RAFI-USA  

e-Bulletin #14

June-July 2003

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Massive cutbacks shock poultry growers

Will Organically Raised Cattle Save the Farm?

Fair Contract Legislation Needs Your Help

Legal Victory in Mississippi

International Survey on Social Justice Issues

Resources

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Massive Cutbacks Shock Poultry Growers

By Laura Klauke, Program Director, Contract Ag Reform

 

After 30 years of almost constant expansion in the poultry industry, poultry growers have become accustomed to the reliability of their contract operations knowing that the poultry companies need them to provide their land, buildings, machinery and labor for ever-expanding world and domestic markets.

 

However, the US poultry industry has been in a slump for the past two years due largely to Russia's ban on imports of our leg quarters and several bouts of diseases in the flocks. U.S. processors are trimming costs by eliminating low-performing operations and cutting other company costs.


On June 20th Perdue announced the closing of their Robersonville, NC chicken processing plant and the Emporia, VA de-boning plant. The move will mean pink slips for 565 processing employees and contract termination for 80 North Carolina and 15 Virginia contract poultry growers.

This is just the latest evidence of problems in poultry markets. Tyson has recently closed two complexes — one in Berlin, Maryland and the other in Jacksonville, Florida. With these closings, 245 contracts with farmers were terminated and 1387 jobs at the plants were lost.

 

Unfortunately, there is little evidence of a major upswing in the market for broilers so these closings are not likely to be the last. This round of closings just brings home again the fact that contract poultry farmers bear enormous risks for the industry without fair access to the financial benefit.

 

Company Tactics

In the Jacksonville, FL and Robersonville, NC closings, Tyson and Perdue employed very similar tactics for dealing with contract growers, revealing a pattern of rapid termination and enforced silence that is likely to become the industry standard procedure.


While the settlements offered by both Tyson and Perdue were substantial enough for most to cover their more immediate debts, in order to receive the compensation the farmer had to release all claims against the company and agree to hold confidential the terms and even the existence of the settlement.


One of the most disturbing elements of the Perdue settlement process was the fact that growers had almost no time to adequately review the offer and obtain legal and financial advice before signing.


The day after receiving their termination letter from the field servicemen, North Carolina growers cut off by Perdue had to meet Perdue management to learn the details. During those individual meetings, Perdue outlined to each grower the compensation package which was based on a formula that took into consideration the size of the barns being cutoff, any upgrades made in the last two years, and the age of the barns (the newer the barns, the higher the compensation).


Compensation varied tremendously from grower to grower. Those with the newest houses and the most extensive upgrades received the most money but also have the greatest debts.


In return, the grower had to agree that he or she would never sue Perdue over the termination or any other issue related to the past performance or consequences of the contract relationship. The grower also agreed not to disclose to anyone (besides legal or financial counsel) the terms of the settlement.


The growers had 10 days (5 business days) to decide to sign or refuse. Under the pressure of substantial debt, many signed before the deadline, fearing that Perdue would rescind the offer. Unfortunately, they signed without talking to a lawyer about their rights or to an accountant about the tax implications.


When asked why he signed without talking to a lawyer or an accountant first, one grower replied, "I have been growing chickens for 20 years now. It’s never done me any good to show my contract to a lawyer before. Why start now?"

 

Voiceless growers

The strong language of the confidentiality clause has left growers voiceless and perpetuates a public lack of information about the unfairness embedded in the poultry contract relationship.


Despite a strong desire within the local media to cover the impact of the closing on farmers, no one is willing to talk. Though the settlement requires the farmers not to discuss the settlement, they are fearful that even talking about their situation before termination or how they will manage without the poultry income will anger Perdue.


Before the farmers signed the settlement, when they could have legally talked about the details, they were afraid talking would cause Perdue to refuse to offer them a settlement at all. Now that they have signed, they are afraid that talking will result in Perdue coming after them with legal action that they can not afford to fight or that talking will mark them as a "trouble maker" and any future company coming into the area will refuse them a contract.


RAFI has worked with the Farmers Legal Action Group (FLAG) to produce an educational sheet on Questions to Ask when your contract is terminated due to a plant closing. The sheet is available at the RAFI-USA web site (www.rafiusa.org) and the National Contract Poultry Growers Association web site (www.web-span.com/pga).

