DEXTER, Missouri – In the heart of rural Missouri, a seemingly ordinary morning in August 2023 took a devastating turn for Shawn Hinkle and hundreds of others. A tearful phone call from a technician at the Tyson Foods plant in Dexter delivered the crushing news: the plant was shutting down. For poultry farmers like Hinkle, who had contracts with Tyson to raise egg-laying hens, this meant not only the loss of their livelihoods but also a precarious financial future.
Hinkle, who had invested $2.3 million a decade prior to build two chicken houses, now faced a staggering $2.8 million debt. Tyson’s explanation for the closure – a national streamlining effort to boost profits – offered little comfort. The closure of the Dexter plant, along with three other poultry plants and two beef packing facilities, sent shockwaves through farming communities.
However, for Hinkle and several other farmers, Tyson’s narrative didn’t add up. In December 2023, they took legal action, suing the meat industry giant for breach of contract. As this lawsuit progresses, an investigation by the Watchdog Writers Group, in collaboration with Investigate Midwest, has uncovered documents revealing a close coordination between Tyson Foods and Cal-Maine Foods, the company that ultimately acquired the Dexter plant. This collaboration, according to the analysis, effectively prevented farmers from continuing operations with a Tyson competitor.
Furthermore, evidence suggests that Tyson attempted to dissuade former contract farmers from pursuing legal remedies and may have discouraged communication with federal officials and journalists. Tyson Foods has remained tight-lipped, declining to comment on the specific allegations raised in the lawsuit.
Following the plant acquisition, Cal-Maine offered contracts to local farmers, but with a significant shift: they would need to retrofit their farms for table egg-laying hens, a different operation from raising chickens for meat or breeder hens like Hinkle’s. This transition presented a considerable hurdle for farmers.
Strategic Maneuvering and Market Control
It’s time to crack down on the meat market monopoly
The dominance of a few players like National Beef Packing Company, Cargill, JBS, and Tyson, who control 80% of the beef market, raises concerns about fair competition and market manipulation.
A particularly contentious aspect of Cal-Maine’s offer was the condition that farmers waive their right to sue Tyson Foods for losses incurred due to the plant closure, as indicated in court filings. Adding to suspicions of coordination, Tyson reportedly provided Cal-Maine with the data used to formulate these offers.
Attorneys for Hinkle and his fellow plaintiffs argue that Tyson’s actions were designed to prevent a competitor, such as Perdue Foods or Sanderson Foods, from acquiring the Dexter plant. These poultry meat companies would have offered a more seamless transition for local farmers accustomed to meat production.
“Why would Tyson orchestrate this?” questioned Russ Oliver, the local attorney representing the farmers, during a June court hearing. He suggested that secrecy was paramount for Tyson to gain a competitive edge by preventing rivals from anticipating their strategic production shifts.
Tyson Foods, a dominant force in the US meat industry, producing approximately one-fifth of the nation’s meat, has a history of antitrust scrutiny.
Past Legal Challenges:
- 2016: Tyson settled a lawsuit with meat wholesalers for $221.5 million over allegations of supply cuts to inflate chicken prices.
- 2020: The Department of Justice sued Tyson and other poultry giants for alleged price collusion, although the case ended in a mistrial in 2022.
- 2021: Producers in multiple states sued Tyson and Perdue Foods for allegedly sharing grower pay data to suppress wages, resulting in a $35.8 million settlement.
Despite these legal battles, Tyson’s market power remains largely unchecked. Together with Pilgrim’s Pride, it controls roughly half of the US chicken market, a stark contrast to the late 1970s when over 40 companies shared that market share, according to USDA data.
The current class-action lawsuit brought by Hinkle and Missouri farmers alleges a 25-year agreement between Tyson and Cal-Maine restricting the Dexter plant’s use, further fueling concerns about anti-competitive practices.
Since filing the lawsuit, Hinkle and his legal team believe Tyson has intensified its efforts to intimidate farmers and suppress media coverage. Tyson sought court orders to compel Hinkle to disclose communications with USDA officials, responsible for antitrust enforcement, and journalists.
Undeterred, Hinkle remains committed to pursuing justice through the lawsuit. “This is not something we wanted. But I won’t stand by and be taken advantage of,” he asserted.
The Promise and Peril of Tyson Contracts
What you need to know about Tyson’s former contract growers
Investigate Midwest’s in-depth investigation highlights the far-reaching impacts of Tyson’s plant closures on contract growers across the nation.
Shawn Hinkle’s relationship with Tyson Foods began in 2013, marked by a promise of prosperity. Tyson managers presented him with an enticing proposition: build a large-scale poultry farm on his land, financed with Tyson’s assistance, and secure a stable, decades-long income as a contract grower.
Hinkle, who inherited a 1,200-acre cattle farm from his father, initially hesitated. He was aware of stories about farmers burdened with debt and equipment upgrades, only to have their contracts abruptly terminated. However, Tyson’s representatives assured him those were outdated concerns.
A decade later, Hinkle’s initial fears materialized when the Dexter plant closed, demonstrating the inherent risks in contract farming and the potential vulnerability of farmers to corporate decisions.
