EXHIBIT 10.27
BROILER GROWING AGREEMENT
PILGRIM'S PRIDE CORPORATION
NASHVILLE, AR
THIS AGREEMENT, made and entered into on this 29th day of January, 1997, by and
---- ------- -
between PILGRIM'S PRIDE CORPORATION, Nashville, AR, hereinafter called,
"Company" and Xxxxx Xxxxxx of Xxxxxx County, Arkansas, hereinafter called
------------ ------ --------
"Grower".
WITNESSETH:
For and in consideration of the mutual promises and conditions contained herein,
parties agree as follows: Company does hereby deliver 180,000 baby chicks, more
or less, to Grower for care and housing at the value of $.15 each, and further
agrees to furnish all feed at a value of $10.00 per 100 pounds to Grower to
maturity and sale.
Company is sole owner of all poultry.
Grower agrees:
-------------
1. To provide proper housing, utilities, equipment, water, liter, all-weather
road to chick delivery doors, catch-out area, and feed tanks; and all labor
necessary to properly raise said flock to maturity and sale.
2. To dispose of all dead birds and poultry house litter in accordance with
all Federal, State, and Local laws, rules and regulations.
3. To allow Company to enter Grower's premises at any time to deliver feed,
inspect flock, and to pick up said flock at any time chosen by Company.
4. To abide by all recommended practices regarding management, feeding,
sanitation and medication as recommended by Company. In time of adverse
weather conditions, such as extreme cold or extreme heat, grower agrees to
make a special effort to minimize death losses from lack of heat, lack of
cooling and lack of water. Grower also agrees not to use any feeds or
medication unless supplied by Pilgrim and to use shavings only from
approved suppliers.
5. To allow a serviceman to inspect and pass condition on flock at any time.
6. To not administer any medications at any time to said flock unless
otherwise recommended by Company's service representative; and to abide by
all FDA rules and regulations concerning the use of medications to said
flock; and to abide by all rules and regulations of the FDA and EPA
concerning the use of pesticides, insecticides or any other chemical which
may be applied to the premises to which said flock may be in contact.
7. To assume all liability for condemnation due to farm causes as shown on the
USDA Poultry Condemnation Certificate, with these causes being
tuberculosis, tumors, leukosis, septicaemia and toxemia, synovitis,
bruises, airsacculitis, inflammatory process head and parts, and 1/2 the
weight of other parts condemned. Condemnation weight is to be figured
Page 1
using the average weight of the flock times the total whole bird farm
condemned head, plus weight of inflammatory process parts and 1/2 other
parts weight. (The total of the parts weight is divided by .667 to convert
the weight to live weight.)
8. To accept payment, as hereinafter outlined, as the total compensation of
said flock.
9. To have no other poultry, fowl, or ratites other than those that are the
property of the company.
Company agrees:
--------------
1. To load and haul the flock to market at no expense to Grower.
2. To maintain accurate records on each Grower account as to total cost per
pound of meat marketed.
3. To furnish technical supervision of said flock at no cost to Grower.
4. To pay Grower final payment for said flock within fifteen (15) days after
processing the flock under this contract. All chickens on each farm will be
settled as one unit regardless of the number of houses. If all houses are
not sold within the same week, settlement will be made in accordance with
the sale of the last house.
5. To assume all liability for condemnation due to plant error as shown on the
USDA Poultry Condemnation Certificate, with these causes being cadavers,
contamination, PRS, and overscald. Condemnation weight is to be figured
using the average weight of the flock the total times whole bird plant
condemned head plus 1/2 other parts excluding I.P. parts.
6. To furnish medication to Grower at Company's cost of said medication.
7. To add a fuel allowance of $22.50/1000 sq. ft. of production capacity to
flocks placed beginning November 1st and ending March 15th of each year and
not to exceed the first two consecutive flocks placed during this time.
8. To pay Grower on salable pounds only, after condemnation, according to cost
per pound performance as follows:
a) Determine the average "Grower Cost" of all growers selling birds
during a one week period using the following formula:
$10/100 lbs. feed + $.15/chick + medication cost = Total cost
Total Cost divided by Salable pounds (total farm weight - farm
condemn) = Total Cost/Lb.
Farm weight is the total live weight of all birds caught.
Any grower whose cost is $.0350/lb. higher than the average cost will
not be included in figuring the average cost.
Feed remaining after the flock is processed will be picked up and
credited to the current flock. In the event that feed is not picked up
before the settlement date, an estimated feed return will be turned in
by the serviceman and credited to the current flock; after pick up,
any deviation between the estimated and the actual
Page 2
weight of the feed picked up will be credited or debited to the
next flock settled.
b) Determine each Grower's individual "Grower Cost". If a Grower's
individual cost is lower than the average for the week, Grower
will receive $.0430/lb. plus 50% of the difference between
Grower cost and the average cost.
C) If a Grower's individual cost is higher than the average cost,
Grower will receive $.0430/lb. less 50% of the difference
between Grower cost and the average cost, down to a minimum
payment of $.0290 per pound.
Examples of lower than average and higher than average settlements are
shown on Attachment A and Attachment B.
