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Taking a stand, losing the farm

Baltimore Sun reporter

ENTERPRISE, Ala. - In this rural town with the can-do name, the ugliness began with a showdown. In late 1995, 39 chicken farmers decided to say no to ConAgra, the nation's fifth largest poultry processor.

The farmers said the company's new contract was unfair and a ticket to the poorhouse. Local bankers agreed. Emboldened by unity and the security of their farms - which they could sell if the going got rough - the farmers refused to sign.

They might as well have challenged a tank squadron with pitchforks.

In the year that followed, ConAgra defied or intimidated nearly every institution that usually calls the shots in small-town America. The bankers surrendered. The local newspaper softened its punches. Government regulators watched but did nothing, prompting one state investigator to quit in exasperation. Real estate agents sensed a raw deal but fearfully kept their mouths shut. A leader of the Chamber of Commerce served briefly as a company spy.

So, the showdown of '95 quickly turned into the rout of '96. Of the 39 growers who first stood up to the company, 20 quickly caved in and signed the contract they despised. The other 19 tried to sell their farms, but ConAgra undermined every offer to buy.

For some that meant disaster, and the casualty list is still growing - on Jan. 7, Tom Greene become the third farmer to lose his land to foreclosure.

The saga of Enterprise is a graphic example of how U.S. chicken farmers have become serfs in a feudal system ruled by the nation's largest poultry processors. Investing hundreds of thousands of dollars in hopes of becoming independent business people, contract poultry farmers are increasingly shackled by the demands of giant corporations.

What happened in Enterprise can befall virtually any chicken farmer who challenges the system, because ConAgra achieved its extraordinary results with the most ordinary of weapons. Not only are the company's tactics commonplace in the poultry industry, they routinely go unpunished by government regulators.

``It's wrong that things like that could happen in America, that a company could have that kind of power,'' said SouthTrust Bank loan officer Theresa Ward, who handled mortgages for several of the holdout farmers. ``I think they really set out to intentionally punish those people. ... It is a heartbreaking thing to watch people lose their farms.''

Greene lost his 53 days ago - four chicken houses and 77 acres. Celia English lost 290 acres and four generations of family heritage in a 1997 foreclosure. At age 62, she now tends the public fishing lake in the town of Elba, living in a state-owned home that comes with the job.

Ed Probst and his family lost their home and farm, too, leaving for Texas with little more than their furniture.

Two other farmers sold their chicken houses at salvage prices. Four eventually signed with other poultry firms in the region, but only after their chicken houses sat empty for two years, incurring huge losses. Several of the rest are saddled with debts they'll be paying for decades for chicken houses they'll never again use.

Among the people who tried to help the farmers make a stand, only a few lawyers have remained committed to the cause. Their pending lawsuit on the farmers' behalf could be the last of its kind - ConAgra's new contract forces farmers to settle future disputes by arbitration instead.

Jim Cooper, a ConAgra vice president, said when the suit was filed, ``We would never attempt to interfere with someone selling their farm.''

And Blake Lovette, who recently took over as president of ConAgra Poultry, vigorously defended the company in an interview.

``This company is dedicated to doing a better job of communicating and providing growers with tools and management systems that allow them to become more comfortable with us as a company,'' Lovette said. ``They run a very fine company [at ConAgra]. Always have. I just would not in any way paint a general picture that ConAgra has a poor reputation with its growers.''

Nor does the company have any trouble attracting new growers, despite the high cost of building a chicken house. ConAgra moved quickly to replace the 19 who fell by the wayside.

Federal regulators wasted little time in moving on, too. After looking into complaints lodged by the holdout farmers, they concluded that, by their rules, ConAgra did nothing wrong.

Uniting for change

The bad blood and mistrust of 1995 had their beginnings in the 1980s, when ConAgra made an unsavory name for itself by cheating Enterprise growers on the weight of their chickens, tampering with scales in ways that cost the growers millions of dollars.

In 1994, aware of this legacy, growers began pushing for changes in the way they were treated. They took their case to the state legislature, and for a while it looked like they'd succeed.

Their goal was to pass the Alabama Agriculture Fair Practices Act, allowing them to collectively negotiate contracts instead of signing whatever the companies demanded.

