Farmers Sue Cooks Venture Executives for Deception After Sudden Shut Down

After many years raising chickens for conventional meatpackers like George’s and Tyson, Leslie Harp decided to take the chance and convert her chicken houses to raise birds for a new free-range company, called Cooks Venture.

Cooks Venture promised a better bargain than other meatpackers, both for their birds and growers. Cooks bred animal welfare certified, slower growing free-range chickens, to meet rising demand for more humanely raised meat. Cooks also promised to pay growers at least 10 cents per pound, well above the median pay in 2020.

Harp was hopeful about her farm’s future. She did not expect that just two-and-a-half years after getting her first free-range flock that Cooks Venture would abruptly close and leave her with over 70,000 euthanized chickens rotting in her barns.  

Just before Thanksgiving 2023, Cooks Venture told Harp and more than 80 other contract growers and some 200 plant workers that it would shut down by the end of the year and would not process over a million chickens left in the field. Workers lost their jobs before the holidays and farmers had no options to pay off debts on barns they built for Cooks.

Last week, Harp and 12 other Cooks Venture growers sued four Cooks executives for allegedly offering deceptive contracts, shorting their pay, and misleading them to partner with a company careening towards collapse. The story of Cooks reveals how so-called regenerative companies can mimic the same abusive and reckless business tactics as conventional meat goliaths, unless competition regulators change the rules of the game.

Despite its reform-minded messaging, Cooks Venture upheld similar deceptive and unequal contracting systems as conventional poultry companies. Cooks vertically integrated every part of its supply chain, except raising birds, which it contracted out to closely controlled third-party growers. Growers invested their own money, anywhere from $1,500 to $450,000, to build or renovate poultry barns to Cooks’s requirements. Because Cooks required barns with more and larger doors, farmers were not able to use a Cooks-certified barn to raise birds for competing chicken companies.

Like many chicken companies, Cooks lured farmers with misleading income projections, the lawsuit claims. Cooks allegedly told one defendant that he could make $40,000 to $45,000 per flock when in practice he made $22,500 to $27,500 per flock.

Cooks also allegedly made several promises in verbal agreements and letters of intent to recruit growers, such as minimum flock placements and flock sizes, minimum pay rates, and a three-year contract term, only to offer farmers a final contract with weaker guarantees and a loophole that nullified all prior offers from Cooks. Farmers suing Cooks say that they only received their full production contract after they took out loans to build or renovate their poultry houses. This bait-and-switch trapped farmers into signing poultry production agreements whose terms “materially contradicted” Cooks’s promises, the lawsuit argues.

Before Cooks closed, farmers alleged that they received smaller flocks than promised and had bonuses deceptively withheld. Cooks’s sudden closure also meant that many farmers could not complete their promised three-year growing contract. The lawsuit argues that Cooks executives lied to farmers about the company’s financial health to convince them to sign contracts. Cooks co-founder and executive vice president, Blake Evans, and chief operating officer, Tim Singleton, allegedly told growers that Cooks had plenty of diverse investors and had no risk of failing over their three-year contract, which was not true.

Cooks Venture knew it had contract obligations to growers and could have planned a corporate wind-down that left enough resources to fulfill them. Instead, the company shut down abruptly and took steps to avoid feeding birds to full weight and compensating growers as it promised, the lawsuit alleges.

When Cooks announced its shutdown, some farmers had birds that were nearly ready to slaughter and others had new birds delivered mere hours before the announcement. Rather than feed or process these birds, Cooks executives asked the Arkansas Agriculture Department to enter contract growers’ farms and euthanize most of their birds with suffocating foam.

At a public meeting, state agriculture officials told farmers that mass euthanization was necessary to comply with animal welfare laws, which plaintiffs allege was “unequivocally false.” Farmers were left to clean up the carcasses and only a few received any sort of final compensation, despite promises from Cooks executives that they would be reimbursed for bird disposal and paid out at their previous six-flock average for this final flock.

Cooks chose to spend what money it still had on preserving its genetics and breeding business, rather than pay contract growers. The suit claims that Cooks received a $70 million line of operating credit after it closed its processing business, which it used to keep its breeding and genetics division running. Cooks filed bankruptcy nearly five months after it left growers in the lurch.

The suit alleges that Cooks Venture violated the Packers and Stockyards Act, which bans deceptive practices by meatpackers and upholds farmers’ right to full and prompt payment. The USDA recently finalized rules that require chicken companies to offer more honest contracts and proposed new standards for performance-based payment systems. This suit will test how well the Packers and Stockyards Act can hold poultry processors, of all kinds, to account.

Cooks Venture’s failure also raises questions about the future of investing in more sustainable and humane livestock systems: such as who receives capital, and how. The complaint claims that Cooks executives chose a predatory path, expanding rapidly and selling meat below cost to corner the market for heirloom-bred, pasture-raised chicken.

Cooks Venture co-founder and former CEO, Matthew Wadiak, learned this grow fast, profit later, startup model as the co-founder of Blue Apron (from which he was ousted after a lackluster IPO). Running this type of business requires financial support from venture capitalists, who generally want to build up a company for acquisition or market domination (think, Uber, Amazon, or Grubhub).

This way of growing a company tends towards market concentration and does not reward sustainable growth, fair competition, or protections for farmers and workers. It is also risky, and in the case of Cooks, led to a swift and messy collapse that hurt hundreds of workers and farmers.

What We’re Reading

• Pepsi announced plans to buy Siete Foods, a grain-free snack company, for $1.2 billion, its largest acquisition in roughly five years. (CNBC)

• Food & Water Watch released a report and interactive map documenting further consolidation of meat and dairy production onto fewer, larger industrial farms. (Food & Water Watch)

• Environmental advocates sued Tyson Foods for its misleading claim that the company can reach net-zero greenhouse gas emissions by 2050. (Wall Street Journal)