Conor here: The following piece doesn’t include much detail on the US Department of Agriculture investigation, but I think it’s important to highlight nonetheless. The investigation appears to be connected to a class action lawsuit by farmers against Tyson. They accuse the the largest chicken company in the country, with nearly $53 billion in sales last year, of leaving them with millions of dollars in debt after the company shuttered plants and not only violated an agreement to sell the plants to a competitor but conspired to make sure a competitor couldn’t make the purchases. Many of the farmers faced bankruptcy and foreclosures due to Tyson’s actions.
Whether it’s screwing over farmers or ripping off consumers, there sure seems to be something rotten in the $65-billion-per-year US chicken industry where four companies control 60 percent of the market and 71 percent of chicken farmers live below the poverty line.Here are just a few of the legal cases brought against the big four in recent years:
- Earlier this year Tyson and JBS agreed to pay a combined $127.2 million to resolve a lawsuit accusing them of suppressing workers’ pay at processing plants.
- In September of last year, the Department of Justice (DOJ) filed an antitrust lawsuit against Agri Stats for allegedly sharing competitively sensitive information among pork and poultry processors to manipulate the markets. Agri Stats is a nationally utilized data and analytics firm for the meat processing industry and it has been named in more than 90 lawsuits since 2016 for using non public data to help the big poultry companies fix prices.
- In 2022, the DOJ fined a group of major poultry producers $84.8 million. More significantly, it ordered an end to the exchange of compensation information, banned the data firm (and its president) from information-sharing in any industry, and prohibited deceptive conduct towards chicken growers that lowers their compensation. Neither the poultry groups nor the data consulting firm admitted liability.
- In 2021, Tyson paid $221.5 million to settle litigation by three groups of plaintiffs that accused it of illegally conspiring to inflate chicken prices.
Is it starting to have an effect?
By John McCracken who covers the industrial agriculture meat industry for Investigate Midwest. He has experience reporting at the intersection of agriculture, environmental pollution and climate change and is a former Midwest reporting fellow for Grist. Originally published at Investigate Midwest.
The Packers and Stockyard Division is actively investigating Tyson Foods, one of the largest meat companies in the nation, according to interviews with contract growers and a USDA employee.
The PSD, an arm of the U.S. Department of Agriculture, is tasked with investigating violations of the Packers and Stockyard Act and handing out enforcement actions. The Act was created in 1921 to protect livestock and poultry producers from “unfair, unjustly discriminatory or deceptive practices.”
The agency routinely investigates potential violations such as the suppression of meatpacking worker wages, failure to pay for livestock and discrimination against contract growers. An investigation doesn’t always lead to an enforcement action or penalty.
The agency would not officially confirm or deny the existence of an ongoing investigation.
“PSD does not comment on any investigative activity, or the absence thereof,” the agency said in a statement provided to Investigate Midwest. “As a regulatory agency, PSD closely monitors all industry participants, including meat packers and poultry companies, for compliance with the Packers and Stockyards Act.”
A USDA employee confirmed that an investigation is ongoing as of early August. Investigate Midwest is not naming the employee due to concerns about employer retaliation.
The employee did not provide specific details about what the agency is seeking but did say Tyson Foods is aware of the matter, and it is larger in scope compared to other PSD investigations.
Tyson Foods is the largest chicken company in the country, with nearly $53 billion in sales last year. The company operates 183 chicken facilities in the U.S., including hatcheries, processing plants and feed mills. The company contracts with nearly 4,000 chicken farmers nationwide.
This investigation follows Tyson Foods’ recent closure of nine meatpacking plants across the country, beginning in early 2023. The company is also in active litigation for alleged violations of antitrust law.
Tyson Foods did not respond to repeated requests for comment.
A chicken operation near Harrison, Arkansas, on March 31, 2024. photo by Julie Anderson, for Investigate Midwest
Investigate Midwest filed a Freedom of Information Act with the USDA seeking records in May related to potential PSD actions against Tyson Foods after two former contract growers told a reporter they had been contacted by the agency. Contract growers said they were asked questions about the debt they took out to work with the company and their operations.
The USDA denied the records request in June, citing a federal exemption for records that could be related to “enforcement records for a pending or prospective investigation.”
“(The exemption) protects law enforcement records if their release could reasonably be expected to interfere with enforcement proceedings. The relevant law enforcement purpose in this instance is enforcement of the Packers and Stockyards Act,” the June response letter stated.
Investigate Midwest has appealed the records denial and is awaiting a response from the department.
The Packers and Stockyards Act has seen major updates in recent years, with the federal government showing an increased interest in the poultry industry.
Recent updates include the required sharing of payment information between chicken companies and the contract farmers who raise the birds. The PSA has also been updated to prevent discrimination of livestock and poultry growers based on race, sex, age, or disability.
The USDA is still developing a proposed rule to address “problematic” practices of contract growers taking out excessive debt to work with companies. The agency said it anticipates finalizing this rule by early next year.
