The encyclopedia states a contract is a promise “for the breach of which the law affords a remedy.” Contracts hold exceptional importance to the enterprise of American economy; so much so that Article 1, Section 10 of the United States Constitution prohibits a governing body from impeding the implementation a contract.
Contracts represent weighty, authoritative documents that define the parameters of a business relationship, the behaviors permitted in that relationship as well as the penalties, and rewards, for adequate or above average performance within contract parameters.
Recent concerns over poultry contracts cropped up when Costco Wholesale and Lincoln Premium Poultry announced their plans to bring a large poultry processing operation to the Dodge County area, with the processing plant, hatchery and feed mill located just south of Fremont.
Starting next week two national experts on the topic of big corporate poultry contracts arrive in the Greater Fremont area to address and share their experiences and knowledge with regards to the advantages, disadvantages and the vital key points that farmers need to know if interested in becoming poultry growers. Lynn Hayes, senior attorney and program director of the Farmers Legal Action Group, Inc. and Mike Weaver, a West Virginia poultry grower since 2001 for Pilgrim’s Pride poultry, part of the world’s leading protein company, JBS USA will speak at four meeting next week over four days to help educate farmers.
In a phone interview, Weaver expressed concern for potential growers contracted with Costco, but only as far as his experience as a grower in West Virginia permitted.
“I’m not opposed to this facility that Costco is building out there,” Weaver said. “If it’s done right it could be a good thing.”
Weaver’s views on the matter reflect the opinions of others who helped to organize and sponsor the series of contract informational meetings scheduled for June 20 to June 23 in various communities around Fremont.
Nebraska Farmers Union (NeFU) President John Hansen, who also serves as vice president for the Organization for Competitive Markets (OCM) – two of several groups sponsoring the meetings – made it clear in a phone interview most of the sponsor organizations do not represent opposition groups to Costco’s proposal.
“OCM, NeFU, the NeFU Foundation, and Farm Aid have not taken a position on the project as of yet. We are in the fact gathering and sharing portion of the process at this point,” Hansen emphasized. “We’re trying to bring in folks that help producers be aware.”
Hansen bears a depth of experience working with the Nebraska agricultural world. He said the NeFU, established in 1913, works at many levels of involvement with Nebraska’s agricultural community. As the oldest and second largest general farm organization in the state it has assisted with the establishment of over 400 Nebraska farmer cooperatives while remaining actively involved in Nebraska agriculture policy at the state and local levels.
Hansen acknowledged that Costco holds a good reputation that continues to set the bar high in the food/agricultural industry. He stressed that now, as negotiations and plans are just beginning, it is a good time make every attempt in establishing a good foundation in the way the Costco facility operates and how it treats its growers.
“If Costco is serious about doing better than the industry standard then farmers need information,” he said. “This provides the opportunity to do something better than the norm or the average.”
When it comes to the status quo of the broiler industry Hansen and Weaver have seen, firsthand, the bad side.
“In the case of the broiler (industry) there is no longer an open market,” Hansen said. “The entire system is a vertically integrated contract structured system … it’s been a known problem.”
In his experience, the history of poultry contracts revealed a “one-sided, non-negotiated, take it or leave it contract” that placed producers in the extremely vulnerable positions. He explained how big corporations can attach what are known as “riders” to legislation moving through the house and senate. Riders are additional stipulations added to bills under the consideration by a legislature. Those stipulations relate very little to the overall purpose of the bill. However, those unrelated provisions can hamper the U.S. Department of Agriculture’s ability to implement legislation that addresses fair poultry contracts
Hansen explained that some of the contracts represent very binding documents that regulate – for the grower – very specific aspects in of raising a flock. Some of those aspects include periodic and expensive upgrades to equipment or housing facilities. If the grower refuses the contract can be voided.
“One side of the equation has so much power and the other party is at such a disadvantage,” Hansen said.
“It’s a rigged lottery, because (the growers) have no control over the inputs (e.g. chickens, feed),” Weaver added.
“The farmers in the Fremont area, for the most part have no experience in raising poultry at this level and no experience in poultry contracts,” Hansen said. “And that worries me.”
Two other sponsoring organizations with experience on contract farming, Farm Aid and GC Resolve, are also following the Costco proposal. Both agreed that do not directly oppose the proposal. But education and transparency must continue as the discussion moving forward.
Farm Aid, started in 1985 during the farming crisis, works to elevate the voice of individual farmers above the din of controversy of agricultural debates. In an interview, Alicia Harvie, Advocacy and Issues director for Farm Aid explained that they are aware the discussions over Costco in Nebraska.
“We’re at the beginning of the process of a new and pretty substantial processing Facility,” Harvie said. “From our perspective, what’s important is that we can draw from the wisdom of what happened in other parts of the country … let’s learn from those lessons and equip farmers with what they need.”
Graham P. Christensen, president of GC Resolve, a local company that works at the community level, promoting more sustainable community development through programs such as solar energy, concurred with Harvie.
“This is all new to us in Nebraska,” Christensen said. “Costco has had a reputation of trying to improve standards and be better … and more progressive … we have to pull out the bad examples, pull out the good examples; and try to learn from that.”
While Christensen and Weaver both stated they are interested and open to meetings with Costco, they stressed next week’s contract informational meetings serve an opportunity to educate growers on the importance of understanding their rights.
Cecilia Harry, executive director of the Greater Fremont Development Council, who has been working with Costco and Lincoln Premium Poultry emphasized both companies’ dedication and commitment to growers.
“The leaders of this project are listening to that feedback,” Harry said. “The contract being developed is unique.”