Nebraska poultry producers are getting legal advice on how to deal with potential Costco contracts.
Lincoln Premium Poultry plans to build a processing plant near Fremont and will need growers to supply birds.
Lynn Hayes, an attorney for Farmers Legal Action, is traveling around the region, urging farmers to protect themselves as they negotiate contracts.
“They’re going to be looking for 100 farmers to put up barns all at one time and the contract is going to be the same,” Hayes says. “There will be multiple lenders involved and multiple farmers involved but they’re going to be looking at the same contract, presumably. We’re encouraging people to work together from the outset.”
Hayes says it’s important for poultry producers to get their own lawyer and financial advisor and not trust the cash flow projections and capital expenditures provided by the company and the banks.
“Get independent verification that those numbers are going to be accurate,” Hayes says. “Read through the contract very carefully to make sure there is enough income from the poultry contract guaranteed and debt payment to build the poultry barns.”
Hayes says it’s critical growers get a guarantee with their contract agreement. She says most broiler contracts are complicated and past history shows many of them have not benefitted producers.
By Jerry Oster, WNAX, Yankton