"It was a take it or leave it deal. We don't want to lose our
"This is just a slow death. They give us just long enough to
"They're putting us on a
operations, because they are
get in debt and leave us
leash and yanking
family farms. We put everything
holding the bag.”
us around."
into these farms."
– Ron Dill
– Robert Owens
– E.L. Coplen
wants “us to keep on because it will be years before the big 3,500-sow units come on line. Right now, they need us to meet their obligations.” “Cargill did a great job of selling in Oklahoma,” said Harlan Hentges, an Oklahoma City attorney specializing in agricultural law. “Now, these growers are in a terrible position. “They have basically two choices – do business with Cargill, which will probably bankrupt them; or fight Cargill, which probably means they end up in a lawsuit and go bankrupt. These are not good choices,” he declared! “Pulling out is a recurring practice in the industry,” said Hentges, who indicated there are many similarities in what Cargill intends to do and what Tyson did to pork producers in eastern Oklahoma and Arkansas. “Tyson is the subject of a lawsuit. It’s a class action suit for fraud,” he said. It was filed on behalf of 80 Tyson contract growers after that company announced it was restructuring and would not renew contracts.
A
n Alabama firm representing the Tyson contract growers cited “Tyson’s abandonment of its hog farmers, disregard for their corporate responsibility and the devastation the profit-driven decision has and will cause.” The suit against Tyson was filed in Arkansas, and the Arkansas Supreme Court already has rejected Tyson arguments that courts had no jurisdiction since contracts growers signed afforded them only arbitration. (The Cargill contracts also state growers are entitled only to arbitration). The Alabama law firm has asserted that Tyson “growers based their decision to get into the business on their reliance of Tyson’s commitments that Tyson was fully committed to their live swine operations and they were in business to stay.” The Tyson growers – just like the Haskell and LeFlore County Cargill growers – built new hog houses, made hog housing upgrades and purchased new equipment to become exclusive contract growers. “The farmers were ready, willing and completely trusting that Tyson would help them provide for their futures and their families’ futures in
the long term,” the Alabama law firm asserted. “Tyson has used their growers as a temporary venture and have now abandoned them completely.” The lawsuit explains how Tyson’s restructuring means the farmers are saddled with debt related to their hog farms that can’t be paid without the proceeds from their hog farms. “The Haskell and LeFlore County Cargill growers definitely need help,” said Hentges. “There’s nothing whatsoever we can do when they’re contracting,” said Oklahoma Agriculture Commissioner Terry Peach. “We can’t infringe on private enterprise and private business.” Peach has contacted Cargill officials. “I asked why. They said the efficiency of the operations wasn’t good enough that they could continue to be profitable and that they weren’t close enough to processors and feed mills.” Oklahoma Attorney General Drew Edmondson was one of 16 state attorneys general to endorse model legislation dubbed as the “Producer Protection Act.” The act proposes new laws to protect producers who enter contracts to provide livestock or grain. It specifically addresses protecting producers who have made sizeable capital investments required by contracts. Oklahoma has not enacted the Producer Protection Act. “Around the country, people know what Cargill is doing and how it’s going to affect Oklahoma,” said Hentges. “We’ve got a mess to clean up, and Cargill created the mess. “It is important to have a healthy, open discussion of this issue instead of keeping our heads down. Sometimes if a man keeps his head down,” the attorney conceded, “he’ll end everything by blowing it off.” “In production contracting, there is great disparity in bargaining power between the contractor companies and individual producers. Producers can easily be stuck with unfair contract terms,” said Rich. “The continued use and expansion of production contracts is appropriate only as long as producers have equality. We must work to be sure the scales aren’t tipped against farmers and ranchers.” Oklahoma Country • Fall 2004 • 19