Farmers were once known more for stubborn independence than organized political activism. But ConAgra and other companies, desperate to meet a growing demand for chicken, had begun hiring growers from other walks of life, people more accustomed to speaking up for themselves when they sensed a raw deal.

Such was the case with Tom Greene and Ed Probst. Greene was a retired military officer who'd traveled the world. Probst was a state constable in Williamsport, Pa. Each bought four chicken houses in Alabama after scouting painstakingly for locations. Both were raring to go.

``I was really full of myself,'' said Greene, 59. ``I was going to be a farmer, an entrepreneur. I read, did a lot of research before I got into this.''

Thirty-one years earlier, as a young military officer, he'd seen a vision of his future as he and his wife, Ruth, cruised a highway near Enterprise. Spotting a comfy farmhouse on a fine spread of land, he'd turned to Ruth and said, ``Someday we're going to have a place like that.''

The Greenes took out a loan of $436,000 and decided to live mostly on his military pension until the loan was paid off. The Probsts saw the business as a means to a full-time income, and ConAgra encouraged them to, even though some poultry executives say growers can only count on a ``supplemental'' income.

Greene built new houses in 1989. He wanted the latest technology, and to him that meant ``nipple drinkers,'' a neater system that makes birds peck for water a drop at a time.

ConAgra disagreed, insisting on standard trough drinkers. Greene obeyed, only to be advised 18 months later that the company was switching to nipple drinkers. He took out a second loan, for $30,000, to comply. The trough system now sits in a heap between his barns.

It was that kind of thing that persuaded Greene to help form the Alabama chapter of the National Contract Poultry Growers Association. Joining him in the organization were longtime farm families such as Randy and Wanda Buckelew, who had seven chicken houses on 10 acres plus a herd of beef cattle on an additional 165 acres near the town of Opp. They, too, had responded to ConAgra's enticement of a robust income, in hopes of sending their three children to college.

``We didn't mind the sacrifices,'' Wanda Buckelew said. ``We were not a family that had to have great vacations or buy new furniture.''

They did well, finishing first or second in the pay rankings for seven flocks in a row at one stretch. In 1994, they were the Covington County farm family of the year.

But demands for new equipment and the steep price of their loans kept shoving their poultry balance sheets into the red. That, plus frustration over their lack of control, united them with the Greenes, the Probsts and other families in the 1994 legislative fight. They journeyed upstate to Montgomery for a rally and a hearing, then lobbied lawmakers door-to-door, only to be followed at every step by representatives of the Alabama Poultry & Egg Association.

For years the association had taken their $20 in annual dues. Now it was marching with ConAgra, Tyson Foods, Wayne Farms, Perdue Farms and other companies in lobbying against the farmers. The industry message was blunt: Pass this bill and we'll leave the state.

``You might as well start putting the nails in the coffin for Tyson to continue its presence in our state,'' Tyson's manager for Alabama operations, Kenton R. Keith, wrote to a state representative in a typical industry letter.

The companies made formidable opponents. Tyson is the nation's largest poultry concern. But even it pales when stacked against ConAgra, a widely diversified agribusiness with annual revenues of more than $24 billion, its products ranging from Healthy Choice dinners and Hunt's ketchup to Orville Redenbacher's popcorn and Hebrew National hot dogs.

So, it wasn't hard for the industry to buttress its arguments with a sudden flush of campaign contributions. In a matter of weeks, $90,000 poured in from the poultry industry. ConAgra contributed $15,000 to the pot. A few key legislators got as much as $10,000 apiece.

The bill failed.

``When they realized how serious we were,'' Greene said, ``they started playing hardball.''

Or so he thought. The real hardball would begin in the summer of 1995.

Mixed messages

The letter on ConAgra stationery was dated July 14, 1995, and it was cordial and congratulatory. It was addressed to grower Randy Buckelew.

``Dear Randy,

``A special grower dinner has been planned for you and the other growers whose excellence in broiler management during our past fiscal year qualifies them as being in the top 10% of our broiler growers for ConAgra Poultry Company, Enterprise, Ala.''

The dinner would be July 27 at the Pines Restaurant, and the invitation was signed by live operations manager Bill Gilley and broiler manager Ty Smith. They closed by saying they looked forward to ``letting you know how much we appreciate your efforts.''

