By Christine Haughney | 01/11/2018
BATTLES IN NEBRASKA OVER COSTCO’S NEW POULTRY CONTRACTS: Costco’s new poultry processing plant – which removes the intermediary, contracts directly with poultry farmers, and then processes their broiler chickens exclusively for Costco stores – is refusing to share a copy of the contract it is giving to new poultry farmers in Nebraska. That’s according to John Hansen, president of the Nebraska Farmers Union, who has been trying to help his state’s farmers negotiate their first contracts with the warehouse giant.
After Costco announced that Lincoln Premium Poultry would build a large processing plant in Fremont, Neb., to provide broiler chickens for Costco, local farmers have been eagerly signing up – drawn by what seemed to be attractive contracts. But Hansen, whose group has been negotiating contracts for farmers for decades, noted that many of these farmers didn’t have experience with poultry and weren’t aware of the hazards of the industry that farmers have experienced. He said that not only did Lincoln Premium Poultry decline to show him the contract, but Costco did too in a letter.
“It’s not a competitive situation,” Hansen said. “There’s no other poultry processor in the state on that scale at all. If you’re negotiating in good faith and making improvements in the contracts, there were areas of improvement.”
What Costco’s reps say: Walt Shafer, who has overseen the project for Lincoln Premium Poultry for the past two years and whose LinkedIn profile shows he previously worked for Pilgrim’s Pride, said that although he would not provide Hansen a copy of the contract, he encouraged all farmers he spoke with to consult with a lawyer before signing. “The first thing I said was ‘Take this contract and show it to your attorney. Show it your CPA, show it to your wife. Show it to your kids,'” Shafer said. “We’re very, very proud of the contract we have with the growers. It is a contract that respects the growers.”
Why the worry? After last year’s move by USDA that scrapped interim final GIPSA rules that gave farmers the right to sue companies like Lincoln Premium Poultry, Hansen said that poultry growers need to be especially vigilant about getting fair deals.
He added that since Costco was working with farmers through this newly created company, these negotiations could foretell the future for poultry farmers. “The final retailer of the product now owns the birds, owns the processing plant,” said Hansen. “If that works for Costco, how long will it be for Walmart and who knows who else will be doing a similar thing?”