In the midst of a lawsuit alleging violations of workers’ rights, the Ostrom Mushroom Farm of Sunnyside, Washington – “the largest producer of mushrooms in Washington State and a proud USA company” – has been sold to Windmills Farms, also based in Sunnyside.
What has been missing from announcements of the sale is where the private equity industry enters into the equation. Windmill Farms is owned by Instar Asset Management, a Toronto-based private equity firm. Private equity has sought to control larger swaths of the agricultural market in recent years, and while Instar is significantly smaller than private equity firms such as Blackstone, it represents an acceleration of this trend. For example, a recent Forbes investigation found that more than 60% of the carrot crop in the United States is controlled by just two private equity companies.
The lawsuit names both Windmill Farms and Instar Asset Management, and alleges that Windmill Farms violated state law by interfering with its workers union organizing efforts. At the time Windmill Farms acquired Ostrom, the Washington State Attorney General was litigating a separate lawsuit that alleged that Ostrom Mushroom Farms violated Washington State’s consumer protection and age discrimination laws. Windmill Farms settled that complaint, but now the United Farm Workers is suing Windmill Farms and accusing the private equity-backed operation of enacting “a retaliatory anti-union campaign of illegal firings, intimidation, and harassment.” The lawsuit is seeking court-ordered protections for union members and employees engaged in efforts to collectively bargain. Farm workers already endure an exclusion from labor protections afforded laborers in other industries, dating back to the 1935 National Labor Relations Act, part of the New Deal. One academic investigating labor conditions in the farming sector has called the lack of basic protections for farm laborers, “the entire agricultural industry’s greatest subsidy…”
The Private Equity Stakeholder Project (PESP) is closely monitoring the developments at Windmill Farms as the UFW continues to fight for the rights of the company’s laborers. While private equity sees workers as numbers in spreadsheets, PESP is working to ensure that short-sighted profiteering does not reduce human beings to financial assets and create headline or reputational risks for investors.
PESP has also released a first-of-its-kind scorecard, grading the eleven biggest private equity firms on their labor practices and the wellbeing of their portfolio companies’ employees. Not one firm received a grade above a “C,” and seven received an “F.”
The Private Equity Stakeholder Project has attempted to contact Instar regarding this acquisition but has not received a response. PESP also plans to speak with investors to discuss the risks of placing their capital in the hands of firms like Instar.