December 2011 Articles

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Just Rambling

Just Rambling: This past Saturday morning, December 3, I was busy working on this month’s Ag Trader USA. I was calling people concerning their classified ads, to see if the items they had advertised had sold. In some cases I had to leave a message asking them to return my call and let me know whether to continue their ads. I spent most of the afternoon feeding cattle and when I came back into my office that evening I saw my message light flashing on the phone. I immediately pushed the button to hear the message and what I heard really made me sit down to do some thinking. The message was this “Take out all of our for sale ads, my lender has contacted me to inform us that they are foreclosing on my farm and I am not to sell anything else”. This really upset me, not at the lender because having worked as a lender for 30 years I understand there are times when the lender has no choice but to pursue foreclosure. This concerns me about our system, a system that allowed a company and persons within that company to gamble with hundreds of people’s livelihoods just to be the largest poultry company in the world. This is old news but it still very much concerns me when I see good people beginning to fall, at no fault of their own. This concerns me because this gamble was strictly out of greed which eventually led the company to bankruptcy. This concerns me because, according to reputable reports, many of the upper management team in place at the time of the bankruptcy were allowed to leave with good compensation packages and others were brought in to restructure the company at as good or better compensation while the growers affected by the bankruptcy and subsequent idling of several plants looked on in disbelief. This concerns me because these idled plants were to be just that, idled, not sold. Only through the efforts of many political leaders and taxpayer funds (50 million dollars) was the Farmerville, La. plant sold to Foster Farms. The Douglas, Georgia processing plant was re-opened by the company after the state of Georgia put 30 million dollars into the facility. Even though the sale of the Farmerville facility and the reopening of the Douglas, Ga. plant was a blessing it still concerns me because there are many Louisiana growers that still do not have chickens and it is reported that many of the Douglas growers continue to be without birds, also. The majority of the growers in El Dorado and Clinton, Ar. continue to be without chickens unless they were fortunate enough to be in close proximity to another integrator and got picked up. This concerns me because during the bankruptcy court hearing in Fort Worth the bankrupt judge dismissed many growers claims with only token payments from the company to them and those growers that received birds from Foster only received token payment for their out time. It is my understanding that for the Douglas growers to get new contracts they had to forfeit their litigation rights against the company. It concerns me that the company and the industry as a whole would rather pay large attorney fees to fight the growers rather than pay the growers just compensation for damages they suffered due to the company’s poor management decisions. Sure grain prices and fuel prices were high but as one complex manager told me, “ the company was struggling to pay interest”. This was debt they had incurred to buy another poultry company to become the largest poultry company in the world. It concerns me that our judicial system is so slow- over a year lapsed before a trial was scheduled for the remaining growers to get the opportunity to present their case to the court and then this trial turns out to be only for the El Dorado growers. It concerns me that the poultry company’s attorneys led the growers to believe they wanted to mediate this case in good faith when actually they didn’t. Their lack of legitimate mediation on more than one occasion spoke louder than their words. It was soon realized that these mediation gatherings were more of an attempt to divide and conquer rather than reach an amicable settlement. It concerns me that the judge presiding over the growers trial which was held in Marshal, Texas wasn’t interested in hearing many growers testimony. It concerns me that even though this judge ruled in favor of the growers he drastically cut the settlement ask for and the way he awarded the individual settlements made no sense. It appears he didn’t take into consideration the debt on the farm nor the age of the houses. As one of the attorneys for the growers stated “If you had a good CPA you probably didn’t get awarded much settlement”. Apparently the judge based his settlement awards on the bottom-line of the schedule F in the tax return. If you had a lot of interest expense and depreciation which is reflective of a new farm with a larger debt then your bottom-line didn’t reflect much net income or if you did a good job of minimizing your taxes to reflect a smaller schedule F net income your settlement was more than likely small in relation to your debt.
I am pleased for those who had little or no debt and were awarded good settlements but I am concerned for those with larger debts who in many cases were awarded much smaller settlements. It concerns me that the poultry company and its attorneys can now appeal this verdict to a higher court—the 5th District Court of Appeals. I understand this judicial process and its intent but I don’t understand the long timetable these appeals usually involve. What happens to the grower without birds, especially if he has a large debt against his farm? What is a lender to do that holds a mortgage on that farm?” This month makes the third year since the company filed for bankruptcy. What is a grower and a lender to do? This very much concerns me. Are my concerns valid. You bet they are! As a past grower with this company I understand much of the pain and suffering all growers have gone through and what growers without chickens continue to go through. I don’t understand it fully as some growers with large debts do. I was fortunate enough that the debt on my farm wasn’t too large for me to overcome but a sizeable portion of my farm cash flow was taken away when this poultry company filed bankruptcy. My family and I have a good understanding of this diminished cash flow—what we don’t understand is having to face the loss of our home and farm. Sure I realize that at any time any one of us could face this possibility due to catastrophic events by Mother Nature or by poor management of one’s livelihood but for growers to face this possibility at no fault of their own continues to concern me. My thoughts and prayers go out to all growers but especially for those who face the real possibility of losing their home and farm. Van Bennett