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.