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UPDATE 1-Top U.S. chicken processors face lawsuit over farmer pay
February 3, 2017 / 12:44 AM / 6 months ago

UPDATE 1-Top U.S. chicken processors face lawsuit over farmer pay

3 Min Read

(Adds details on lawsuit, background on USDA rule)

By Tom Polansek

CHICAGO, Feb 2 (Reuters) - A group of U.S. chicken farmers sued the country's biggest poultry processors, including Tyson Foods Inc, for allegedly conspiring to depress their pay, the latest accusation of improper collusion in the sector.

Tyson, Pilgrim's Pride Co, Sanderson Farms Inc and other companies illegally agreed to share detailed data on grower pay with one another to keep compensation below competitive levels, according to the civil lawsuit filed last Friday in a federal court in Oklahoma.

Sanderson Farms said in a regulatory filing on Thursday that the company plans to fight the lawsuit.

Tyson, the largest U.S. chicken company, called the allegations "false claims."

"We want our contract farmers to succeed and don't consult competitors about how our farmers are paid," Tyson spokesman Gary Mickelson said.

Perdue Farms declined to comment while representatives of the other companies that were sued - Pilgrim's Pride and Koch Foods - could not immediately be reached for comment after normal business hours.

The companies, which the lawsuit refers to as a "cartel," frequently shared data on pay with each other to keep compensation lower than it would have been in a competitive market, according to the lawsuit. That allowed the companies to keep more profits, the complaint said.

The companies also agreed not to compete for the services of farmers working for each in order to insulate themselves "from normal competitive pressures that could potentially erode the effects of their information sharing agreement," according to the lawsuit.

The farmers want to be paid monetary damages.

Overall, about 25,000 U.S. farmers have production contracts with chicken processors, according to the National Chicken Council, a trade group. They produce meat to feed consumers who spend about $90 billion annually on chicken.

Tyson said its average contract farmer has been raising chickens for the company for 15 years. Compensation "is set out clearly in contracts the farmers voluntarily enter into," according to the company.

The lawsuit comes after the U.S. Department of Agriculture in December proposed rules it said would make it easier for chicken producers to sue processors if they believed they were being mistreated.

The Trump administration has since frozen the rule, as officials review regulations proposed toward the end of former President Obama's last term in office.

A lawsuit last year alleged that Tyson had colluded with other companies in the broiler chicken business to reduce production since 2008. Tyson disputed the allegations at the time.

The case over pay is Haff Poultry Inc et al v Tyson Foods Inc et al, U.S. District Court, Eastern District of Oklahoma, No. 17-CV-00033. (Additional reporting by Karl Plume in Chicago; editing by Jonathan Oatis, G Crosse)

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