Four days after writing the letter, Smith set in motion plans that were anything but appreciative. Former ConAgra serviceman Ricky Bagents recalled the moment:

``He sat us [service people] down at a meeting and he said, 'Do you want to improve your grow-out by 25 percent?' He said that the way to do that was to cut off your growers with the oldest houses. I [had] about 40 growers, and he wanted each of us to make a list of the 10 with the oldest houses. ... The understanding we all had was that it was a cutoff list.''

The service people, who visited each of the farmers on their route about once per week, were shocked. Bagents spoke up, saying contract cutoffs ``should be based on performance. [Smith] pretty much said that's not an option. And that's when I went home and cleaned out my truck. I said I can't work for a company that would treat people that way.''

Smith's strategy was one of the first major moves at Enterprise under the reign of new complex manager Barney Jarreau.

Jarreau had earlier run the Dalton, Ga., complex, and a lawsuit later showed that widespread cheating of growers occurred during his tenure. But Dalton did well on the balance sheet, and ConAgra rewarded him with bonuses of $57,646 from 1989 to 1991, according to company records.

Jarreau arrived in Enterprise with all the subtlety of a blitzkrieg, Bagents recalled:

``The very first day he came in he gathered all of the salaried people together at the complex, and the first words that came out of his mouth were, 'I didn't have any friends when I came here, and I don't expect to have any when I leave.' He made you live under a threat every single minute of every day.''

The Enterprise operation was due for some shaking up, Bagents allowed. Its plant and its farms had fallen behind the times. Growers the previous summer had lost 230,000 birds to heat. Jarreau figured to remedy that by signing up new houses with expensive new cooling systems, and the plan to drop older houses would clear the way. But word of the plan leaked. Then a grower secretly taped serviceman Paul Reiker discussing it further.

``Hell, it's wrong,'' Reiker said of the plan on the recording. ``It's immoral. It's unethical. But I've got to have a job. Know what I mean?''

Suddenly faced with a hornet's nest of angry growers, Jarreau denied that the plan existed. Growers soon began hearing of another plan, one that would require expensive upgrades.

Then, fate played a hand. On. Oct. 5, Hurricane Opal roared in from the Gulf of Mexico, sweeping southern Alabama with heavy rain and 100-mph winds. ConAgra officials awakened the next morning to find that nature had gotten rid of some older chicken houses for them. But Opal wasn't quite thorough enough. So, six days later, while farmers were repairing the damage, Jarreau sent them a letter:mpetitive and therefore create a more secure future for you and ConAgra.''

Jarreau followed up Oct. 20 with a notice to each grower via certified mail. A new contract was coming Nov. 1, he said, and six days later the company unveiled the specifics.

ConAgra offered the first look to representatives of local banks and farm lending organizations. The company needed them to make the hefty loans to pay for all those improvements. When the bankers saw the cost, their jaws dropped: $49,301 per chicken house. It was more than some growers had paid to have chicken houses built to begin with.

The company would raise pay as an incentive, but part of that gain would be offset by an end to some bonuses. The lenders told ConAgra that loan payments would overwhelm income, that some farmers might go under.

``We told them, '[Better equipment] is fine and dandy, but it's going to hurt as many people as it helps,' `` said Ken Smith of the Federal Land Bank.

Said Max Metcalf, then with SouthTrust Bank, ``That meeting was a disaster.''

Farmers saw the same numbers later that day, and were equally aghast.

``You start figuring this stuff up, and they said, 'Well, there it is, if you put up a new barn, at the end of the year you will have a $1,895 profit,' `` Ed Probst said. ``But you couldn't get through to them. They had their minds set, they had those blinders on, and they didn't care what was ahead. They were going to go through with it.''

Greene, who owed $302,000 on his four chicken houses, figured he'd have to borrow another $200,000 to make the required upgrades. Financially, it was out of the question.

Celia English would need to borrow another $200,000, too, and she owed $190,000 on her first loans.

``I knew I couldn't borrow anymore,'' she said.

