FIRST BIG AG DATA LAWSUIT FILED BY POULTRY PRODUCERS AGAINST INTEGRATORS
Feb. 20, 2017
Source: by Todd Janzen, as it appeared in Precision Farming Dealer magazine
A number of poultry growers have filed suit against Tyson Foods, Perdue Farms, and other poultry integrators alleging that growers' production data was shared among integrators to depress grower payments. This is the first case where farmers' ag data is the center of the lawsuit.
The suit, titled Haff Poultry, Inc. v. Tyson Foods, Inc., was filed in the Eastern District federal court in Oklahoma. The suit alleges that Tyson Foods, Perdue Farms, and other integrators (called a "Cartel" in the complaint) collect and share farmer level data through a third party, Agri Stats, Inc., for the purpose of suppressing grower compensation. The ag data collected and sent to Agri Stats includes a range of production level data, such as:
a. Grower compensation;
b. the sex, breed, genetic makeup, and genetics company used for the primary breeder stock of the Broilers used by each Complex's Integrator;
c. the type of equipment and grow-out houses used by each Complex's Integrator, including numerous mechanical aspects of the facilities;
d. Broiler weight for each Complex;
e. the type of feed and medicine utilized by (and costs) for each Complex;
f. Broiler transportation costs from Grow-Out facilities to the each Complex;
g. the number of chicks delivered, bird mortality by week and overall percentage, average daily weigh gain by chicks (weighted against the feed utilized, referred to as a feed-conversion ratio) for each Complex;
h. live pound of Broiler produced per square foot of grow-out house for each Complex;
i. monthly operating profit per live pound, sales per live pound, and costs per live pound for each Complex;
j. anticipated capacity and future output for each Complex; and
k. the general geographic location of each Complex by Sub-Region (Agri Stats includes at least 50 and likely more Sub-Region identifier codes)
The complaint alleges that Agri Stats is a data hub that allows the "Cartel" to collect and share grower data:
Agri Stats "partners" with Integrators. Cartel members all disseminate information through Agri Stats, representing some 120 Complexes [grower farms] covering 98% of Broiler production. This data includes production information on individual Complexes, broken down by region as well as viewable at the "farm [i.e., Grower], flock [i.e., transaction], or plant [i.e., Complex] level"; in other words, the information is not aggregated, but disaggregated down to the transaction level.
At the center of the growers' claim is the allegation that Agri Stats' data aggregation is ineffective at anonymizing the data. "While the data is purportedly anonymous, it is so granular and disaggregated that anyone familiar with the industry can identify precisely which data belongs to which Integrator and even the location of the specific Complex. In particular, the Sub-Region identifier code, the type and genetic makeup of the Broiler, and the type of poultry house and equipment, can be quickly used to determine the Integrator that owns a given Complex and the specific identify of the Complex."
As a result, "Cartel members can identify, by Complex, various Grower compensation data, such as cost per liveweight pound, cost per square foot, and other "Actual Live Production Cost" data, including base compensation for Growers."
In other words, the complaint alleges that, by reverse engineering the data, every Cartel member can determine the compensation paid to specific growers. This, in turn, leads to price-fixing and suppression of grower compensation.
While the case is interesting for its anti-trust implications, the suit may help answer some of the ag industry's burning questions about data: Who owns ag data? Is production data something that the farmer can own and control? Can companies share ag data "anonymously" without running afoul of anti-trust issues? To what extent must geographic information be stripped from ag data to make it truly anonymous?
As far as I know, this is the first case to address these ag data issues. I am sure it will not be the last.
You can read the entire complaint here: Haff Poultry v. Tyson Foods. This post is not intended to express an opinion as to the merits of the growers' or integrators' position.
About the author:
Todd Janzen is an attorney at Janzen Agricultural Law LLC (www.aglaw.us) in Indianapolis. Todd grew up on a Kansas grain and livestock farm and now practices law in the agriculture and technology fields. Todd is the past chair of the American Bar Association's Agricultural Management Committee and authors a blog addressing legal issues facing agriculture: www.aglaw.us/JanzenAgLaw. Contact: firstname.lastname@example.org.