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State Of Iowa, Hog Producer Reach Settlement

State Of Iowa, Hog Producer Reach Settlement

Iowa Attorney General reaches an agreement with large multi-state hog production company, AgFeed Industries, to allow the firm to expand in Iowa. It ends the hog producer's attempt to get a state law declared unconstitutional.

The Iowa Attorney General's office announced in mid-September that it has reached a consent decree with a hog production company, AgFeed Industries. The agreement ends the hog firm's attempt to get a state law declared unconstitutional.

Attorney General Tom Miller said U.S. District Court Judge Robert Pratt approved the consent decree jointly submitted by the State of Iowa and AgFeed Industries, Inc., headquartered in Grand Junction, Colorado. The firm owns and operates hog production facilities and feed mills throughout the Unites States, including in Iowa.

AgFeed's website says the company produces "approximately 1.3 million market hogs annually through our system of breeding facilities in Colorado, Oklahoma and North Carolina and contract finishing facilities in Iowa.

The consent decree sets the terms of a settlement reached between the State of Iowa and AgFeed Industries resolving a dispute over the constitutionality of Iowa's prohibitions against processors vertically integrating into pork production in Iowa. "This agreement allows the company to continue doing business here in Iowa and to expand its operations, while still protecting the rights and interests of Iowa's contract growers," says Miller.

AgFeed Industries plans to increase its pork processing capacity by acquiring Pine Ridge Farms, LLC, and also expand its hog contracting business. Pine Ridge operates a slaughter facility in Des Moines. The problem is Iowa law prohibits a processor from directly or indirectly operating, financing or controlling a swine operation within the state or contracting with Iowa producers for the care and feeding of swine in Iowa. This formal agreement, which also institutes contract grower rights, addresses the state's legal concerns.

In return for AgFeed's compliance with its commitments under the settlement, the state of Iowa will not pursue enforcement of the ban on packer involvement in swine production with respect to AgFeed. The agreement between the state and AgFeed Industries expires on September 16, 2015. Specific provisions of the agreement include:

Contract grower rights. AgFeed has agreed that its Iowa contract growers will have a set of identified grower rights, including the right to be a "whistleblower," the right to join an association, the right to use a contract grower's lien, the right to review production contracts and the right to disclose contractual terms.

AgFeed's obligations. AgFeed has agreed to certain terms, including:

* AgFeed will not impose less favorable terms and conditions in contract grower agreements on basis of a contract grower or prospective contract grower's membership or activities in a contract grower's association.

* AgFeed will not take actions to coerce, retaliate, or discriminate against any contract grower or prospective contract grower because that contract grower or prospective contract grower exercises, or attempts to exercise, any contract grower right.

* AgFeed will not provide false material factual information to contract growers or prospective contract growers regarding other contract growers, associations and organizations and their rights.

* AgFeed will provide statistical information and data used to determine payment to the contract grower.

* AgFeed will allow a contract grower or representative to observe weights, measures and weighing used to determine compensation.

* AgFeed will not require a contract grower to make capital investments associated with an existing contract grower agreement that are in addition to the investment requirements of the contract grower agreement without fair and equitable compensation. AgFeed can require contract growers to make necessary capital improvements at contract growers' expense to meet statutory or regulatory standards and requirements.

* AgFeed agrees that contract growers or prospective contract growers may form and operate an association of agricultural product producers, and that such an association may negotiate contract grower agreements.  AgFeed agrees not to retaliate or discriminate against such contract growers or prospective growers and to negotiate in good faith with any such association.

* AgFeed agrees that it will not assert that any of the protections and/or benefits provided by this consent decree are preempted by any existing federal law.

* AgFeed will provide the Attorney General 90-day written notice of the closure of any permanent swine slaughter facility which it owns, constructs, or acquires.

* For two years, AgFeed agrees to purchase at least 25% of the swine slaughtered at the qualified processor to which AgFeed delivers market hogs from sellers other than AgFeed-owned facilities.

Other similar settlements with large hog companies in recent years

The agreement with AgFeed Industries in September 2011 is similar to the resolution of litigation between the State of Iowa and Christensen Farms Midwest LLC, announced March 30, 2011; between the State of Iowa and Hormel on April 6, 2006; between the State of Iowa and Cargill on January 19, 2006; and between the State of Iowa and Smithfield Foods on September 16, 2005.

For more information on any of these hog production agreements, contact Geoff Greenwood, communications director, Iowa Attorney General's Office, 515-281-6699 or
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