The News Journal (Wilmington, DE) | By LULADEY B. TADESSE | April 25, 2003
Tyson Foods Inc.'s decision Monday to close its Maryland processing plant and sell its feed mill is the latest step in a process of consolidation that has shrunk the Delmarva poultry industry from nine companies in 1985 to four today.
Tyson's decision to close its Berlin, Md., processing plant by the end of the year leaves the fate of chicken growers, grain farmers and plant workers in the hands of Perdue Farms Inc., Mountaire Farms, Allens Family Foods, and Tyson on the Eastern Shore of Virginia.
Tyson's plant closure, triggered by an internal restructuring, comes as the industry as a whole is struggling with an oversupply of chicken in the United States. Preliminary estimates by the U.S. Department of Agriculture show that there will be 0.05 percent growth in broiler production this year - the lowest since 1975 - in part because the Russian government has imposed restrictions on exports from the United States.
Mountaire has offered to buy Tyson's grain mill in Westover, Md., and hire the two dozen employees there. It has also said it plans to sign contracts with at least half of the 155 chicken growers who had worked with Tyson. Securing a contract with Mountaire or the other companies is essential for the growers' survival.
"The fact that Mountaire is purchasing part of the operation and is taking on many of the growers shows confidence in the future of the poultry industry here," said Bud Malone, poultry extension worker at the University of Delaware.
Poultry companies supply young birds to growers, who raise them and return them to the companies for processing.
Companies also buy feed from local grain farmers and supply it to the growers.
Some growers said losing Tyson reduces their business options.
"It gives the growers less business choices to make," said Connie Larimore, who grows 80,000 roasters in nine-week cycles on her Harrington family farm for Allens Family Farm.
Although she is happy having worked with the same company for 10 years, Larimore said any farmer would like to be able to consider other options.
Some farmers who sell soybeans, corn, wheat and barley for feed are concerned that their income could decline with fewer poultry processors competing for their grains.
Michael Scuse, Delaware secretary of agriculture, agreed that competition is good for farmers, but he added that he does not expect a major change in how much farmers are paid.
"With Tyson pulling out, that is one less person who is going to be out there bidding for the corn, but, remember, there is a huge demand for corn and soybeans here on the shore by those companies," he said.
Demand for a product, whether grain or chicken, will dictate how much the buyer is willing to pay, said Michael Haigh, assistant professor at the University of Maryland. "The less buyers there are, the less competition there is ... Generally, it means less power to the sellers of the commodity," he said.
Farmers said any drop in grain prices is too much.
"My guess is that prices will go down. That is what happened when Townsend went down in Delaware and left Perdue as the only buyer," said Robert Baker, a soybean farmer and president of the Delaware Farm Bureau.
While grain farmers may find new opportunities with Mountaire, the 650 workers to be laid off by Tyson may have a hard time finding new jobs with other processors.
Union representatives of the workers at the Berlin plant said they will try to help their members find jobs at the two nearby unionized processing plants, Mountaire's Selbyville plant and Perdue's Salisbury plant.
The search could be hard for some of the displaced workers because many don't have transportation, union officials said.
"There are probably not enough jobs for everybody," said Ervin Williams, business agent at Teamsters Local 355, which represents 240 workers, including truck drivers, chicken catchers and refrigerator and storage workers.
Reach Luladey B. Tadesse at 324-2789 or [email protected].The News Journal (Wilmington, DE):