 

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Will Organically Raised Cattle Save the Farm?

By Jason Roehrig, Project Manager, Tobacco Communities Reinvestment Fund

 

Larry Harris has been farming his entire life. Tobacco, corn, and soybeans grow on his 100 acre farm near Pinetops, North Carolina. Despite a lifetime of experience in working the land, Larry was forced to find an off-farm job a few years ago and lease a lot of his land to other farmers. There wasn’t enough money to be made in the traditional row crops, so Larry was forced to look elsewhere to support a family.


Larry’s son-in-law, Patrick Robinette, has worked with cattle since taking his first job at Open Grounds in Beaufort, North Carolina. Later he earned a degree in Beef Cattle Management from North Carolina State University and went to work in Nebraska at a cow-calf operation. There he got plenty of experience in the feeding systems that large meat packers want, but consumers are rejecting more and more. Recently, Patrick returned to North Carolina where he set about convincing his father-in-law, Larry Harris, to try a different kind of beef cattle operation.

 

Larry and Patrick began purchasing cattle last year to help supplement income on Harris Acres Farm which they now operate as a partnership. This year they took it a step further. Larry and Patrick received a cost-share grant from RAFI’s Tobacco Communities Reinvestment Fund in March to assist with the development of a grass-fed, organic beef operation.

 

"The financial returns in farming are not immediate. Before the grant, our herd was small and our financial resources required us to be selective in how we raised our cattle. We are now able to provide higher quality pasture and a more efficient grazing method so we can boost our calf weights and profits," Patrick explains.

 

The Tobacco Communities Reinvestment Fund is helping with some of the start-up costs like fencing and development of a marketing website. It’s also helping Larry and Patrick gain access to technical assistance from other farmers and researchers. Through an intensive, rotational grazing system, Larry and Patrick expect to be able to graze 12 months out of the year, eliminating the costs of supplemental feed. No corn, no hay just 100% organic, grass-fed beef.

 

While they are still a few years away from being able to market as organic, Patrick and Larry see organic production as a good way to get a premium price for their product. Patrick points out that "trends in customer demand show that the average buyer is willing to pay more for a healthy alternative."

 

The project is the first of its kind in eastern North Carolina and has generated a lot of interest from the agricultural community. Originally, Larry and Patrick had assumed that they would need to use grant funds to purchase seed for the new pastureland. But when Dave Taylor of Pennington Seeds found out about RAFI’s support of the project, he saw it as a good opportunity for his company to get in on the ground floor of an innovative new enterprise. Pennington Seeds has donated the seed for the project and provides invaluable technical support.

 

Larry and Patrick have made efficient use of the cost-share grant, shaping a corral from scrap irrigation pipe, purchasing a used scale, and trading work for the use of a seed drill. As time goes on, they will be conducting workshops to talk about the lessons they are learning from the project.

 

Neighbors watch and wait, wondering if grass-fed beef is part of the answer to the region’s agricultural woes. In an area that has had three agricultural disasters in the last five years, and with the peanut program gone and tobacco looking as if it’s not far behind, one might expect farmers to be frustrated. But as the herd of Senepol cows moves onto the lush new stand of millet for the first time, it’s hard not to share some of Larry and Patrick’s optimism for the future.

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Fair Contract Legislation Needs Your Help

 

The Fair Contracts for Growers Act of 2003 (S. 91), introduced by Senator Grassley (R-IA) would amend title 9, US Code to allow the use of arbitration to resolve a controversy as provided for under a livestock or poultry contract only if, after the controversy arises, both parties consent. The Act also directs an arbitrator to provide to the parties a written explanation of the factual and legal basis for an award.

 

S.91 has been read twice and referred to the Senate Judiciary Committee chaired by Sen. Orin Hatch (R-UT). The following U.S. Senators have signed on as co-sponsors: John Edwards, D-NC; Michael Enzi, R-WY; Russell Feingold, D-WI; Tom Harkin, D-IA; Tim Johnson, D-SD; and Patrick Leahy, D-VT.

