The upheaval in the poultry industry in the last year has been enough to last many farmers a lifetime.
Some northwest Arkansas farmers are scrambling in the wake of news from poultry companies like Tyson Foods Inc. of Springdale and Cooks Venture of Decatur (Benton County). Tyson, in the midst of a disastrous year in its poultry segment, announced in August it would cut ties with any of its poultry farmers who had two years or less on their existing contract.
Dozens of farmers in Carroll County were affected by the Tyson Foods news. Many hoped to switch to other integrators, such as Cooks Venture, but that option closed when Cooks Ventures stopped operations in November and filed for bankruptcy.
“I was going to do Cooks Ventures but they went under,” said one Carroll County farmer, who asked to remain anonymous.
The farmer had raised broiler chickens — those destined for consumption — for Tyson Foods for years when he was told his contract wouldn’t be renewed. Tyson is paying him his contract terms through October, and those funds are keeping him afloat while he tries to find a new partner.
Right now, he is hopeful about a deal with an unnamed company to raise pullets instead of broilers. Pullets are the female chicks raised until they are old enough to become egg-laying hens.
The farmer has five empty chicken houses built for broiler production. He estimates it will cost him as much as $500,000 to convert those houses for pullets.
He hopes to hear good news about a loan from his bank. The bank may not have much of a choice: either lend him money so he can continue farming or have him default on the outstanding loans he had on his original chicken houses.
Scrambling to Get Loans
Some poultry farmers are in even more dire straits, said Chris Meador, vice president of CS Bank in Berryville.
Meador is also a farmer, raising poultry and cattle, and is the chairman of the poultry division of the Arkansas Farm Bureau.
Farmers need loans to build new houses or convert existing ones, but they need integrator contracts to get the loans.
They are having to scramble on both ends of the business model.
“That is what someone is looking at,” Meador said. “They may owe you $300,000, $400,000, $500,000 on a current farm.
“Well, that farm isn’t really worth much without a current contract. To come and ask a bank, ‘Hey, I need about $1.3 million,’ that is where some of these guys are.”
Paul Wells of Green Forest did not have a contract with Tyson Foods, but he understands the dilemma many farmers face. He is facing it himself after his contract with Cooks Venture disappeared with the company in bankruptcy.
Wells raised turkeys for Butterball, based in Garner, North Carolina, for five years before that company canceled his contract three years ago.
He hooked up with Cooks Venture, converted his turkey houses to chicken houses, and had just paid off the loan he took to build his original turkey houses when Cooks Venture closed.
Wells is an optimist and his current plan is to acquire a $1.4 million loan and build a brand-new house for egg-laying hens for Mid-States Specialty Eggs of Smithton, Missouri.
He still has $200,000 left on the loan he took to convert his turkey houses.
“We have to go back to the bank and do that whole deal,” Wells said. “We are hoping the bank gives us the approval. We’re not going to be able to put them in the existing houses that are there, so we are going to have to build a new one.
“We are pretty much starting over and starting at the bottom and going to try to work our way back to the top. Many other farms are doing the same thing.”
‘A Dark Cloud’
Meador said the general standard is that it takes more than $1 million to build a chicken house and approximately $200,000 to convert one — from a broiler house to an egg house, for example.
Meador raised broilers for Tyson Foods before switching to George’s Inc. of Springdale in early 2023, several months before Tyson Foods announced its contract-canceling news.
Meador was lucky to jump ship to George’s, which had expanded its network east into Carroll County after losing some farmers to Simmons Foods of Siloam Springs.
Meador said poultry farmers know the job isn’t for the faint of heart.
The farmer does the hard work raising the chickens, but the integrator supplies the birds, the feed and the medical care; any of those factors can affect the farmer’s production.
“The poultry industry is one of the most diverse commodities out there,” Meador said. “The poultry deal is weird. In the broiler world, we are still stuck with the fact that we do not own the bird.
“The way they’re paying us, rightfully so, is they are renting the square footage and buying the labor.”
Meador said the integrators, such as Tyson Foods, hold the “big stick” in the poultry industry.
“It has always had ups and downs,” Meador said.
“It has made it harder on that end, for lending institutions to be confident in what integrators are going to do. When Tyson did what they done — not saying other integrators haven’t done things in the past or the future that will tarnish the reputation of integrators — they put a dark cloud over it for a little bit when they did what they did out of the blue.”
Count Wells as one of those who isn’t faint of heart.
He and his wife, Corynn, also raise cattle and sell hay from their fields, and Corynn is a high school cheerleader coach and long-term substitute teacher.
“We are going to hope that something else is going to come about,” said Wells, who is also a manager at Reliable Poultry in Springdale. “If not, I am going to work my tail end off. We’re going to go that route. We are very optimistic that this henhouse is going to work.”
In a statement to Arkansas Business, a Tyson Foods spokesperson said, “Tyson Foods is proud to partner with a network of independent growers across the country, and we value the contribution that these growers make to our business. Closing plants is always a difficult decision, and we understand the impact it has on the people and businesses in those communities.
“We work to help our team members and partners through that transition, and Tyson Foods has provided affected growers with several options to honor our contractual commitments and allow growers to receive fair value.”
The headline of this story was rewritten to more accurately reflect the status of contracts between farmers and Tyson Foods. A statement from Tyson Foods was also added to the story.
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