Costco Refuses to Discuss Poultry Contracts



For more information, contact:
Mike Weaver (304) 668-2526
John Hansen (402) 580-8815

Costco Refuses to Discuss Poultry Contracts

LINCOLN, NE – As a result of Costco’s Wholesale Corporation CEO W. Craig Jelinek’s failure to accept or respond to an invitation from the Organization for Competitive Markets (OCM) and Nebraska Farmers Union (NeFU) to sit down and discuss concerns with poultry contract provisions offered to area farmers, OCM and NeFU have issued an open letter to Costco detailing their concerns, based on their understanding of contracts being offered to local producers.

The March 2, 2017 letter of invitation was co-signed by Mike Weaver, President of OCM and John K. Hansen, President of NeFU. Weaver is a long time poultry contract grower and cattle producer from Fort Seybert, WV who also serves as President of the Contract Poultry Growers Association of the Virginias. Hansen also serves on the OCM Board of Directors.

Both organizations were co-sponsors of the four public information meetings on poultry contract issues held last June in West Point, Columbus, Wahoo, and Arlington, Nebraska. Other meeting co-sponsors included Farm Aid, Nebraska Farmers Union Foundation, Nebraska Communities United, and GC Resolve. Weaver and Hansen were both speakers at those informational meetings.

“We are disappointed that Costco did not accept our good faith invitation to discuss their poultry contract provisions. The time for poultry producers to fully understand the binding provisions of proposed ‘take it or leave it’ non-negotiated poultry contracts is before they sign, not after they have committed to at least 15 years of their life,” said Mike Weaver, OCM President.

NeFU President John Hansen said, “Poultry contracts are not like a simple forward contract to sell grain. Poultry contracts specify what you will and will not do, what you are liable for, and the rate at which you are compensated for your capital investment and labor. The poultry contract, not the weather, the price of corn, soybeans, or broilers determines whether or not poultry producers make or lose money. If the producer does everything right, and the inputs provided by the company are wrong, the producer will still come out on the short end of the stick.”

Mike Weaver pointed out, “When producers are given non-negotiated take it or leave it contracts, they are at a disadvantage because they are reading complicated contracts written by the company lawyers who specialize in poultry contracts. If there is a problem with the contract, that problem is not going to get fixed because they are “as is” contracts. We don’t know why Costco won’t discuss their contract provisions, but the fact they are unwilling to do so raises a red flag as far as I am concerned.”

The open letter listed some of the poultry contract areas of concern identified in the March 2nd letter:
• LPP’s Control of Number of Birds Delivered to Growers.
• LPP’s Control of Inputs Affecting Growers’ Production Efficiencies (chicks & feed).
• LPP Can Require Costly Housing and Equipment Changes.
• Growers’ Required to Accept all Environmental Liability.
• Grower Improvement Plans.
• Restrictions on Growers’ Rights (like a trial by jury and photographing on their own farm).

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