Wayne-Sanderson Acquires Harrison Poultry
Cargill’s U.S. chicken business, Wayne-Sanderson, acquired Georgia-based poultry packer, Harrison Poultry, last week. The takeover helps Wayne-Sanderson diversify its portfolio into niche markets and increase its feed mill capacity. Harrison is relatively small with just one large processing plant. According to a Wayne-Sanderson spokesperson, the Department of Justice (DOJ) approved this merger without conditions. The acquisition follows a steady trend of chicken industry consolidation and has competitive implications for farmers, workers, and consumers.
Ranked as the 21st largest poultry packer, Harrison Poultry had plans to grow. Currently, it processes 5.66 million pounds of chicken weekly. By comparison, Wayne-Sanderson produces 20 times more chicken, and industry leader Tyson produces 40 times more, according to WATT Poultry production data. Harrison invested in its processing plant to expand production by 20% in 2023 and added 200 more employees. It also built a large new feed mill and planned to build a second processing plant to keep pace with its customers’ growth. More than 100 contract farmers raise chickens for Harrison.
Harrison Poultry specializes in golden-yellow chicken, which has a yellow color from feeding chickens marigold extract and requires special processing to keep more fat on the meat and retain the color. Harrison claims it is the only company in the U.S. that still raises and processes golden-yellow chicken, primarily for Hispanic markets. It also sells halal chicken and has customers in the U.S. and abroad. Harrison mostly sells to restaurants and food processors.
This acquisition helps Wayne-Sanderson quickly expand into these specialty and international markets, says Dr. Jada Thompson, professor of agricultural economics at the University of Arkansas. “You already have some built-in network relationships, in terms of who they are selling to,” she says. Thompson also notes that Wayne-Sanderson was looking to build a new feed mill, and this acquisition could make that unnecessary, since Harrison’s new feed mill wasn’t utilized to its full capacity. “The feed mill was a big plus, I think,” says Thompson.
Harrison’s poultry plant is roughly 20 miles from a Wayne plant. Combining the companies will reduce options and competition for contract growers and workers, but not by as much as in other regions. Harrison is in the heart of northern Georgia’s broiler belt with headquarters in Gainesville, the self-proclaimed “poultry capital of the world.” Tyson, JBS (Pilgrim’s Pride), Fieldale Farms, Mar-Jac, and Tip Top Poultry also operate conventional slaughter facilities in this region, according to USDA data. By comparison, half of chicken farmers report having one or two processors to work with in their market.
A spokesperson for Wayne-Sanderson confirmed that Harrison’s flock management practices and grower contracts will largely remain the same. Wayne-Sanderson will modify contracts to eliminate deductions from Harrison farmers’ base pay in the tournament system to comply with a DOJ consent decree.
Harrison prided itself in offering the same benefits package to its salaried and hourly employees, which included free health insurance and automatic retirement contributions. Wayne-Sanderson does not publicize equivalent benefits. Wayne-Sanderson did not comment on possible changes to Harrison workers’ benefits by the time of publication.
The steady consolidation of poultry processing gives packers more market power to raise prices. One economic study estimated that chicken wholesale prices were 16% higher in 2019 than they would have been absent corporate concentration. Poultry processors, including Wayne, Sanderson, and Harrison, have also paid out millions in recent years to settle allegations that they conspired to restrict the chicken supply and raise prices. Notably, a jury found Sanderson not guilty of price fixing in one of the cases that was not settled.
Unlike in pork and beef processing, where the concentration of production into fewer, larger plants drove many packers out of business, conventional poultry processing plants are more uniform in size. Further, successful poultry plants are not necessarily the most physically productive plants, but the plants with better name recognition, customer networks, and market access, according to one study. These factors make it harder for the top poultry processors to gain market share by building the biggest, most productive plants: they need to use other methods, including acquisitions.
Mergers and acquisitions were an important driver of poultry processing consolidation through the 1990s and 2000s, roughly equal to plant closures. Between 1992 and 2007, 11% of U.S. poultry plants were acquired, while another 12.5% of plants closed. Most of these deals involved a large firm acquiring a small firm. Thus, over time, many small acquisitions can increase industry concentration and the risk of collusive activity.
“In general, my own view is, you don’t want the majors to continue to make purchases,” argues Peter Carstensen, emeritus law professor and former federal antitrust attorney. Carstensen believes it is important to scrutinize deals involving specialty markets, like this one, where entry by a dominant firm could crowd out smaller competitors.
Wayne-Sanderson is itself the product of a large merger orchestrated by Cargill and Continental Grain in 2022. As part of its merger review, Wayne-Sanderson entered a consent decree with the DOJ to resolve wage-fixing allegations. The company remains under the purview of a court-ordered antitrust monitor.
What We’re Reading
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