RAFI-USA
Agriculture Production Contracts
and Corporate Concentration Watch
Bulletin 4 March 2002
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Contract Protections in the new Farm Bill
Russian Ban on Poultry Imports from U.S.
State Action on Contract Protections
Upgrade Your Facilities or No More Birds
Independent Contractors, Employees, or Agents
Mississippi Sq. Footage Contract
Ranking the Poultry Companies
Resources
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Act TODAY to help win protection for Contract
farmers!
The US House of Representatives and Senate have
each passed a farm bill. Now a joint conference committee is beginning to work
out the differences and negotiate a final version. The final farm bill could be
ready for President Bush's signature as early as Easter.
Because of all the work of poultry farmers across
the US and their allies, the Senate farm bill includes two significant contract
agriculture reforms that could help contract farmers if these reforms remain in
the final version of the farm bill proposed by the conference committee.
Please take a moment to voice your support for
these reforms TODAY by contacting the members of the conference committee.
See the list of conferees listed below to see if
anyone from your state is on the committee. If no one from your state is listed or if you can make more
calls, contact Representatives Combest and Stenholm (House Ag Committee Chair
and ranking Democrat).
Ask Congress to support the contract agriculture reforms in Sections 1046 and 1044 of the Senate Farm Bill
Section 1046 is a ban on forced arbitration clauses. Section
1046 of the Senate farm bill clarifies that producers signing a livestock or
poultry contract cannot be forced to sign away their right to access the court
system should a dispute arise. The
provision does not prohibit arbitration; it preserves the right of producers to
choose that course voluntarily once a dispute arises.
Many of the House conferees signed on to a bill in
the House that addresses the same issue with regard to contracts between
auto manufacturers and auto dealerships. These are marked with
a ** on the list below. Let them
know that if they are concerned about Jaguar dealers being taken advantage of
by mandatory arbitration clauses in their contracts, then they should also be
just as concerned about contract farmers.
Section 1044 is a limited prohibition on confidentiality
clauses. Through the use of stringent confidentiality clauses, producers are
discouraged or prevented from consulting with advisors about the terms of the
contract, many of which are extremely complicated. This provision merely makes
it clear that contract producers have the right to discuss the terms of their
contract with their business advisors, landlord, managers, family, and State
and Federal agencies charged with protecting parties to the contract. The
amendment does not require any producer to share the contract if they choose
not to do so, but merely preserves their right to discuss the terms with
trusted advisors.
Farm Bill Conferees (By State)
When you call ask to speak to the staff contact listed. If no contact is listed, ask to speak
with the staff person handling agriculture. If you send an email or fax, address the appropriate
Representative or Senator but send it to the contact staff.
Always give your address (or at least hometown)
and let the office know you are looking forward to learning if the congressman
or woman is going to support these reforms.
** House member who has cosponsored a House bill
that provides a similar ban on forced arbitration as is currently in the Senate
farm bill.
Alabama
Representative Terry Everett
Staff contact: Reece Langley
Phone:202-225-2901
Fax: 202-225-8913
E-mail: Reece.Langley@mail.house.gov
California
Representative Gary Condit
Phone:202-225-6131
Fax: 202-225-0819
Representative Calvin Dooley
Phone:202-225-3341
Fax: 202-225-9308
Representative Richard Pombo
Phone:202-225-1947
Fax: 202-226-0861
Georgia
**Representative Saxby Chambliss
Staff contact: Steven Meeks
Phone: (202) 225-6531
Fax: (202) 225-3013
E-mail: Steven.Meeks@mail.house.gov
Indiana
Senator Richard Lugar
Staff contact: Daniel Spellacy
Phone:202-224-2035
Fax: 202-224-1725
E-mail: Daniel_Spellacy@agriculture.senate.gov
Iowa
Senator Tom Harkin
Staff contact: Doug O'Brien