Contract ultimatum

Money wasn't the only problem growers had with the new contract. There was also the arbitration clause. Having stopped ConAgra's earlier cheating only through a class action lawsuit, the growers now faced a future in which any grievance would be taken to arbitration.

Not only is that costly - usually about $12,000, some attorneys estimate - it also allows no collective grievances and little power to ferret out company information. In effect, they would be signing away their rights to sue.

Growers talked of a boycott, of continuing to grow birds under the old contract. Then the company set a deadline: Sign by Jan. 15, 1996, or be cut off.

Seeking a way out of the impasse, growers at an October meeting asked live production manager Ken Edwards whether they'd be able to sell their farms if they didn't sign the new contract. Or, in other words: Would ConAgra offer contracts to buyers?

No problem, Edwards told them. At a later deposition, he verified that he said so.

The boycott of the new contract began to take shape, led by the local members of the contract growers association.

In the meantime, the local press had gotten onto the story. On Nov. 19 the Enterprise Ledger ran an article by reporter Dale Maddox on opposition to the arbitration clause. It was decidedly sympathetic to the growers, and ConAgra human resources manager James Ponce de Leon picked up the phone to call Ledger publisher Mark Cullen.

Afterward, said Maddox, no longer with the paper, ``We got told to cease and desist, to not do that anymore, that the company was important to the local economy and to leave them alone.''

Cullen, who has also left Enterprise, didn't recall issuing such an order, but he did share a general impression that the growers were well-paid and had little to complain about. The company's longtime message of easy money was well-established around town.

``Your man in the street at that time couldn't see what the problem was,'' Cullen said. ``He only saw it as maybe the difference between making $70,000 a year and $90,000.''

The growers association called a meeting for Nov. 21. Jarreau struck back with a ``press release,'' hand-delivered to every farm, that said the association was ``attempting, for a fee, to deceive the men and women it seeks to represent.'' He cited ConAgra's ``honesty of purpose,'' and said the company ``has every intention of remaining a good corporate citizen.''

Two weeks later, ConAgra's Ponce de Leon called a private meeting with Enterprise Mayor Johnny Henderson, Chamber of Commerce President Charlene Goolsby and city economic development officer Tim Alford. His subject: the economic damage if ConAgra were to leave the community.

He then asked Goolsby to attend the next meeting of the growers association, and he passed along her report to his bosses in a memo, noting that at one point in the meeting a farmer had warned, ``Be careful what you say because ConAgra has 'spies' everywhere.''

But he lamented that Goolsby had been less than perfect as a spy: ``I tried to get a tape of this meeting, however, Charlene said she felt too much pressure to pull out her recorder.''

The bloc dissolves

By early 1996, with the Jan. 15 contract deadline drawing near, the resolve of the growers began to crumble under the weight of debts and fears for their future. What at first seemed a solid bloc as large as 60 quickly fell to 39. A few weeks after that it was down to 19.

``Folks have got to make a living, and a lot of them just couldn't lay it out there on the line,'' said attorney Debbie Jared, representing some of the holdouts in their lawsuit.

The 19 who held firm soon discovered the terrible price of their resolve.

By Jan. 1, many of the 19 had put their farms up for sale, and one of them, Forest Powell, got an offer he liked. The company deemed his chicken houses fit for renovation, then scheduled an appointment at the plant for Jan. 12, where buyer Bragg Carter, a Covington County commissioner, would sign his contract to grow chickens.

That was three days before the contract deadline, meaning Powell was still officially a ConAgra grower. Besides, he still had ConAgra's chickens in his houses, his last flock under the old contract.

But when everyone arrived at the plant Jan. 12, Powell said, ``They said, 'We've changed our mind, and we can't do this.' ... It was just devastating. ... I didn't even try to sell it after that. They told me that was the end of it.''

Edwards, the live production manager, said later that the company canceled the deal because Powell hadn't yet signed the new contract.

By then, ConAgra had also turned down Peggy Fremd, who'd asked in November about buying or leasing English's farm. Fremd arranged her financing and made an appointment at the plant with Smith, the broiler manager. But she said Smith told her it was too late, that the company had all the growers it needed.

``I literally begged him,'' Fremd said. ``I told him I would do anything to save [English's] farm. And he said, 'Well, we'll put you on the list [of prospective growers].' ``

She asked to see the list. ``He got out a blank piece of paper and wrote my name down.''

