Arkansas City Sues Poultry Producer Over Idled Plant

June 3, 2009

The city of Clinton, Ark., filed suit against Pilgrim’s Pride Corp. for $28.5 million in federal court on May 31, accusing the poultry processor of potentially turning the city into a ghost town by idling its plant there.

The north Arkansas city filed a complaint against Pilgrim’s Pride in federal bankruptcy court in Fort Worth, Texas, and accused the company of trying to manipulate the price of chicken by idling some of its processing plants.

“With its largest and sole remaining employer, Pilgrim’s, now evacuated, the city faces a crisis of revenue, bond payments and economic devastation, and as a result of the Pilgrim’s evacuation is threatened with becoming a modern day ghost town,” the lawsuit filed by the city said. “This serious economic situation is, however, a direct consequence of Pilgrims’ illegal purpose in shuttering the Clinton plant and operations.”

Pilgrim’s Pride announced in 2008 it was idling the Clinton plant as the company struggled with high feed costs and lower market demand. Also in 2008 Clinton was hit by a tornado that destroyed a boat-making plant that employed 45.

Carrying a heavy debt load, the poultry company filed in December for protection from creditors under Chapter 11 of the federal bankruptcy code, while it reorganizes its debt.

The city challenged the reasons for the company’s decision to seek bankruptcy protection.

“A review of its recent actions toward its growers and poultry communities reveals a far different factual history, and that more accurate history is summarized as a series of attempts to manipulate chicken prices and create illegal preferences, all at the expense of growers and communities that provided Pilgrims with their unwavering support,” the complaint says.

Ray Atkinson, a spokesman for Pilgrim’s, declined to comment.

The damages the city is seeking include $8 million in lost wages for the plant’s 450 workers and $7.4 million for wastewater and water expansion bonds for facilities that Clinton officials say they wouldn’t have constructed without the Pilgrim’s plant.

It’s not the first time a community has protested over a closure by Pilgrim’s Pride.

Government officials and farmers in El Dorado, Ark., and Douglas, Ga., filed objections in federal bankruptcy court earlier this year after the nation’s largest chicken producer said it was closing processing plants in those cities.

But in April they agreed to withdraw their objections, under an agreement reached through mediation, and Pilgrim’s Pride said it would start the procedures for selling those plants.

Pilgrim’s Pride rejected a poultry company’s bid for the shuttered chicken processing plant in El Dorado. But the federal bankruptcy judge ordered Pilgrim’s and the El Dorado Poultry Co. to go into mediation and try to agree on a sale of the property.

Earlier this year the Pittsburg, Texas-based Pilgrim’s Pride also said it was selling its Farmerville, La., plant, which recently was bought by California-based Foster Farms.

The three plants in Louisiana, Georgia and El Dorado employed about 3,000 workers and contracted with about 430 farmers, the company said.

Associated Press writer Angela K. Brown in Fort Worth, Texas, contributed to this report.

Was this article valuable?

Here are more articles you may enjoy.