Area chicken growers fight to keep contracts
Published: Friday, January 16, 2009 at 6:01 a.m.
Last Modified: Thursday, January 15, 2009 at 8:04 p.m.
A group of chicken growers is fighting to keep their contracts with Pilgrim's Pride and in some cases to keep their farms after the poultry company announced its intentions to sever ties with underperforming farmers in conjunction with layoffs at its Live Oak plant.
Nine of the 19 farmers at risk of losing their contracts in Suwannee and surrounding counties hired an attorney Thursday morning to ask a judge to honor the contracts.
Pittsburg, Texas-based Pilgrim's Pride is seeking to void the contracts as part of its bankruptcy reorganization. A bankruptcy judge will have final word over the contracts.
In December, the company announced that it was laying off 505 of 1,400 workers and would no longer need some of the 158 growers it contracts with.
In a statement, spokesman Ray Atkinson said last year was tremendously difficult for the entire U.S. chicken industry as a result of record-high feed ingredient costs, an oversupply of chicken, weak market pricing and lower consumer demand. The company had its worst fiscal year in 63 years with a $1 billion loss.
Now, some local chicken growers are feeling the pain acutely.
Bruno and Gillian Garcia received their last payment on Dec. 21. With a baby crying in the background, Gillian Garcia said by telephone Wednesday that they won't be able to afford insurance for their three children after this month.
They left the Garcia family's printing business in Miami and moved to McAlpin to give their children a different life, she said. They bought an existing chicken farm with a $1 million loan and $500,000 of their own money.
Without the contract, she said the farm is only worth the land - $250,000 - "so we'd still be left with a debt of $700,000."
"I can't go to my bank and say I want to null and void my mortgage. It doesn't work like that, but that's what they are trying to do with us," Gillian Garcia said of their Pilgrim's Pride contract.
Another farmer in his 70s is poised to lose everything and go $700,000 in debt, she said.
Only those farmers with long-term contracts have standing in their legal claim, Gillian Garcia said. Other farmers had flock-to-flock contracts.
Atkinson said the company has had to make tough choices that are especially painful when they involve eliminating jobs or grower contracts, but that they were vital to protect the greatest number of jobs and ensure the future viability of the company.
The growers are also taking issue with Pilgrim's Pride's performance measures, saying they are punished for the cost of feed that was never delivered. Atkinson said the company has used the same criteria for years and any contract issues would be decided by the judge based on a proof of claim filing.
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