On Jan. 15, the deadline passed, and all 19 growers who'd refused to sign the contract were cut off. No more chickens were delivered to their farms. They kept trying to sell their farms, and offers were frequent. The Probsts got 16. The Greenes, the Buckelews, English and the others got plenty, too. Most of the buyers were willing to make the costly renovations the company wanted, and to sign the arbitration clause as well.

Such buyers had always been welcome in the past, local real estate agents said. And, if anything, the company was almost desperate for new growers, judging from other moves it made at the time. The sudden loss of 19 farmers, accounting for about 80 chicken houses among them, prompted ConAgra to temporarily reactivate several retired growers, including at least two with outdated equipment.

The company also was taking on buyers of other used chicken houses - houses not owned by the holdouts. On Jan. 29, Smith wrote farmer Doug Burdeshaw to tell him that the chicken houses he wanted to purchase were suitable for renovation and that he had qualified for a ConAgra contract. Burdeshaw was buying the farm of Ron Danforth, who had signed a new contract.

The company filled the rest of its sudden need by signing up new growers, the ones who supposedly placed higher on Edwards' ``list.''

With their poultry incomes cut off, the holdout growers began contacting the three other poultry companies with farms in the area - Perdue, Sylvest Farms and Wayne - seeking contracts for themselves or for buyers. Those companies had also lost some farms to Hurricane Opal.

All of the other companies said no.

Metcalf, who had arranged loans for several of the growers, said, ``It was an unwritten thing, and they'd never admit to it, but it was the position of those other [companies] that they weren't going to take any of those houses.''

Not so, the other companies say. Perdue spokesman Richard C. Auletta said in a written response that ``significant cutbacks in the poultry industry'' were to blame, not any sort of industry conspiracy. Officials speaking for Sylvest and Wayne said the same.

Threats to leave town

With the dissident growers in check, ConAgra moved to break the resistance of the bankers and lenders. The company called them back for a second meeting in early February. Jarreau met with them one by one, setting their appointments at intervals that kept some waiting in the hallway, and they arrived to find Jarreau accompanied by a senior vice president from ConAgra's corporate headquarters in Omaha, Neb.

The company had knocked a few items off its expensive list of required renovations, said Metcalf, the banker, ``but the fact still remained that the farmer would lose money.''

This time, ConAgra had a ready response for that argument. It was the same one the company had spelled out to state legislators in 1994 and to town leaders a few months earlier: Do it our way or we'll leave.

The ConAgra people mentioned other towns in other states that would be happy to have their factory. Metcalf said the bankers left with little doubt that, unless they made the numbers work and began offering loans for renovation, the company would follow up on its threat. ``They didn't care what we or anybody else did or thought,'' he said. ``This was the program they were going to have, and we were going to have to live with it.''

Meanwhile, the 19 holdout growers were seeking the help of government investigators, although their expectations were low. Neither the state nor the federal agencies required to protect their interests had come through for them before.

Frank Chirico, a farm crimes investigator for the Alabama Department of Agriculture, had tried several times to look into allegations that ConAgra farmers were losing some of their chicken feed to thieves, perhaps even to company truck drivers. Every time, Chirico said, he was thwarted by higher-ups in his department. That's one reason he later quit the job.

The track record of the Grain Inspection, Packers and Stockyards Administration of the U.S. Department of Agriculture was little better. GIPSA investigators had never caught the company cheating growers through years of misweighing and hadn't followed up after the violations were disclosed by private lawsuits.

When GIPSA's regional supervisor Mike Huff visited the Buckelews from his Atlanta office, Wanda Buckelew said, ``he did not have so much as a pen in his pocket, one piece of paper or a tape recorder, but he was supposed to be investigating. I wrote down notes for him on paper.''

ConAgra officials speak of the agency in warmer terms.

``We're not trying to hide anything, so we do have those guys come in routinely and visit with us,'' said Tommy Knight, current plant manager in Enterprise. ``Not only that, we know them on a first-name basis. ... It's a good check and balance for us.''