Phone:202-224-6901
Fax: 202-228-2125
E-mail:
Doug_O'Brien@agriculture.senate.gov
Kansas
**Representative Jerry Moran
Phone:202-225-2715
Fax: 202-225-5124
Minnesota
Representative Collin Peterson
Phone:202-225-2165
Fax: 202-225-1593
Mississippi
Senator Thad Cochran
Staff contact: Hunter Moorhead
Phone:202-224-5054
Fax: 202-224-9450
E-mail: Hunter_Moorhead@cochran.senate.gov
North Carolina
Senator Jesse Helms
Staff contact: Matt Leggett
Phone: (202) 224-6342
Fax: (202) 228-1339
E-mail: Matt_Leggett@helms.senate.gov
Rep. Eva Clayton
Staff contact: Derek Miller
Phone: (202) 225-3101
Fax: (202) 225-3354
E-mail: Derek.Miller@mail.house.gov
North Dakota
Senator Kent Conrad
Phone:202-224-2043
Fax: 202-224-7776
Ohio
**Representative John Boehner
Contact staff: Mike Sommers
Phone: 202-225-6205
Fax: 202-225-0704
E-mail: Mike.Sommers@mail.house.gov
Oklahoma
Representative Frank Lucas
Contact staff: Nicole Scott
Phone:202-225-5565
Fax:202-225-8698
E-mail: Nicole.Scott@mail.house.gov
Pennsylvania
**Representative Tim Holden
Phone:202-225-5546
Fax: 202-226-0996
South Dakota
Senator Thomas Daschle
Contact staff: Jonathan Lehman
Phone:202-224-2321
Fax: 202-224-7895
E-mail: Jonathan_Lehman@daschle.senate.gov
Texas:
**Representative Charles Stenholm
Contact staff: Vernie Hubert
Phone: (202) 225-0317
Fax: (202) 225-8510
E-mail:Vernie.Hubert@mail.house.gov
**Representative Larry Combest
Contact staff: Pete Thomson
Phone: (202) 225-2171
Fax: (202) 225-0917
E-mail: Pete.Thomson@mail.house.gov
Vermont
Senator Patrick Leahy (VT)
Phone:202-224-4242
Fax: 202-224-3479
Virginia
**Representative Bob Goodlatte
Contact staff: Brent Gattis
Phone: (202) 225-2171
Fax: (202) 225-0917
E-mail: Brent.Gattis@mail.house.gov
********************************
Russia, Moldova and Kyrgyzstan (all former Soviet
republics) have banned the importation of US poultry over alleged concerns
about the use of antibiotics, feed additives, sanitary problems, use of chlorine
in processing the birds, excess fat, and poor taste. However, the real reasons for the ban may have more to do
with the 30% US tariff on Russian steel or an attempt to protect the rising
Russian broiler industry.
The US is now threatening to withhold support for
Russia's admission into the World Trade Organization if the ban is not lifted
soon.
The U.S. exports 7.2% of total broiler production
, or 1.8 billion pounds of chicken to Russia each year. That represents 36% of total US poultry
exports. About 10% of Mississippi's poultry income came from sales to Russia
last year. Eight percent of
Georgia's total poultry production (1.84 million pounds per day) is exported to
Russia. If the ban lasts for
very long, the poultry industry will have to cut back on production causing
layoffs in the industry. Poultry
growers also fear being left with empty houses and no income for a long period
of time and that the growers with older houses will be the first to be left
empty.
The first week of poultry negotiations ended
without any progress toward a settlement.
The U.S. Ambassador to Russia, Alexander Vershbow, said that the
Russians do not appear to feel any urgency about ending the ban. (3/18 http://www.meatingplace.com/)
*************************************
Georgia has 6 bills in the state legislature pertaining to contract ag
reforms. Why so many? Some are the entire model bill produced
by the National Assoc. of Attorneys General in 2000. Others contain fewer but basic reforms considered easier to
pass. All are partially the result
of hotly contested seats in the upcoming state elections for Lt. Governor and
Representatives/Senators from poultry-heavy districts.
The bills are HB1657, HB1498, HB308 (tabled),
S227(complete model bill), S489, S533
(four important provisions now being debated). Download bills at http://www.state.ga.us/by
clicking on the button labeled 2001-2002 Legislative Session.
Missouri has introduced two
bills this year.
HB1967, meant to be a recapture of investment for all
contract producers, turned out to be poultry specific and attempted to make the
contract binding until the initial investment was paid off. It also included language to protect
the growers' right to join associations, seek advice from US Sec. of Ag and law
enforcement agencies, and have the contract reviewed by legal and financial
advisers. There has been a hearing
on this bill.
