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June 22, 2014

County chicken farmers look to secure new contracts

Tyson declines to renew them as suppliers

— Limestone County chicken farmers are scrambling to secure new contracts after Tyson Foods recently notified them that their seven-year supplier contracts would not be renewed.

A majority of the contracts are set to expire in 2015, according to Clements farmer Ty Smith. In 2009, he signed a seven-year deal to supply the Tyson’s nearest Tennessee poultry-processing plant, which is about 80 miles north in Shelbyville.

Worth Sparkman, a public relations manager for Tyson, confirmed this week a certain number of contracts are not being renewed due to the availability of suppliers located closer to the plant.

At least 15 farmers must secure a deal with another producer to remain solvent, Elkmont farmer Stan Usery Sr. said. He owns nine chicken houses in Elkmont and Athens with his son, Stan Jr.

“Roughly, it’s between 15 to 18 farmers in Limestone County but this contract affects everyone in North Alabama. It also affects 20 to 25 farmers in Lauderdale County,” said Usery Sr., a chicken producer for the past 22 years and a board member for several poultry associations.

Limestone generated $60.8 million and 332 jobs from poultry and egg production in 2010, which is the most recent data available. The figures came from a joint study released last year by the Alabama Cooperative Extension System, Alabama A&M and Auburn University.

Tyson feedback

Tyson officials declined to provide specifics when asked how many Limestone farmers would be affected by the non-renewals or the dollar amount for the expiring contracts, describing contractual data as proprietary for a global company with $34.4 billion in sales during fiscal 2013.

“We have not canceled any contracts with farmers ... In 2008, we picked up several farmers in Alabama to supply our Shelbyville, Tennessee, complex. At the time, their contracts with (Pilgrim’s Pride) weren’t being renewed, and we had a need for more chickens. We signed seven-year contracts with those farmers, and we have let them know that when their current contracts expire in 2015, we will not enter future contracts with them,” Sparkman said.

Tyson’s economic footprint in Alabama is estimated at $217.3 million, with about 1,800 employees primarily located at plants in Cullman, Marshall, Etowah and Blount counties, according to company data. Sparkman said the estimate is derived from wages, farmer pay, utilities, taxes, donations, scholarships and other purchases, and does not include economic multipliers.

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