Tyson Meals plant closure raises antitrust issues amongst US farmers, consultants

By Leah Douglas and Tom Polansek

(Reuters) -Tyson Meals Inc gave its rooster suppliers two months’ discover of its plan to close a Virginia processing plant in Could, elevating issues amongst farmers and authorized consultants concerning the firm’s compliance with antitrust rules requiring it to offer 90 days’ discover earlier than ending a contract.

The deliberate closure of the plant has left dozens of Virginia rooster growers scrambling to search out new patrons in a area with few different choices. It may additionally expose Tyson to fines below the century-old Packers and Stockyards Act (PSA), the U.S. antitrust legislation requiring the minimal advance warning, in response to Peter Carstensen, a professor of legislation emeritus on the College of Wisconsin-Madison Regulation Faculty who beforehand served within the antitrust division on the U.S. Division of Justice.

Tyson instructed Reuters the corporate isn’t canceling any farmers’ contracts and as a substitute has dedicated to paying the growers for the full-term of their remaining contracts, maintaining in compliance with federal rules.

Antitrust points, significantly in meatpacking, have been a precedence for the U.S. Division of Agriculture (USDA) below President Joe Biden, who in 2021 directed federal companies to deal with consolidation. 4 firms, together with Tyson, management 55% to 85% of the meat, pork, and rooster markets.

Tyson alerted Virginia farmers by cellphone on March 13 and later by mail that it’ll shut its Glen Allen plant on Could 12, in response to three poultry farmers who provide the plant. The corporate stated there are 55 farmers with 73 contracts who provide the plant with chickens raised for meat.

Tyson owns chickens it slaughters and pays the farmers to lift them. The corporate hatches child birds and vehicles them to farmers. The farmers then increase the birds for about six weeks, till they attain the dimensions to be slaughtered and are trucked to the processing plant.

Tyson spokesperson Alicia Buffer confirmed farmers acquired discover final week of the Could 12 closing, and stated Tyson intends to cease supplying them with chicks after March 28.

She stated that as a substitute of canceling their contracts, Tyson is providing farmers a voluntary buyout bundle, or the choice to retain them and be paid by means of their period.

The three farmers interviewed by Reuters have between three and 10 years left on their contracts.

Farmers instructed Reuters they felt strain to just accept the buyout choice as a result of they weren’t certain how the contract may stay in drive after the plant is shut and the chicks cease coming.

Roger Reynolds, a farmer in Crewe, Virginia, stated retaining his July 2012 contract with Tyson isn’t a viable choice, partially as a result of it could forestall him from promoting to a different poultry firm if one entered the area.

One other farmer with a contract to provide the plant, who requested to not be named, stated they might finally should promote their third-generation farm because the buyout provide wouldn’t cowl long-term bills like property taxes.

Carstensen, of the College of Wisconsin-Madison Regulation Faculty, stated it was unclear if Tyson’s strategy would absolve it of its requirement to supply farmers 90 days’ discover earlier than ending a purchase order contract, as a result of closing the plant means it will not be processing chickens there anymore.

PSA violations can carry a $29,270 nice, in response to the USDA web site, and Carstensen stated fines may apply for every contract.

The USDA, which enforces the PSA, instructed Reuters it’s “carefully monitoring” Tyson’s deliberate plant closure.

‘WE’RE DONE’

Beneath regular circumstances, Tyson provides farmers with chicks, whereas farmers assume the prices of land and rooster homes.

Paperwork reviewed by Reuters present the corporate’s proposed buyout bundle provides cost to farmers based mostly on their common cost per flock in 2022.

In addition they present that farmers opting to retain current contracts as a substitute of accepting the buyout must meet Tyson’s contractual necessities for his or her services even after the corporate stops offering chicks.

Tyson stated these growers must carry out “routine and preventive upkeep” to satisfy contract necessities and referred to as the choices beneficiant.

Farmers should select between the choices by the tip of March, in response to the doc.

On Monday, about 20 Tyson farmers and native authorities officers gathered in a fireplace station in Burkeville, Virginia, and raised issues about Tyson’s brief timeline for closure of the plant, attendees stated.

Taylor Lee, a farmer in DeWitt, Virginia, who attended the assembly, stated he constructed two new rooster homes in 2017 and raised about 400,000 birds yearly for Tyson, and is unclear what is going to occur to his funding.

“After we’re achieved rising chickens (for Tyson), we’re achieved, until any person else steps in,” Lee stated.

The closest rooster vegetation to Glen Allen are 100 to 150 miles away, exterior the perfect radius of 60 miles, stated Hobey Bauhan, Virginia Poultry Federation president. Longer distances hike transportation prices and well being dangers to chickens.