HB2037 would provide a priority lien for all
production contracts similar to the language included in the model Producer
Protection Act. The bill awaits a
hearing.
Kansas
HB 2767 did not get out of
the House Ag Committee. However a new resolution that would classify production
contracts under the consumer protection code was added to a bill on the House floor
and this resolution passed. It then was sent to the Senate Judiciary
Committee. Farmers are also
interested in passing producer protections included in a Farm Bureau sponsored
bill that the Senate may be more interested in.
North Carolina - As the Long Session of the State Legislature
ended in December 2001, Study Commission legislation was passed authorizing the
Legislative Research Commission to study "enhancing fairness in
agricultural contracts" among many other issues. Given that the state's huge
budget deficits will consume all of the Short Session opening in May, any Study
Commission may have to be appointed after the session ends in order to make
recommendations for the 2003 General Assembly. A study of contracts in NC where
there are large numbers of contract poultry, hog and tobacco growers and some
contract grain and cattle growers, would be very valuable.
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In
spite of assurances that they would one day pay off their loans taken to build
and equip new houses only a few years ago and enjoy a good income from their
investment, poultry companies tell contract growers to either upgrade or face
long layouts and possible permanent cut-off of birds. Growers consider it an unfair trade practice and have called
in the Packers and Stockyards Investigators. Read below the account of one
Alabama grower and see what it is like to be a contract poultry farmer in
today's high tech world.
"We as growers are being used as company
guinea pigs. It seems every few
months we are told to do something new to our poultry houses.
"Example:... Add vent boards, vent machine,
cable pulleys, etc. Then we are
told to take out our pulleys and add chains and sprockets so the cable won't
break. Then take out the cable and
add a steel rod that won't stretch.
"Example: ...Take out your positive pressure
units and center fans, add 2 inch spray on pads and tunnel fans. Then take out your 2-inch pads and
replace with 6 inch recirculating pads, and put back your center fans to stir
air with.
"A new house will run a grower approximately $150,000.00
dollars. I know. I built two new broiler houses two years ago, and now I am
being told that some expert says that there is a better way to gain profits for
the integrator. So I now need more
brooders, stir fans, 6-inch pads, etc.. Well I have not paid for the new
equipment in my houses and now they
want
me to throw some of it out, add more of this and that.
"Well what happens next year? Will some
expert change his mind again? and will the companies take his change as gospel?
Who will suffer??? The growers will.
We will be asked, told, hoaxed, or tricked into more upgrades believing
that it will help us make more money only to find out that we will go deeper in
the hole. Where is the
bottom line? Where does it
end?" ......(Chris Fannon,
Alabama poultry grower)
It ended for one 56 year old Arkansas farmer last
week . He borrowed the money to
upgrade his poultry houses as ordered, but was terminated anyway. He hanged himself in one of his chicken
houses when he received the notice that he would receive no more birds to
raise.
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Are contract growers INDEPENDENT CONTRACTORS, EMPLOYEES, or AGENTS of the company?
“Employees” says Oklahoma:
The city of Tulsa, Oklahoma has filed suit against
six poultry companies demanding that they clean up Lakes Eucha and
Spavinaw that supply Tulsa’s
drinking water. The Mayor of
Tulsa claims that the water has been contaminated by overuse of poultry litter
from farms; however, the Mayor doesn’t blame the farmers. Mayor Susan Savage contends that the
contract farmers have no real decision making power and that the poultry
companies are liable.. Oklahoma Attorney General Drew Edmondson agrees and
plans to file a number of lawsuits against the poultry companies operating all
along the Oklahoma-Arkansas border.
“Agents” says the Alabama Supreme Court:
In the Mid-January 2002 edition of Progressive
Farmer, Des Keller reports that a Tyson contract hog producer in Alabama was
sued by neighbors over alleged odor and waste pollution coming from the
farm. The jury found, however,
that the farmer was an agent of Tyson Foods, Inc. and therefore, both were
liable for damages. On a Tyson
appeal, the Alabama Supreme Court agreed with the jury. “The high court found that the
production contract controlled the operator’s actions to the extent that
he could not be considered an independent contractor,” Keller reported.