In May, Investigate Midwest reported that chicken growers who worked with Tyson were left with millions of dollars in debt after the company shuttered plants. Many of them faced bankruptcy and foreclosures, while others retired, found work outside of farming or sold their land to pay off debt.
Peter Carstensen, an antitrust expert and emeritus law professor at the University of Wisconsin Law School, said the PSD typically builds investigative cases against companies to bring about a formal complaint alleging a violation of the act.
“It is somewhat more plausible they are seriously looking at whether they can make a claim that Tyson violated the provisions of the Packers and Stockyards Act by inducing various kinds of investments and then turning around and closing the plants,” he said.
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Might someone explain how is it that contract producers need to be indebted so much? As far as I know the producers have to struggle between feed prices/production costs and the quotes from the processers and it makes it a difficult business indeed, but why so much debt?
From what I understand, smaller farmers are often approached with loans by the food processors in exchange for long term supply contracts. The loans are to build the feedlots and other buildings for chickens, etc. Even modest ones can cost six figure sums to build so are beyond the savings of small farmers in my experience. The ‘catch’ is that the farmer then can’t sell his eggs or chickens for whoever pays the most.
Farming these days is far more capital intensive than it used to be. You’d be surprised how much you have to invest to build basic animal houses and buy the latest machinery. Its one reason why small operators have been driven out. Here in Ireland there has been a stealth process whereby milk producers are leasing land off neighbours, gradually building up bigger and bigger operations, while their neighbours live off the rent.
Thank you PK. Your explanation works for me. I believe the producers would be better of if they were able to associate and build their own supply chains.
Yes. The chicken and egg businesses are vertically integrated with the “farmer” (aka serf with no rights) taking on all the risk and the Tyson et al. grabbing all the profits. In Georgia and adjacent states there was a cooperative called Gold Kist back in the day that was truly a co-op. No longer. You can see the modern “chicken house” in the photograph at the link. It is not an accident that antibiotic resistance is increasing. Imagine the drugs required to keep those crowded chickens “healthy.” Ditto for pigs in similar “houses” and cattle being finished in feedlots.
Anyway, the few farmers who raise chickens and pigs on pasture are the only farmers making a decent and sustainable living. Expensive yes, but the other way is cheaper only because negative externalities are not included in the price at the grocery store. The old will be new again for survivors of the coming apocalypse.
>Anyway, the few farmers who raise chickens and pigs on pasture are the only farmers making a decent and sustainable living. Expensive yes, but the other way is cheaper only because negative externalities are not included in the price at the grocery store. The old will be new again for survivors of the coming apocalypse.
Personal anecdote, my daughter and son-in law will today and tomorrow be on farm processing 250 pastured meat chickens for sale. Third batch for the summer.Most all of them have been prebought already, only sold as whole birds. Fortunately the Green Mountain State has recently allowed the further processing of the bird on farm to be parted out, so with further work they will be able to sell the meat separately as thighs, wings, breast, etc. Interestingly, they have also found that there is a demand for the organ meats, the necks and feet.
So yes it is more profitable than being enslaved like those poor souls to an outfit like Tyson, they are doing okay with it financially. But still, it is a s**t ton of work. Worth every penny more that it may cost vs. the supermarket, but if you can swing it it keeps alive local farms, fields, all the infrastructure behind all of it.
It has never not blown my mind that a cut of beef coming from a CAFO in Nebraska, or wherever, can be cheaper than something raised just down the road. It just highlights how absolutely out of control the system is in this country.
Forgive me if this is threadjacking as I know the link below is about beef farmers fighting the big boys but one can hope that maybe the chicken farmers will try to do the same.
https://www.npr.org/2023/08/15/1194048541/ranchers-want-to-take-on-the-top-beef-sellers-by-starting-their-own-meat-plants
We feel fortunate that the State is dotted all over with these little guys, and I would add pastured beef to it as well, as as KLG stated above >The old will be new again for survivors of the coming apocalypse.
Please support all the little farmers no matter where you live, if you are able to.
I do buy me beef from a rancher in Nebraska, it is the only way to go.
>Anyway, the few farmers who raise chickens and pigs on pasture are the only farmers making a decent and sustainable living. Expensive yes, but the other way is cheaper only because negative externalities are not included in the price at the grocery store. The old will be new again for survivors of the coming apocalypse.
Personal anecdote, my daughter and son-in law will today and tomorrow be on farm processing 250 pastured meat chickens for sale. Third batch for the summer. Most all of them have been spoken for already, only sold as whole birds. Fortunately the Green Mountain State has recently allowed the further processing of the bird on farm to be parted out, so with further work they will be able to sell the meat separately as thighs, wings, breast, etc. Interestingly, they have also found that there is a demand for the organ meats, the necks and feet.
So yes it is more profitable than being enslaved like those poor souls to an outfit like Tyson, they are doing okay with it financially. But still, it is a s**t ton of work. Worth every penny more that it may cost vs. the supermarket, but if you can swing it it keeps alive local farms, fields, all the infrastructure behind all of it.