'I cried all day'

Within a week of losing their contracts, the farmers began hearing from their bankers and lenders. The Buckelews were 15 months ahead on their loan payments but got a letter anyway from SouthTrust chief executive S. Craig Robinson, who wrote:ext few days so that you can explain to us how you intend on continuing to keep your notes current.''

A letter also arrived from the insurance company. The policy on their chicken houses was canceled.

``We were sitting out in a lake with a great big hole in the bottom of the boat, and it was going down in a hurry,'' Randy Buckelew said.

Two days before their meeting at the bank, Wanda Buckelew couldn't get out of bed.

``I cried all day and could not stop,'' she said, ``and I ended up at my doctor's office that afternoon. We'd thought we had a year [on the loan] to figure it out, at the least. And here I had a child ready for college and didn't even know if I was going to have a home for my children. And one graduating from high school the next year.''

For a while they kept up with their payments. Wanda went back to teaching school full time. Randy did what he could to make their cattle business pay off better, giving up days off and often working past midnight. But by the spring of 1997 they could no longer keep the pace.

They worked out a new payment schedule for the $128,000 in debt on their seven empty chicken houses: $16,000 a year for the next 20 years.

The Probsts watched with frustration as would-be buyers of their farm sought a contract.

``They went to Wayne, they went to Sylvest and they went to ConAgra,'' Ed Probst said. ``... I kept trying. I wanted to make sure they couldn't come to me and say, 'You didn't try hard enough.' Right up until the time we left, I was trying to get on with Wayne.''

Celia English made do for a while by working as a security guard, but debt caught up with her. She was $190,000 in the hole, and in February 1998 her farm was auctioned at foreclosure.

By then, Tom Greene - still hanging onto his farm - had gotten the bad news from USDA investigators. In September 1996, nine months after the contract deadline passed, Steve Bright called from Atlanta to say he lacked sufficient evidence to forward the case to the Justice Department.

``We have nothing to show [ConAgra] did anything to block the sale of any house,'' Harold Davis, deputy administrator for Packers and Stockyards programs, said in a later interview.

The growers had virtually given up on the U.S. government by then, anyway. Twelve of them had filed suit a month earlier against ConAgra for tampering with the sale of their farms.

Attorneys representing ConAgra in the case did not answer telephone calls and letters requesting an interview, and company officials won't comment on the suit.

Jarreau, the plant manager, has left ConAgra. He moved to Mississippi to work for Choctaw Maid, another poultry company. Recently he was promoted to vice president of processing. He refused to comment for this article, and ConAgra officials refused to discuss the circumstances of his departure.

Knight, the current complex manager in Enterprise, said times are better now. ``Our grower morale is up big,'' he said.

Yet, ConAgra ranked ninth among 10 companies in ``fairness ratings'' in a 1996 survey of Alabama poultry growers - taken after the departure of the Enterprise holdouts. Overall, 30 percent of ConAgra growers said the company deals with them fairly, while 67 percent said they're treated unfairly.

But for the 19 growers who risked everything by taking a stand against the company's contract demands, the most bitterly ironic twist to the story may have come in March 1997. That's when Russell Bragg, Lovette's predecessor as president of ConAgra Poultry, addressed a meeting of chicken growers in Louisiana.

Bragg announced that the company's earlier ultimatum - to upgrade all older chicken houses, or else - had been rescinded. ``I will not say you have to upgrade,'' he said to loud applause.

The belated retreat was little solace for Tom Greene as he stood at the edge of his property Jan. 7, while auctioneer Pete Horton called for bids on his four chicken houses and 77 acres.

The farm sits by Highway 27, one of those roads Greene drove down 31 years earlier when he was a young military officer foreseeing a comfortable future.

``It was going to be the fulfillment of a dream,'' he said.

But instead it had come to this: Greene watching with arms crossed while solemn men in ball caps quietly nodded their bids. A few gawkers from town, seated on the trunk of their Chevrolet for some lunch-hour entertainment. His wife standing quietly with her jaw set, tears in her eyes. And an auctioneer in a blue blazer and khaki pants barking out a steady patter, telling the gathering of the bright prospects that awaited the winning bidder:

``Make up your own mind,'' his voice boomed from two speakers. ``Be your own boss. Outstanding opportunity.''

Greene had heard all that before, down here in Enterprise.

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