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Growers take Pilgrims Pride to fed court

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Well-known member
Feb 10, 2005
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Growers take Pilgrims Pride to fed court

Pilgrims Pride is headed to court Thursday in a federal lawsuit filed by former chicken-growers.

The lawsuit is a combination of two 2009 complaints filed by the city of Clinton, Ark., and Shelia and James Adams, who own or have owned 368 poultry farms in Arkansas, Oklahoma, Louisiana and Texas, including in Nacogdoches and Mount Pleasant. The lawsuits were originally filed in federal bankruptcy court, but a Fort Worth federal court consolidated the cases and moved the venue to Marshall.

Pilgrims has denied it violated the federal Packers and Stockers Act.

A bench trial before U.S. District Judge Charles Everingham is scheduled to begin at 9 a.m. Thursday at the federal courthouse in Marshall.

Formerly headquartered in Pittsburg, Pilgrim's Pride filed bankruptcy in 2008. It emerged from bankruptcy in late 2009 after selling a majority stake to Brazilian meat producer JBS USA. Company headquarters was moved from East Texas to Greeley, Colo., in 2010.

The lawsuits allege Pilgrims violated the Packers and Stockers Act through its plan to manipulate the price of chicken, its creation of an insider system of advantages and its retaliation for and termination of growers who refused to continually make capital investments in their facilities.

"Pilgrims has repeatedly, falsely claimed that its economic troubles were the result of a sort of 'perfect storm' for the poultry industry, a condition in which high feed prices, low demand and high debt combined to force it to seek Chapter 11 protection," the plaintiffs' attorneys wrote in the complaint. "However, a review of its recent actions toward its growers reveals a far different factual history, and that more accurate history is best summarized as a series of attempts to manipulate chicken prices and create illegal preferences, all at the growers' expense."

They said Pilgrims' takeover of Gold Kist, another large, chicken-producing company, in early 2007 made the company the highest-volume poultry-producer in the U.S. However, Pilgrims took on $1.3 billion in debt with the takeover. Combined with flat, chicken prices and increased costs, plaintiffs' attorneys said, Pilgrims found its new debt structure difficult to maintain.

The company immediately created a business plan to increase the market price of chicken and try to control its feed costs through hedge contracts, though both moves backfired, the complaint alleges. It idled a number of production facilities and displaced their associated growers. Attorneys for the plaintiffs quoted Pilgrims executives who said they cut production by 5 percent to create higher, chicken prices.

The Clinton, Ark., facility and its processing facility in Bossier City, La., were idled.

"Pilgrims was careful to choose grower communities to shut down that were not in an area where a competing integrator had a facility," the plaintiffs allege.


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