in "a partnership that will provide a buffer zone
from the risks of the marketplace."
After what has happened to this area, Chewning wonders about
that statement.
His hog farm consists of three buildings created for a single
purpose-to raise hogs-and the buildings are built in a way that
doesn't allow them to be adapted to any other purpose. Parts of
the floors are concrete, and pens are cemented into the floor.
The floor is built on a grade, so the buildings are not level.
Becoming an independent grower is not an option.
"We live in an area with no ready access to feed or a place to
market," he says. "There aren't many independent growers in
this area."
Chewning is luckier than most, since he paid for his investment
last winter. But that is little consolation since he now owns three
buildings with no purpose and has no income from those three
buildings.
In his mid-40s, he believes he has wasted the last 13 years,
both in regards to time and money.
And he doesn't know what the future holds for a man his age
with little formal training in a field other than agriculture.
"This was seven days a week, 365 days a year for 13 years," he
says. "I lived like a hermit, and just went to town about once a
month for supplies. I'm so out of touch I don't even know what is
going on in the world."
In the meantime, Chewning waits in limbo, not knowing what the
next step will be.
"Every time I hear a truck coming down the road, I wonder if this
is it, if that is the truck that will come and take the pigs," he
says.
From: Swine Song: A Texarkana Gazette special report, September 01, 2002