Frank Perdue first met the "Godfather" in the early 1970s at a food industry conference in the Catskill Mountains.

The Mafia chieftain, Paul Castellano Sr., accompanied by one of his sons, was soft-spoken and circumspect. He simply told Perdue that "we would like to buy your product."

Perdue -- whose favorite theme is "it takes a tough man to make a tender chicken" -- gave his account to the President's Commission on Organized Crime and said that at first he demurred. Castellano's sons, Paul Jr. and Joseph, had organized a distributing company known as Dial Poultry in 1970, but Perdue told himself there were other ways to sell his brand in New York.

"It was fairly common knowledge that Dial was owned or run by or operated by Paul Castellano Jr. and that he was associated in some way -- I don't remember exactly how -- with the Mafia, so therefore I avoided selling to him," the Maryland Eastern Shore chicken magnate said in a deposition. "I just felt, look, there is no need getting involved with people like that where I may have a problem. So I avoided him for several years."

Eventually, however, Perdue, his eyes on the large number of retail butchers that Dial served, began selling his birds to the company. And a few years after that, around 1980, he had occasion to seek the help of the Gambino crime family boss in fending off a union effort to organize the workers in his nonunion domain.

"I just thought -- you know, they have long tentacles, shall we say, and I figured he may be able to help," Perdue told commission investigators at the deposition last September. Asked if he meant that the senior Castellano (who was gunned down last December in midtown Manhattan) was an organized crime figure, Perdue replied:

"Yeah. Mafia and the mob."

The commission, headed by U.S. 2nd Judicial Circuit Court Judge Irving R. Kaufman, criticized such relationships yesterday in a voluminous report on labor and management racketeering.

"Legitimate retailers, who lack the resources to bypass these mob-controlled companies and deal directly with legitimate producers, have no choice but to do business with the mob if they wish to remain in the industry," the commission said at the close of a chapter on organized crime and the meat industry. "Larger, more integrated producers, who knowingly seek out these companies solely to ensure expansion of their geographic market and to enhance their profits, have no comparable justification for their actions."

In a statement issued last evening by New York public relations man Richard Auletta, Perdue said he "voluntarily cooperated with the commission in every respect." He said he reached "no agreements or understandings of any kind" at his meetings with Castellano, but added that "in hindsight, I never should have had the meetings." Perdue said Dial was "just one of 90 distributors of our products."

Paul Castellano Jr. and Joseph Castellano could not be reached for comment.

Perdue's contacts with the Castellanos were laid out in detail as part of a case study on the Gambino family and the meat industry. The commission offered it to exemplify what it said is a growing tendency of the Mafia to move beyond the exploitation of labor unions and acquire control of "segments of entire industries."

In New York, the report noted, organized crime leaders have asserted themselves in the meat industry since the 1930s, traditionally by gaining control of a local of the old Meat Cutters Union, now part of the United Food and Commercial Workers (UFCW).

But more recently, the commission said, "some associates of New York LCN La Cosa Nostra families have also sought to profit from the meat industry by acquiring more direct control of meat distribution companies." According to the report, Charlie Anselmo, an associate of the Bonanno crime family, moved up the ladder from loan shark to meat dealers to control in the 1960s of a brokerage firm, Triangle Meats.

Anselmo at times dealt in tainted meat, which was treated with formaldehyde to remove the stench, the report said. Once, when asked by a confederate about the contents of a recent shipment, Anselmo, according to author Jonathan Kwitny, is said to have replied: "Well, some of it moos, and some of it don't moo."

The commission described Dial's dealings with the chairman of Perdue Farms as "particularly instructive as an example of the manner in which legitimate businessmen may decide that doing business with organized crime-connected companies" can give them a competitive edge.

Perdue told the commisssion staff that he decided in the late 1960s to market his golden yellow birds in New York because "New York would pay more money for a quality product than anyone else." He began with an intensive advertising campaign, which attracted Dial's interest, the report said, but Perdue resisted early overtures, saying he didn't have enough birds to sell to Dial.

As his production increased, however, Perdue, the report said, started looking for a share of the supermarket chain business, approaching among others Pasquale Conte, onwer of a number of Key Food Cooperative stores.

"Conte," the report said, "is also a capo [captain] in the LCN Gambino family and Perdue, who is not known to have had any knowledge of Conte's LCN relationship, had no success. Not long after that, the commission said, Paul Castellano spoke to Perdue in the Catskills.

Perdue testified that he again said he didn't have "enough product to go around." But by 1976, the brand-name chicken competition in New York was getting stiff, Pearl Bailey was singing admen's tunes about rival Paramount's birds, and Perdue started selling to Dial.

" . . . I started saying to myself, 'Why shouldn't I have some of that business that other people have,' " Perdue testified. "Because there were other people selling [to] Dial . . . . Why shouldn't I sell them. I was never forced to sell them."

In 1980, the UFCW began a second attempt to organize the workers at Perdue's Accomac, Va., plant. The union called for a boycott of Perdue products starting in December 1980 and UFCW official Irving Stern asked retail chains in the New York area for support. Perdue told the commission that most of the chains reduced their special sale of his products.

At that point, the report said, Perdue arranged a meeting with the elder Castellano, through Paul Jr., to talk about the union's organizing effort. Perdue said he did so because of Castellano's "long tentacles," but was vague about what he expected. He said Castellano told him he probably couldn't reach out to Accomac because "it's pretty far away" from New York.

Even so, Perdue said he sought out Castellano again about a problem closer to home. The union was planning to picket the February 1981 opening of Perdue's new restaurant in Queens.

In a meeting at a LaGuardia Airport hotel, attended also by Gambino family capo Thomas Bilotti (murdered in December with Castellano), the commission said, "Perdue asked Castellano whether he could help in any way with the matter. Castellano indicated that he did not know . . . . According to Perdue, Castellano 'didn't help.' "

The report said Perdue also dealt with Quarex Industries, a meat wholesaler that the commission described as having "close ties to the Gambino family." It said its sales manager, Peter Castellana Sr., is a member of the Gambino family and, according to Frank Perdue, is the man who really runs the company.

Told the report named him as a member of the Gambino family, Castellana told a reporter yesterday, "That's not true." He also denied that his company has close ties to the Gambino family. "We've been in business for 40 years," he said. "We work six days a week."

Perdue told the commission that he began doing business with Quarex two or three years ago after deliberately avoiding it for some years. The commission said it has no evidence that Perdue knew, or yet knows, of any relationship between Castellana and the Mafia.