It has never not blown my mind that a cut of beef coming from a CAFO in Nebraska, or chicken from somewhere down south or wherever, can be cheaper than something raised just down the road. It just highlights how absolutely out of control the subsidy system and the economics it are in this country.
Forgive me if this is threadjacking as I know the link below is about beef farmers fighting the big boys but one can hope that maybe the chicken farmers will try to do the same.
https://www.npr.org/2023/08/15/1194048541/ranchers-want-to-take-on-the-top-beef-sellers-by-starting-their-own-meat-plants
We feel fortunate that the State is dotted all over with these little farmers, and I would add pastured beef to KLG’s words, and as KLG stated above >The old will be new again for survivors of the coming apocalypse.
Please support all the little farmers no matter where you live, if you are able to. Meats, veggies, you name it.
I believe this is a general problem for all producers. The same issues plague other agricultural sectors, also in Europe (the case of French farmers producing milk for Lactalis is similarly infamous).
At least the following aspects are relevant:
1) Scale. Those large corporations do not want to deal with small producers — so these have no other recourse than going into debt to expand their operations. Otherwise, no contracts.
2) Norms. It has become usual for those large corporations to impose comprehensive and strict standards regarding how their contractors must operate: buildings and their equipment (dimensions, light, ventilation, temperature control, etc), rations (type, quantity, frequency of provisioning), etc. Refurbishing a farm to the standards imposed by the principal (i.e. Tyson) can be very expensive, and without that, no contracts.
Basically, view a farm operation a bit like a franchise — whether it is about broilers for Tyson or potatoes for Frito-Lay. Franchisees usually have to put a lot money into “their” operation, and high indebtedness is a consequence.
Tysons?
I guess the Clintons are officially powerless.
Presumably you are referring to Hillary once lawyering for Tyson. I’m sure this had nothing to do with her husband being lawyer of the company’s home state.
Locally we also have the Purdue brand at Lidl and Publix and Sanderson’s at Lidl and Walmart. Or maybe they are all owned by Tyson.
No mention of this in the cattle side of things – I believe the same companies do the same to cattle producers – A few years back a 4 billion -B – litigated liability was decided – then on the producers appeal of this amount, with a known and picked Judge this was reduced to cost of litigation
Unbelievable – I will try to dig out both the informative interview of the individuals who brought suit and the court case and appeals.
Costco sells whole rotisserie chickens for $4.99. Most recent article I found is at https://www.forbes.com/sites/chloesorvino/2023/06/09/inside-costcos-billion-dollar-bet-on-499-rotisserie-chickens/ (use reader view to read article).
Anyway, that’s what it takes to compete with Tyson. Costco and its deep pockets building a whole chicken supply chain from the ground up, including 15 year contracts to match those 15 year loans.
The larger the animal operation, the more concentrated the water use and waste sources become.
More smaller operations might have the same combined water use and waste production (resp.), but it’s spread out over a larger area lowering the overall impact.
I have a contract with a county in western MN to work on these issues, mainly dairy cattle and hogs. Seeing the small farmers struggle at the same time as grocery process are high infuriates me. Someone’s making money, and it isn’t the farmer or the grocer.
Someone’s making money, and it isn’t the farmer or the grocer. – The “US chicken industry where four companies control 60 percent of the market” – in my opinion that should be made clear – it is not “the market”. “The Market” implies the whole thing — what the four companies do? they use the producers access point to the consumer market because they are the choke point (more like premeditated murder through strangulation to capture the entire market) intermediary, the abattoir, packager to distribute on to the consumer. I am sure that stories of massive recalls of millions of pounds of this-or-that meat product or vast quantities of this-or-that vegetable ring a bell….it’s due to the concentration of facilities that own the choke point….my opinion is that the huge money made, some of it found it’s way to legally and PR wise suppress the problems from reaching the public. The additional problems in poultry is they contract the producer to produce specific breed(s) (sort of the monoculture way) that affect the human health (nutritional) and ecological footprint in highly negative ways because, profits….as an aside, it is a mirage that consumers have choices available. The aforesaid, applies equally in the -other than poultry- meats department and is choke point controlled by the same companies above. The difference in the taste of pork or bacon or beef products produced by contract through these chokers (jokers) and that by an independent who knows his stuff and uses bio-char and other sustainable practices with happy!! livestock is beyond belief. Also, the nutritional values are tremendous including finding much more Omega 3s and other high importance nutritional benefits.
Native Americans who are pioneering buffalo production incorporating natural grazing show extremely high nutritional health benefits in the produced meat….. I keep thinking that bringing back large herds of roaming buffalo would be a great way to provide sustainable meat production while minimizing the negative health effects of corporate controlled mono-type practice. All the barbed-wire and closing the open range malarky and ownership issues could be solved with some low tech high tech – location, ownership, health, history etc. while using tech herd control to protect the Darwin award contestants and other innocents from a trampling. No better way to restore soil health than to have them big old thing do what they do. — Just my thinking a bit
Unless and until corporate executives and business owners start going to prison, there is no “enforcement”. Fines should be referred to as imposed business costs.