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Lawsuit claims ‘fraudulent scheme’ in Tyson plant closure in southeast Missouri

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Lawsuit claims ‘fraudulent scheme’ in Tyson plant closure in southeast Missouri

Jun 14, 2024 | 5:08 pm ET
By Allison Kite
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Lawsuit claims ‘fraudulent scheme’ in Tyson plant closure in southeast Missouri
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Chickens gather around a feeder at a farm on August 9, 2014, in Osage, Iowa. Chicken houses are often constructed near processing facilities like Tyson's former plant in Dexter, Missouri. (Scott Olson/Getty Images).

Tyson Foods, Inc. “devastated” a Missouri town and “chicken farmers who put everything on the line” to raise animals for slaughter when it closed its Dexter plant, a lawsuit alleges. 

An owner of three poultry farms in Arkansas that raised chickens for slaughter at the plant, which closed last October, filed a lawsuit against the company in Stoddard County Circuit Court last week. Attorneys are seeking certification as a class-action lawsuit to represent other affected farmers.

The lawsuit claims Tyson engaged in an “anticompetitive and fraudulent scheme” to reduce competition for poultry and receive higher profits in selling its Dexter plant. Doing so, the lawsuit says, not only put plant employees out of work but suppliers and families who “took on millions of dollars of debt.”

“The Tyson chicken processing plant was the lifeblood of the Dexter community,” the lawsuit says.

Tyson, the world’s largest chicken producer, operated a processing plant in Dexter — population 7,864 — for 25 years. It held contracts with local producers within 50 miles of the plant to grow chickens for slaughter. According to the lawsuit, those farmers — some with no experience and no collateral — took out government-backed loans and invested huge sums to build facilities to Tyson’s specifications. 

But while the farmers invested in facilities to care for the chickens, Tyson retained ownership of the birds, the lawsuit says, which shifted the risk from the poultry company to the local producers.

“The chicken houses built to Tyson’s specifications and financed by poultry banks could be used for one thing and one thing only: Raising chickens for slaughter at Tyson’s plant in Dexter,” the lawsuit says. 

Refugees came to Noel for opportunity. Tyson’s plant closure leaves their futures uncertain

The company “shocked and devastated” the Dexter community in August when it announced the plant would close in November. Tyson also closed its Noel plant last fall.

After Tyson’s announcement, according to the lawsuit, it assured state and federal lawmakers from Missouri that it wouldn’t prevent a competitor from acquiring the plant to continue slaughtering chickens.

In a social media post in September, U.S. Sen. Josh Hawley, a Missouri Republican, said Tyson’s CEO, Donnie King, assured him the company was willing to sell to competitors. 

“I hope Tyson is actively pursuing a sale that will save these jobs in Missouri,” Hawley wrote. “Second, he told me Tyson would help any farmer who wanted to keep raising chickens to do so, including helping them get new contracts with Tyson or other companies.”

But instead, it sold to Cal-Maine Foods, Inc., which produces eggs but does not slaughter chickens, which “decimated former Tyson chicken farmers…whose farms were financed and built exclusively for the chicken slaughter system.” Raising chickens for egg-laying “is an entirely different grow process.”

The redacted lawsuit filed in circuit court says the terms of a property use agreement reached by Tyson and Cal-Maine are illegal and will shut chicken farmers out of any market in Dexter for 25 years. Those terms are redacted.

But the result of the agreement, the lawsuit alleges, is “reducing the value of the farmers’ multi-million-dollar investments to nearly nothing” and boosting Tyson’s profits by reducing the supply of chicken to increase prices. 

Neither of the companies nor attorneys for the plaintiffs immediately responded to requests for comment.