Tyson Foods hopes new bill of rights will improve grower relationships

by Kim Souza (ksouza@talkbusiness.net) 285 views 

Tyson Foods recently issued a new bill of rights contract for its poultry growers in an effort to foster more transparency and better communication between the corporate giant and family farmers.

The Springdale-based company unveiled the new contract this week and said it is also in the process of forming an advisory council made up of poultry farmers. The company said the move will include additional technology investments to enhance communication from the farms to the company.

“We value the farmers who raise our chickens and work hard to maintain good relationships with them, but also know we can do better,” said Doug Ramsey, group president of poultry for Tyson Foods. “That’s why we’re taking steps to enhance how we interact with them.”

Tyson Foods has contracted with farmers to grow chickens since the late 1940s. The company supplies the birds, feed and technical advice, while the farmer provides the labor, expensive housing and utilities. Last year the company said it paid more than $800 million to roughly 3,600 independent poultry farmers who contract to raise the chickens in temperature controlled poultry houses – often financed for 20 years or more with upgrades required by the company and often resulting in readjusted financing before the initial term ends.

Tyson Foods said its average grower has raised chickens for 15 years and some families have been in the business for three generations. Board Chairman John Tyson said the farmers who contract with the company are essential partners because without them there would no protein to slaughter, process and sell. He said it’s up to Tyson Foods to share its knowledge and best practices with its farmer growers who in some cases also raise cattle, hogs or row crop in addition to having grower houses or layer hens.

CONTENTIOUS RELATIONS
The relationship between company and growers has been contentious over the years. Tyson Foods and other poultry integrators have been sued by grower groups who claim the companies used deceptive business practices in how they were paid. Tyson Foods growers in McCurtain County, Okla., won $4.79 million in damages from a court when the jury sided with the grower group in 2010. That verdict was overturned by the Oklahoma Supreme Court in 2012. Another suit was filed in February 2017 claiming the company and its competitors treated its growers like “modern-day sharecroppers.”

That federal suit claims growers earned incomes between $12,000 and $40,000 per year while working 12 to 16-hour days – every day of the year. Most of the suits filed by growers over the years have been over pay. Tyson Foods and the poultry industry have used a “tournament system” to determine the pay. The system is designed to create a competitive advantage to those farms who produce the healthiest birds and those who invest the most time and energy into overall farm performance. The industry supports performance-based pay.

As noted, the poultry company provides the birds and feed to the farmer and thereby controls the quality of those things. The grower provides the housing, which comes at their own expense. A poultry house cost upwards of $100,000 to build and must have backup power generators in case of electric outages. The utility costs to maintain specific temperatures is paid by the farmer.

CONTRACT RIGHTS
In the new contract bill of rights, Tyson Foods attempts to address some of the criticism from agri industry groups and contract growers. For instance, the company in the past has asked growers not to discuss pay with any outside interests. The bill of rights allows contract growers to get a detailed explanation of their pay and how it was calculated. It also can be shared with outside interests such as financial and legal advisors.

Tyson Foods said it gives the grower the right to terminate the contract for any reason by giving a 90-day prior written notice for broilers and turkeys, and a 60-day written notice prior to scheduled removal of poultry from farmer housing for hens and pullets.

The company said poultry growers are not prohibited from joining any association of contract farmers. Tyson Foods said it also provides poultry welfare training with farmers to ensure they understand what the company expects. Farms are also subject to audit by a third-party animal well-being expert as part of the company’s FarmCheck program to ensure birds are being raised according to Tyson Foods’ standards.

Tyson Foods said farmers have a right to complain or voice concerns to the company first. Tyson has made that easier with a website www.telltysonfirst.com or by calling the company at (888) 301-7304.

Tyson Foods also has a grower-specific website which it uses as a communication tool for contract farmers. The company said this site has been used for many years to publish information for farmers. The company said it will soon be tied to to a functional smartphone application that farmers can download. The application is being built, but a release date not yet been set.

Johnny Simmons, a 30-year grower named to the new advisory council, said a key function of the council will be to communicate directly with the company’s top management.

“They are listening and very interested in our ideas as well as issues affecting growers,”  Simmons noted in the release. “The Bill of Rights that Tyson Foods has put together explains our relationship with the company and shows its commitment to our relationship. This is a working council, so we watch for results to come.”

The company is still working on initial advisory council details as well as a process so that farmers who are interested may be able to participate as members of the council. There are now six farmer-members from Arkansas, Missouri, Tennessee and North Carolina.

FARMER REACTION
Tammy Wilson and her husband Casey are a second-generation farm family and operate seven grower houses on their family farm. The farm is the family’s major source of income and the couple has been growing for Tyson Foods the past 18 years, taking over a contract from Casey’s parents, who built the houses 25 years ago.

Tammy Wilson told Talk Business & Politics she looked at the bill of rights and didn’t see any major changes. She said the contracts already tell growers how pay is calculated and the only real news was the website soon to be available via smartphone and the new council.

“We never really have trouble knowing what Tyson wants and expects from us,” she said. “They make it clear in writing and often in person. The problem has been they don’t always hear what we are saying to them. Perhaps this website and council will also allow growers a chance to hear from other farms on similar issues.”

Wilson said the farm life and the Tyson Foods contract allows she and Casey to stay home and raise their five children ranging in age from 16 to 10 months old. She homeschools and runs a small side business from the home.

“It’s not a perfect relationship between farmer and corporation but we make it work,” she said. “There’s a lot we don’t control, like the quality of birds. The company’s move to antibiotic free has been more work for the farmers and we haven’t received any additional pay though I am sure the company can charge more for that product. As a mom, I support the effort to grow without antibiotics but the workload is more for the farmers.

“If a bird is sick then we can’t treat it with antibiotics and if it dies we lose the cost of the bird and then our feed conversion rate goes down and that reduces our pay on the other birds that survive. We are penalized twice if we get a sick bird and most often they come to us sick. I am not sure how the company can make this more fair because if they credit us for sick birds, those famers who don’t take the best care of the birds could also benefit. It’s just a really hard business even when both sides are trying,” Wilson said.

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