Month:

Pilgrim’s Pride Begins Settlement with Broiler Growers: A Closer Look

Introduction

In a significant development for the poultry industry, Pilgrim’s Pride Corp. has initiated a settlement with thousands of broiler chicken growers. The settlement follows a class action lawsuit overseen by Judge Robert J. Shelby of the US District Court for the Eastern District of Oklahoma. This case, involving allegations of wage suppression through conspiratorial agreements, marks a crucial moment in the ongoing scrutiny of the practices within the poultry sector.

The Class Action Lawsuit

The lawsuit, which has garnered widespread attention, involves 24,354 broiler chicken growers who allege that Pilgrim’s Pride, along with other poultry companies, engaged in a conspiracy to suppress their wages. The growers claim that since at least 2008, Pilgrim’s Pride participated in agreements designed to prevent competitive wage increases. These agreements, referred to as No-Poach Agreements (NPA) and Information Sharing Agreements (ISA), are at the heart of the allegations.

Court Proceedings and Settlement Progress

On June 25, 2024, Judge Robert J. Shelby confirmed that Pilgrim’s Pride had reached a settlement with the growers. The details of the settlement are still being finalized, with Judge Shelby directing the parties to file a joint status report within 14 days. This report will outline the steps towards finalizing the settlement agreement, bringing closure to the long-standing dispute.

Background on the Allegations

The plaintiffs in the case have presented documents suggesting that Pilgrim’s Pride and its co-conspirators utilized NPAs and ISAs to manipulate wage levels. By preventing competitive hiring and sharing wage-related information, these agreements allegedly kept growers’ wages artificially low. This practice, if proven, constitutes a significant violation of antitrust laws, aimed at ensuring fair competition and labor practices.

Settlements by Other Poultry Companies

Pilgrim’s Pride is not the only company implicated in these allegations. Over the past few years, other major poultry businesses have also settled similar claims. Tyson Foods Inc. settled for $21 million in 2021, while Perdue Foods agreed to a $14.75 million settlement. Koch Foods and other companies have also reached multi-million dollar settlements, indicating the widespread nature of the alleged conspiratorial practices.

Implications for Pilgrim’s Pride

As the only remaining defendant in this case, Pilgrim’s Pride’s settlement marks an important resolution. The settlement, once finalized, will require the company to compensate the growers for the alleged wage suppression. This move is likely to have financial implications for Pilgrim’s Pride, as well as reputational consequences in the highly competitive poultry industry.

Industry-Wide Impact

The settlements and the allegations that prompted them have significant implications for the entire poultry industry. They highlight the need for greater transparency and fair labor practices within the sector. The case has brought to light the potential for anticompetitive behavior and the importance of regulatory oversight to protect the rights of workers.

Looking Ahead

The resolution of this case through settlement is a critical step towards addressing the concerns raised by the growers. It underscores the importance of holding companies accountable for their labor practices and ensuring fair treatment for all workers. As the details of the settlement are finalized, it will be essential for industry stakeholders to reflect on the lessons learned and implement measures to prevent similar issues in the future.

Conclusion

The settlement between Pilgrim’s Pride Corp. and the broiler chicken growers represents a pivotal moment in the poultry industry. It addresses longstanding allegations of wage suppression and highlights the broader issues of fair labor practices and antitrust regulations. As the settlement process progresses, it is crucial for the industry to commit to transparency and equitable treatment for all workers, fostering a more competitive and fair marketplace.

Related: Pilgrims Pride Factory Closure – 270 Jobs at Risk

Danish Crown’s UK Arm Thrives Amid European Pork Crisis

Introduction

Danish Crown’s UK division has experienced remarkable revenue growth, driven by unprecedented pork prices in Europe. Despite a dip in pre-tax profit, the company continues to expand its operations and invest in state-of-the-art facilities to meet rising demand and maintain its market position.

Revenue Surge Amid Pork Price Hike

Danish Crown UK reported a significant increase in revenue, reaching £610 million for the year ending September 30, 2023. This is a notable rise from the previous year’s £506 million, largely attributed to the soaring prices of pork in Europe. The surge in pork prices was triggered by a dramatic decline in pig production across Europe, resulting from weak demand in Asia, particularly China, leading to an oversupply of pigs.

Impact of Pig Shortage on European Markets

The pig shortage in Europe created a ripple effect, causing pork prices to skyrocket. The company explained, “European production of pork had to find its balance without significant exports to Asia, especially China, which caused disruption.” This disruption, coupled with inflation-driven changes in consumer behavior, led to reduced pig production and increased prices at abattoirs across the continent. Despite this, Danish Crown UK’s pre-tax profit saw a slight dip, falling to £10.5 million from £10.6 million the previous year.

Strategic Investments in UK Facilities

In response to these market dynamics, Danish Crown UK is investing heavily in its infrastructure. The company is pouring more than £100 million into a new 30,500 square meter processing facility. This advanced facility will feature highly automated production equipment and the latest processing technology, aimed at slicing and packing bacon and gammon to UK welfare and food safety standards.

Future Outlook and Competitive Landscape

Danish Crown UK anticipates a highly competitive market environment in the coming year. The company’s management is focused on business growth and capital initiatives to navigate these challenges effectively. In a statement, the company noted, “Trading in the coming year is expected to remain highly competitive across all sectors. Management will continue to focus on business growth and working capital initiatives.”

Parent Company’s Strategic Adjustments

While Danish Crown UK is expanding, its parent company has been making strategic cuts elsewhere in Europe. In April, Danish Crown announced the closure of one of its largest abattoirs in Ringstead, Denmark, resulting in over 1,200 job cuts. This decision was driven by a challenging two years for Danish pig production, with fewer pigs available for slaughter, making it difficult to maintain efficiency levels at Danish abattoirs.

Consolidating Operations and Future Investments

To address these challenges, Danish Crown is consolidating its production sites in Denmark and focusing future investments on processing its owners’ pigs into products such as bacon and pepperoni. This strategic shift aims to enhance the company’s value chain and improve profitability. Part of this strategy includes a significant investment of around £100 million in a new bacon factory near Manchester. This facility is expected to produce over 200 million packets of bacon annually and sustain approximately 300 jobs.

Related: China Approves Imports of Danish Crown Processed Pork

Conclusion

Danish Crown UK’s ability to navigate the complex European pork market and achieve substantial revenue growth highlights its resilience and strategic foresight. Despite a minor dip in pre-tax profit, the company’s investments in advanced processing facilities and its focus on innovation position it well for future growth. As the global pork market continues to evolve, Danish Crown’s strategic adjustments and investments will be crucial in maintaining its competitive edge and ensuring long-term success.