 

Last year, Congress passed a measure similar to S.91 to provide arbitration fairness in contracts between car dealers and car manufacturers. Likewise, the Senate passed by a 64 to 31 vote an amendment to the Senate farm bill that was basically the same language as S.91. (The amendment was dropped in the conference report.) 

 

To see how your Senator voted on the arbitration fairness amendment to the Senate farm bill, go to -http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=107&session=1&vote=00366. A "yes" vote was in support of contract fairness.

 

Action Needed: Please call your Senators.  Ask that they support fairness for farmers by co-sponsoring S.91

 

If you know your Senators’ names, you can call the capital switchboard at 202-224-3121 and ask to be connected. Not sure who your Senators are? Check www.congress.org.

 

For more information on fairness in arbitration and on how local and state organizations can participate in the Campaign for Contract Agriculture Reform, contact: Laura Klauke, Director, Contract Agriculture Reform Program ; ph: 919-845-4615 or email: laura@rafiusa.org.

 

Check our website: http://www.rafiusa.org/programs/CONTRACTAG/CONTRAG.html.

 

For the text of the Fair Contracts bill, search for S.91 at http://thomas.loc.gov.

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Thrilling Legal Victory

 

The Supreme Court of Mississippi ruled on June 26, 2003 that Sanderson Farms, Inc. (Sanderson) - one of the top seven poultry producers in the United States - wrongfully denied family farmers Roy and Nelda Gatlin of Jones County, Mississippi, the right to have their day in court, when the company terminated the couple’s production contract prematurely, then breached its promise to pay half of the $11,000 estimated costs for an arbitration hearing.

 

"The Court’s decision, in both the majority and dissenting opinions, shows that arbitration should be used as an alternative method for resolving disputes, not as a weapon for depriving people of a forum for resolving disputes," said J. Dudley Butler of Jackson, Mississippi, co-lead counsel for the Gatlins. "Arbitration is a valuable tool when properly used, but is all too often abused by corporations seeking to insulate themselves from defenses such as fraud, duress, and unconscionability. Arbitration should be permitted only when the parties knowingly and voluntarily agree to it; it should not be imposed through power and chicanery."

 

"The Mississippi Supreme Court’s ruling is truly a thrilling victory for the public interest," said Lawrence E. Abernathy III of Laurel, Mississippi, co-lead counsel for the Gatlins. "Companies cannot force family farmers out of court and into private arbitration, then break their promise to share in the arbitration costs."

 

[From a press release written by the Trial Lawyers for Public Justice, Washington, DC. TLPJ’s key legal brief in Sanderson Farms, Inc. v. Gatlin is posted on its website, www.tlpj.org.] 

   

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International Survey Addresses Social Justice In Ag Issues?

By Michael Sligh, Program Director, Just Foods

 

"An international group of organizations with a shared vision of social justice and social accountability in organic and sustainable agriculture have prepared a survey addressing social justice issues in the agricultural sector. Their purpose is to first map what is currently going on and second, identify opportunities for collaboration and sharing experiences.

 

What the survey is about 
We understand that social justice and social accountability issues can encompass a broad range of issues and can mean different things to different people.

 

We seek to keep this as open as possible.Issues such as access to land and fair trade for farmers as well as worker rights and gender equity issues are examples of what social justice and social accountability address but this list is not exclusive. We are interested in learning about standards-based approaches that may involve informal or formal forms of verification or certification as well as other approaches such as capacity building, market access, research and advocacy activities.

 

If you are a farmer, farmer organization, NGO, certification body, trader, retailer, trade union or worker representative, inspector/auditor, researcher, consultant or anyone else involved in addressing social justice and social accountability issues in organic or sustainable agriculture or in the food sector more broadly, please take a few minutes to complete this survey. We appreciate it.

 

The survey is entirely voluntary. If you complete and send in this survey, we will understand that you agree to participate in this activity.

 

How the survey will be used 

The results of this survey will be used to better plan for a strategic meeting for strengthening social justice in organic and sustainable agriculture to take place just before the IFOAM trade conference in Bangkok in early November 2003.

