Dive Brief:
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Poultry farmers have filed a lawsuit against Tyson Foods and two supervisors in efforts to recoup sunk costs following the closure of a poultry processing plant in southeast Missouri.
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The plaintiffs, who raised hens and delivered fertile eggs to Tyson, claim they spent millions of dollars to maintain and improve their brooder houses based on assurances from the company that the Dexter hatchery, feed mill, and processing plant would continue to operate well into the future. However, the facilities closed in October as part of a larger cost-savings plan.
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According to a 36-page complaint, the farmers are seeking compensatory damages and a jury trial for incurred damages as a result of Tyson misrepresenting itself in the years leading up to the location’s closure. They also allege a conspiracy that led to at least one longtime broiler grower selling their farm before Tyson officially notified workers of the changes. A company spokesperson declined a request for comment.
Dive Insight:
Tyson has faced broad backlash from rural communities after closing several processing plants in 2023. Missouri's attorney general called on the meatpacker late last year to sell, rather than close the Dexter facility and one other plant, noting closures "will have ripple effects that will harm more than just the individuals who would lose their factory jobs."
Meat companies have struggled with declining profits due to elevated production costs and softening consumer demand in the face of inflated food prices.
The plaintiffs, which include nearby egg farmers from Missouri and Arkansas, allege Tyson knew it was going to close the Dexter complex in recent years, but did not notify them about the decision until Aug. 7.
As support for their argument, the farmers cite an investor filing from Nov. 15, 2021 in which the company had “identified” and “targeted” $1 billion in recurring savings, and would carry out these changes between 2023 - 2024. They also allege a supervisor notified a grower about the upcoming changes after the company decided internally to close the plant, allowing the individual enough time to sell the farm.
In the span of time between the investor filing and the plant’s closure, a number of farm improvements were made by the plaintiffs. One farmer installed nesting boxes worth $200,000; another invested $2.6 million to construct new houses at the request and demands of Tyson, according to the complaint.
Recently, the Biden administration has worked to crack down on the poultry industry, encouraging improved transparency in contracts for growers.
In general, Tyson relies on a network of contract growers within 45 miles of the nearest production facility. For growers in Southeast Missouri, there is no other processing plant within those parameters besides the Dexter location, the plaintiffs allege.
Egg producer Cal-Maine said earlier this month that it will purchase Tyson’s former assets and transform the Dexter location into an egg-grading facility.
