Charge Of Chicken Monopoly
Cautionary Tale For Cowmen

(Editor's note: Readers may be excused for wondering what this story about chicken monopolies is doing in Livestock Weekly. After all, the cattle business is not in this shape — yet. Call it a cautionary tale ...)

CHARLESTON, W.Va. —(AP)— Saying Eastern Panhandle poultry farmers are trapped by a monopoly, state Attorney General Darrell McGraw last week sued a Virginia chicken processor, claiming it engages in unfair and deceptive business practices.

The lawsuit follows two attempts by McGraw to have officials from Wampler Foods Inc. and WLR Foods Inc. meet with a delegation representing 160 poultry farmers. The farmers are upset with Wampler contracts covering the raising of broiler chickens.

Instead of meeting, company officials had their lawyers call and threaten legal action against the farmers, McGraw said.

``They say they are not going to deal with the farmers, but they will deal with us because they don't have any choice,'' McGraw said.

Wampler Foods Inc. and WLR Foods Inc. are based in Broadway, Va. A call to the company's corporate offices was not immediately returned.

Wampler owns a chicken processing plant in Moorefield, Hardy County, and contracts with farmers to grow birds for the plant.

McGraw's lawsuit, filed in Hardy County Circuit Court, claims Wampler's contracts violate the state's Consumer Credit and Protection Act.

About 160 Hardy County area farmers say they are at risk of losing their farms because of the terms of their contracts.

``In a time of prosperity for the poultry industry, with low feed prices and high chicken prices, the growers are being squeezed into bankruptcy,'' McGraw said.

Under the contracts, Wampler provides chicks, feed and medicine to the growers. The company agrees to purchase the birds when they are ready for market.

The lawsuit claims that farmers were enticed into the contracts with the promise of making several thousand dollars a year on each chicken house they operate. Poultry farmers operate multiple chicken houses.

West Virginia poultry farmers raise more than 100 million birds a year. The industry has grown from 570 poultry houses in 1991 to more than 1000, according to the U.S. Department of Agriculture.

The industry grew after WLR Foods Inc. purchased and expanded the Moorefield chicken slaughtering and processing plant.

``These guys are trapped,'' McGraw said. ``All these guys built these chicken houses and borrowed money with the idea they were going to make $20,000 to $40,000 per year, per house.

``The contracts are confusing. On top of that, they get chicks of varying quality,'' he said.

The lawsuit claims that in 1995, Wampler started reducing the amount it paid farmers for each chicken. The company also ``began using chicks that were of substandard quality and infected with viruses and other diseases,'' the lawsuit said.

McGraw said the contracts also require farmers to take responsibility for the proper management of chicken manure and other environmental issues.

The concentration of poultry houses in the South Branch and Lost River watersheds has been a source of friction between environmentalists, farmers and regulators. Environmental groups say the poultry industry is polluting area streams.

The increased poultry production means about 150,000 tons of litter a year is produced in Hardy and nearby Eastern Panhandle counties.

Many farmers spread a manure and bedding mixture on fields as fertilizer.

The lawsuit wants Wampler to change its business practices, pay restitution to farmers hurt by the unfair contracts, and pay civil penalties.

``It is important for all to know that we are serious about the farmers getting a fair shake,'' McGraw said. ``We believe the legal forum provides us with the formality we need to proceed in an orderly way."