 

The results will be used to prepare a public presentation at the November meeting and a written paper/publication for widespread dissemination.

 

If you would like to receive a copy of the results, please make sure to fill in your contact details on the last question of the survey and we will send you a copy.

 

You can find the survey on the Internet at: http://regnet.anu.edu.au/social_survey/index.htm. Fill it out online or download a copy and send it to: socialsurvey@anu.edu.au

 

or send it by mail to:Sasha Courville, Australian National University, RegNet, 1st Floor, University House,  Canberra, 0200, ACTb, Australia.

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Resources

 

Fair contracts + state contract laws

Minnesota's Jennie-O turkey bought The Turkey Store in early 2001, forming the new organization (Jennie-O Turkey Store). Recently the organization  wrote a new contract for its turkey growers which to Southeastern poultry growers is truly amazing.

 

The contract follows the guidelines set out by the Nat'l Assoc. of Attorneys General in their model Producer Protection Act in 2000 which was based largely on existing Minnesota and Iowa statutes. The contract contains many of those provisions including plain language throughout and a material risk disclosure as the front page.

 

For a copy of the Jennie-O contract go to the Iowa Attorney General's Website: http://www.state.ia.us/government/ag/ag_contracts/.

Scroll down to the Jennie-O contract, which is marked as NEW. While you are there, also check out the MBA Contract for the Smart Chicken raised in Nebraska by contract growers.

 

For an explanation of the provisions of Minnesota and Iowa contract laws, see "Livestock Production Contracts: Risks for Family Farmers", by David Moeller, Farmers Legal Action Group, Inc. at www.flaginc.org under "Publications." This 13 page document was written on behalf of the Campaign for Family Farms, Taking Action on Corporate Power in Agriculture, 2003.

 

 

Plant Closures

Closures of poultry and livestock processing facilities and the resulting impact on communities have been studied and reported on in a fascinating book, I Was Content and Not Content by Cedric Chatterley and Alicia Rouverol. The study focuses on the story of one plant worker and the effects on her and her community of the closure in 1988 of the Penobscot Poultry Plant - Maine's last poultry processing plant. The New York Times Book Review called it a "compassionate and sorely needed book."

 

The hardcover book is available at a discount price of $16.65 per copy (shipping $4.50 for the first book and an additional $1 per book thereafter; Illinois addresses must include 6.25% sales tax). Send check or money order to SIU Press, P.O. Box 3697, Carbondale, IL 62901 or phone 1-800-346-2680. Ask for Angela; and please use source code PGN3 on your order, whether by phone or mail.

 

 

Plucked and Burned

Author Sylvia Tomlinson has been chalking up good reviews of her book, Plucked and Burned, the novel about contract poultry growers in the U.S. - even from poultry industry newspaper and magazine editors. Some ot the latest comments follow:

 

Poultry Times: Editor Chris Hill writes that the book "should be required reading for everyone in the industry." He also states in a book review for the Gainesville Times, "(Tomlinson) has fused into the story accounts of growers and companies that made the news. I recognized several incidences that we have covered in our publication."

 

Meat Processing, North America Edition: Editor Steve Bjerklie wrote "I know from more than 20 years experience as an agricultural journalist that its story is quite true. …The industry must heed her call if it is to continue to grow in the future, and I sincerely hope it does."

 

American Small Farm, June 2003: Book review - "Sad as it is, Big Chicken does business at the expense of farmers, laborers, consumers and the environment. The real lessons and the sad truths it (Plucked and Burned) brings to light should be known by all."

 

The Southeast AgriPost, Canada: Staff writer and book reviewer Les Kletke wonders in an article, Could it happen here? He writes, "(Sylvia Tomlinson) does not condemn integration for its own sake but rather the loss of competitiveness that can come with it. She does tell the story of corporations being able to control human lives." And in his book review, Kletke states, "I have been to visit the poultry industry of the southeastern United States and tried to interview a poultry farmer who was organizing local growers to form an association. The fear in his face when I visited his yard and he thought I was a company representative was real."

 

Plucked and Burned by Sylvia Tomlinson is available from Amazon.com or directly from Redbud Publishing Co. at www.redbudpublishing.com

 

 

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