Smithfield, Iowa Settle Packer Ban Lawsuit
In a bit of “end of the week” news last week, Smithfield announced a settlement with the State of Iowa that would lift the ban on Smithfield owning hogs to contract to growers.
Smithfield
Foods, Inc. announced Friday what it termed “a landmark agreement” with
the State of Iowa that allows Smithfield affiliates to contract
directly with Iowa farmers to raise hogs for slaughter at Smithfield
facilities.
The
announcement brings to a close a five-year legislative and legal battle
over an Iowa statute forbidding meat packers from owning or controlling
livestock in Iowa that began when Smithfield, then the nation’s largest
processor of hogs, announced its intention to acquire Murphy Family
Farms, one of the country’s biggest hog growers. Iowa’s Attorney
General interpreted that statute to prohibit Smithfield from continuing
Murphy’s practice of contracting with Iowa farmers to grow hogs to
maturity. Smithfield twice challenged the statute in court and both
times it prevailed.
Background:
In February 2002, a state court rejected the Attorney General’s
interpretation. Later that year, the Iowa legislature amended the
statute to make it more restrictive. Smithfield challenged the 2002
statute in U.S. District Court in Des Moines, which declared the law
unconstitutional. While that case was on appeal, the legislature acted
again, and the Eighth Circuit Court of Appeals remanded the case for
reconsideration under the existing statute. The parties reached an
agreement to settle that case and U.S. District Judge Robert Pratt has
signed an order approving the settlement.
The settlement was announced at a news conference in Des Moines, which
was attended by Attorney General Tom Miller, other Iowa officials and
Smithfield executives.
Under
the terms of the settlement, the Iowa Attorney General agrees not to
enforce the statute against Smithfield and its affiliates. This permits
Smithfield’s affiliates to continue to enter into “grower contracts”
with Iowa farmers, similar to those common in other hog producing
states. Farmers entering into grower contracts with Smithfield are
given expanded rights in their relationship with the company.
…
Smithfield also agreed to commit $200,000 a year for 10 years to fund
an environmental education program at Iowa State University and grants
to foster innovative swine production. The company also committed to purchase 25 percent of the hogs slaughtered at its Iowa facilities on the open market.
What
this means: the Smithfield settlement clears the way for
Smithfield to set prices based on contracts, rather than open markets
and sale barns.
It
shouldn't be surprising that this morning Linda posted an article stating the ever
increasing numbers of large confinment facilities – this settlement
will pave the way for even more such facilities. In fact, it may
be necessary for a farmer to build nuisance facilities just to stay in
business, even if it means staying in business on Smithfield's terms.
Blog For Iowa 