Some Carroll County poultry farmers are wondering what is next for them after Tyson Foods Inc. of Springdale announced it would not renew integrator contracts with them.
The publicly traded meat processor told farmers last month that it would end ties with those with two years or less on their existing contract. In Carroll County, that was 39 farmers. In southern Missouri, it was 20.
All the farmers raised broilers, the chickens raised for consumption, for Tyson Foods, which for a long time was the only integrator that did business with farmers in Carroll County. The affected farmers will still be paid through the end of their contracts, either in a lump sum or in installments.
“We have some tremendous hardship going on right now,” said Chris Meador, the chairman of the poultry division for the Arkansas Farm Bureau. “It’s a messed-up deal.”
Poultry contracts between a farmer and an integrator such as Tyson Foods are typically multiyear deals: The company provides the chickens, the feed and veterinary care, and the farmer does the rest of the work. But finding new integrators isn’t a certainty for many farmers, who face an uncertain future when Tyson Foods’ payments end.
“They called me at 7 o’clock in the morning and said that they had some bad news,” said one Carroll County poultry farmer who requested anonymity. “It’s pretty sorry in my opinion. They sure ruined a lot of people’s lives in a pretty sorry way.”
The news came on Aug. 7, the same day Tyson Foods delivered its own bad financial news, a $417 million third-quarter loss.
That included a $314 million loss of operating income in its chicken segment, which reported a $258 million loss of operating income in the second quarter.
Tyson Foods also said it would close four chicken production plants, including one in North Little Rock and one in Noel, Missouri, later this year. In May, Tyson Foods closed two poultry plants, including one in Van Buren.
The company plans to move production at the Noel facility to Springdale. The harsh business reality is that consolidation requires fewer birds — and fewer farmers.
“Those business decisions get made every day in every business,” said Marvin Childers, president of the Arkansas Poultry Federation. “It does not surprise me looking at the chicken market.”
Poultry farmers are a tough lot and understand the life they have chosen, Meador said.
“Does it suck that you’re the one who took it blunt on the chin? Yes,” he said.
Meador not only raises broilers on his 500-acre Green Forest farm, but he handles many farm-related loans as vice president of CS Bank in Berryville.
Three of his clients lost their Tyson Foods contracts, and there is a scramble to find new integrators as partners.
Meador counts himself lucky. He raised broilers for Tyson Foods for more than 20 years before deciding to join up with privately held George’s Inc. of Springdale a few months ago.
“I had jumped ship and gone to George’s before all of these cuts,” Meador said. “It was just pure luck. I wish I could say I saw it coming down the pike and could have warned folks, but I didn’t.
“A few of us met with them and decided to move. It didn’t hurt Tyson’s feelings none. They were like, meh.”
Meador and Childers said a few of the affected farmers have already found future contracts with George’s, which has become more active in Carroll County, and Simmons Foods Inc. of Siloam Springs, another private integrator.
There are other possibilities: free-range companies such as Vital Farms or turkey-based companies such as Butterball.
But switching from a traditional chicken house to a free-range house or a turkey house requires capital investments.
Meador said many poultry farmers, including those who lost their Tyson Foods contracts, are hard-pressed enough with loan payments and other debts.
“I’m trying to find somebody I can start growing for now, but I haven’t decided for sure what I’m going to do yet,” the anonymous Carroll County farmer said. “At my age, what do you do? It’s kind of hard to start out on a whole new career.
“George’s has already taken on the ones they wanted to take on.”
Tyson Foods, through a spokesman, said the company showed it was committed to taking “bold actions” to improve its poultry division’s results.
It also stressed that it was not terminating any contracts but had decided to not renew 59 in Arkansas and southern Missouri. The company partners with more than 1,600 growers in Arkansas. Childers has said that the state processes more than 20 million birds a week.
“We are currently in the process of engaging in person with growers on next steps and in no circumstances are we terminating grower contracts prior to their respective expiration dates,” Tyson Foods said through its spokesman. “We understand the business dynamics of our growers firsthand and are providing a range of options for them to consider designed to support their needs.”
Meador said another outcome of Tyson Foods’ decision could be a decline in property values. A working chicken farm is worth more than one with an expired contract in a tightening market.
“My place went from being worth $1 million last year to not being worth nothing now,” said the Carroll County grower, who said he turned down an offer from George’s at the beginning of 2023 to stay with Tyson Foods. “It’s just what the house and the land is worth now.”
It’s not just affected farms could see a drop in value, Meador said.
The growers “can’t just go and jump into the workforce somewhere,” Meador said. “They changed their whole retirement scheme. The sales of chicken houses are going to be affected.
“We had been in a pretty good environment where these things were selling for really good money. Now that has changed. That’s a whole other dynamic. Even the growers who weren’t affected, the value of our farms has dropped.”