Tyson’s Legal Tactics: Countersuits and Confidentiality
When Hinkle decided to sue Tyson, he sought legal representation from Russell Oliver, a lawyer with deep roots in the local farming community. Oliver’s personal connection to farming and the community fueled his commitment to the case.
Joining Hinkle in the lawsuit are four other farmers: Jessie Bridwell, Richard and Samantha Green, and R&S Green Farms LLC. They allege that Tyson intentionally misled them by closing the Dexter plant, resulting in significant financial harm.
Tyson’s legal team countered these allegations during an April 29 hearing, arguing that farmers were still receiving “outtime payments.” These payments, intended to cover the period between flocks, amount to a meager $0.02 per square foot of chicken house, a fraction of regular monthly income. Hinkle pointed out the inconsistency and inadequacy of these payments, often delayed and insufficient to cover basic expenses like electricity.
The lawsuit further alleges that Tyson was aware of the plant closure as early as 2021, citing a Securities and Exchange Commission disclosure about a “Productivity Program” aimed at $1 billion in recurring savings.
Early morning calls. Barren chicken barns. Millions in debt.
The human cost of Tyson Foods’ plant closures is vividly portrayed through the stories of contract chicken farmers facing financial ruin and uncertainty.
The alleged agreement between Tyson and Cal-Maine, restricting the Dexter plant’s future use, is central to the lawsuit’s claims of anti-competitive conduct. While the specific terms remain redacted in public filings, farmers believe Tyson deliberately prevented a sale to a poultry meat competitor to reduce supply and inflate prices.
In a strategic countermove, Tyson countersued two farmers, Elija and Melissa Skaggs, for rejecting contracts with Cal-Maine. Tyson acknowledged the existence of the agreement with Cal-Maine but claimed to have terminated it, stating it was initially intended to prevent the plant from falling into the hands of a broiler chicken competitor. However, as attorney Brandon Boulware argued, the termination was inconsequential as the plant had already been repurposed for egg production.
Political and Public Scrutiny
Tyson’s dealings have attracted scrutiny from state and federal lawmakers. Senator Josh Hawley of Missouri expressed feeling misled by Tyson’s CEO, Donnie King, who had previously assured him that Tyson would not block a competitor from purchasing the Dexter plant. Missouri Attorney General Andrew Bailey echoed these concerns, urging Tyson to prioritize keeping facilities open or selling to competitors. Bailey later joined the farmers’ lawsuit, indicating growing official concern.
The Battle for Transparency
A June 26 court hearing highlighted the contentious issue of document confidentiality. Plaintiffs’ attorneys criticized Tyson for designating all 1,325 documents produced in the lawsuit as confidential. Tyson’s legal team, in turn, accused the plaintiffs’ counsel of misusing confidential documents and sought sanctions, a motion that was ultimately denied.
Russell Oliver passionately argued for the public disclosure of four key confidential documents, including the sale agreement with Cal-Maine, suggesting Tyson was concealing evidence of unlawful behavior. He pledged to share these documents with government agencies if permitted. Tyson’s defense rested on the premise that preventing a sale to a competitor is standard business practice, not illegal.
Tyson’s Market Dominance and Investor Implications
Claire Kelloway, from the Open Markets Institute, emphasized the broader implications of the case, stating that Tyson’s brand carries “baggage” due to its role in shaping the vertically integrated and consolidated poultry industry. She described the industry as “extremely unfair” and “exploitative” of farmers, highlighting the challenges in holding powerful corporations like Tyson accountable.
Send Us a Secure Tip
The lawsuit against Tyson Foods unfolds against a backdrop of significant financial performance. In November, Tyson reported robust quarterly earnings, with its poultry division achieving a $409 million profit, a dramatic turnaround from a $267 million loss the previous year. This financial rebound, while positive for Tyson Foods Stock Price and shareholders in the short term, could be overshadowed by the long-term financial and reputational risks associated with the ongoing litigation and allegations of anti-competitive practices. Investors are closely watching how these legal challenges and public scrutiny will ultimately impact Tyson Foods stock price and the company’s future market position. The outcome of this lawsuit and the broader regulatory environment will be crucial factors influencing investor confidence and the long-term valuation of Tyson Foods stock price.
For Shawn Hinkle and the other farmers, the fight is far from over. They face continued depositions and legal pressure from Tyson. However, they remain resolute. “The days of exploiting farmers and discarding them are over,” Hinkle declared, underscoring the deeply personal and principled nature of their struggle against a corporate giant whose actions have significant ramifications for both individual livelihoods and the broader market dynamics influencing Tyson Foods stock price.
Like this:
Like Loading…
Citations & References:
Interviews/statements
Shawn Hinkle, July 11 and Aug. 14, 2024
Russ Oliver, Aug. 14, 2024
Brandon Boulware, June 10 and July 12, 2024
Claire Kelloway, Aug. 22 and Nov. 21, 2024
U.S. Sen. Josh Hawley letter, July 9, 2024
June 26 hearing
Attorney General Andrew Bailey – Oct. 3, 2024 (Letter)
Documents/reports
Hinkle’s lawsuit against Tyson Foods
Tyson v Skaggs counter lawsuit
Transparency in Poultry Grower Contracting and Tournaments, USDA
Data