It is mutually agreed and understood that neither Grower nor any employee of
Grower shall be deemed or construed to be employees, agents or partners of
Company, and Grower accepts full, exclusive liability for the payment of and
agrees to pay and indemnify and save Company harmless from any and all claims
and Federal, State and Local taxes now or hereinafter imposed upon the premises
and facilities used by the Grower in the performance of this contract and
imposed for Worker's Compensation Insurance, Unemployment Compensation
Insurance, or old age benefits or annuities as to himself or his employees in
the performance of this contract and all said claims and taxes shall be paid
directly by Grower, and that Grower is an independent contractor.
The Grower agrees that the Company is the sole owner of all poultry and feed so
placed in these poultry houses, and that the Grower shall have possession of
said poultry and feed as custodian or caretaker only. It is further agreed,
however, that Company has engaged Field Warehousing Corporation to provide
financing for the poultry covered by this agreement. Grower cannot use the
poultry, feed, or any supplies which are the property of Pilgrim's Pride
Corporation for collateral for any loan or other purpose.
Nondiscrimination. The Equal Opportunity Clause contained in Section 202 of
Executive Order 11246, as amended, relating to equal employment opportunity for
all persons without regard to race, color, religion, sex or national origin, the
Affirmative Action Clause contained in 41 C.F.R. Chapter 60-2540.4 relating to
affirmative action obligations to disabled veterans and to veterans of the
Vietnam Era and the Affirmative Action Clause contained in 41 C.F.R. Chapter 60-
741.4 relating to Affirmative Action obligations to handicapped workers,
implementing rules and regulations of the Secretary of Labor (41 C.F.R.
Chapter), and the utilization of small business concerns owned by socially and
economically disadvantaged individuals as set forth in public law 95-50 are
incorporated herein by reference.
This contract is non-transferable and shall remain in effect until such time as
either party fourteen (14) days notice in writing of their desire to terminate
the contract, and provided that there is no flock on the premises of Grower for
which Field Warehousing Corporation is responsible.
Page 3
Both parties, having read and understood the above agreement, do accept the
terms herein.
ATTEST: GROWER
/s/ XXXXX XxXXXXXX /s/ XXXXXXXX X. XXXXXX
---------------------------- ------------------------------
PILGRIM'S PRIDE CORPORATION
/s/ X. XXXXXX
------------------------------
01/12/97
Page 4
ATTACHMENT A
Broiler Growing Agreement
EXAMPLE #1: LOWER THAN AVERAGE GROWER COST
FLOCK: 999999 GROWER: XXXX XXX
HEAD PLACED 30,000
HEAD SOLD 29,175 42 DAYS OLD
------
MORTALITY 825
97.25% LIVABILITY
XXXXX XX. 115,320
COND. WT. 692
-------
NET WT. 114,628
.60% CONDEMNED
3.95 AVERAGE WT.
FEED SUMMARY LBS. LBS./CHIX
PRE-STARTER .00 .000
STARTER 65,760.00 2.268
FINISHER 97,430.00 3.360
X.X. 66,420.00 2.290
FEED PICKUP 9,540.00- .329-
--------- -----
TOTAL FEED 220,070.00 7.589
52.40 FEED CONVERSION 1.91
COST STATEMENT
FEED 22,007.00
CHICKS 4,500.00
MEDICATION 35.54
---------
TOTAL COST 26,542.54
COST PER LB. .2316
GROWER PAYMENT COMPUTATION
--------------------------
AVERAGE GROWER COST PER POUND .2414
GROWER PRIME COST .2316
YOUR COST COMPARED TO AVERAGE .0098-
ADJUSTMENT FACTOR .50
GROWER PERFORMANCE FACTOR .0049
BASE GROWER PAYMENT .0430
GROWER PAYMENT PER POUND .0479
GROWER PAYMENT $5,490.68
FUEL ALLOWANCE .00
TOTAL PAYMENT $5,490.68
Page 5
ATTACHMENT B
Broiler Growing Agreement
EXAMPLE #2: HIGHER THAN AVERAGE GROWER COST
FLOCK: 999999 GROWER: XXXX XXX
HEAD PLACED 30,000
HEAD SOLD 28,401 42 DAYS OLD
-------
MORTALITY 1,599
94.67% LIVABILITY
XXXXX XX. 105,660
COND. WT. 1,659
-------
NET WT. 104,001
1.57% CONDEMNED
3.72 AVERAGE WT.
FEED SUMMARY LBS. LBS/CHIX
PRE-STARTER .00 .000
STARTER 57,660.00 2.082
FINISHER 112,360.00 4.056
X.X. 42,880.00 1.548
FEED PICKUP 1,710.00- .062-
---------- -----
TOTAL FEED 211,190.00 7.624
50.03 FEED CONVERSION 2.00
COST STATEMENT
FEED 21,119.00
CHICKS 4,500.00
MEDICATION 51.48
---------
TOTAL COST 25,670.48
COST PER LB .2468
GROWER PAYMENT COMPUTATION
--------------------------
AVERAGE GROWER COST PER POUND .2414
GROWER PRIME COST .2468
YOUR COST COMPARED TO AVERAGE .0054
ADJUSTMENT FACTOR .50
GROWER PERFORMANCE FACTOR .0027-
BASE GROWER PAYMENT .0430
GROWER PAYMENT PER POUND .0403
GROWER PAYMENT $4,191.24
FUEL ALLOWANCE .00
TOTAL PAYMENT $4,191.24
Page 6