“Independent Contractors” says Sierra Club:
Yet in Kentucky, the Sierra Club plans to bring a
lawsuit against four poultry farmers with 16 to 24 poultry houses on each
farm. The Sierra Club claims that
the fumes and dust from these operations should be considered
“emissions” under federal laws that control factories and cars. The farmers raise chickens for Tyson
Foods and the company claims that it does not operate any chicken farms in
Kentucky, independent farmers do.
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Choctaw Maid Farms of Carthage, Mississippi has
failed to implement the agreement reached in 2001 with poultry growers who
filed a class action suit against the company over unfair trade practices. A new payment system for Choctaw
Maid’s growers based on the square footage of the floors of the
growers’ poultry houses was to have been in effect by January 1,
2002. So far the company has
refused to work out the new payment system claiming that they have not found
such an arrangement to study nor have they had time to work out an arrangement
of their own. Growers report that
most of the other 22 items included in the settlement have not been carried out
either. The Court retained
jurisdiction over the parties and the Class for the purpose of enforcing and
administering the settlement. Stay
tuned.
*****************************
With the acquisition last year of Wampler Longacre
Foods, Pilgrim’s Pride has moved up into 3rd place sending ConAgra and
Perdue Farms into 4th and 5th place.
Foster Farms moves into 9th place ahead of Mountaire after acquiring
Zacky Food of California.
George’s Inc. moved up from 20th place to 12th place with the
purchase of Rocco Farm Foods. The consolidation of vertically integrated
poultry firms continues as the 45 firms listed in 2000 are reduced to 41 firms
in 2001.
Top Ten Poultry Companies & Headquarters
1. Tyson Foods, Inc., Springdale, Arkansas
2. Gold Kist, Inc, Atlanta, Georgia
3. Pilgrim’s Pride Corp., Pittsburg, Texas
4. ConAgra Poultry Co’s., Duluth, Georgia
5. Perdue Farms, Inc., Salisbury, Maryland
6. Wayne Farms, Gainesville, Georgia
7. Sanderson Farms, Inc., Laurel, Mississippi
8. Cagle’s Inc., Atlanta, Georgia
9. Foster Farms, Livingston, California
10.Mountaire Farms, Inc., Selbyville, Delaware
9th ranked Foster Farms in California, a company
started as an independent farmer cooperative, owns 65% of the poultry farms that grow the company
chickens. Nebraska’s MBA Poultry built 6 company owned poultry houses
last year.
While not the usual circumstance nor a future
trend so far, these two companies
prove that it is possible for a company to be totally vertically integrated,
including owning the growout facilities, and compete with those companies that
are not.
*********************************
RESOURCES:
1. Assessing the Impact of Integrator Practices
on Contract Poultry Growers
(December 2001) published by The Farmers Legal Action Group,
Inc , St. Paul, Minnesota.
ph:651-223-5400
This report includes an analysis of a survey of
broiler growers conducted in 1999, an analysis of the legal implications of
provisions in 18 growout contracts, and an analysis of current state and
federal laws affecting growout arrangements with recommendations for change.
Find the report on the Internet at
www.flaginc.org, under “New Publication”
Download the Complete Report (2.5 MB) OR
Download it in five smaller files
Chapter 1 (1.6 MB), Introduction (includes
cover and title page)
Chapter 2 (1.9 MB), Broiler Grower Survey
Report
Chapter 3 (134 KB), A Current Broiler
Contract Analysis
Chapter 4 (331 KB), Contract Broiler
Production: The Legal Context and
Recommendations
Appendix A & B (121 KB & 119 KB), Model Producer Protection Act
& Grower Education Materials ( short presentations about the contract,
promised income, the ranking system, equipment upgrades, livehaul weights, feed
weights, and dispute resolution methods)
2. Lift Your Fork to Help a Farmer
An interview with Brother David Andrews, C.S.C. on
the agricultural situation in the world today, the need for everyone to
understand it and to become involved in improving it. The interview can be downloaded at http://www.uscatholic.org/
3. The 2002 Outlook Forum contained a panel on Contract Ag Issues, Friday
Feb.22. "Producer Initiatives to Deal With Production Contracts"
session was held during the
10:30 - 12:15 concurrent sessions.
Download speeches from http://www.usda.gov/oce/waob/agforum.htm
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