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Geoff Greenwood, Communications Director
515-281-6699, geoff.greenwood@iowa.gov
FOR IMMEDIATE RELEASE, April 19, 2013

State Reaches Hog Production Agreement with Texas Farm LLC

(DES MOINES, Iowa)  United States District Court Judge Robert W. Pratt approved a consent decree today jointly submitted by the State of Iowa and Texas Farm LLC, of Perryton, Texas, which owns and operates hog production facilities throughout the Unites States.  Texas Farm is a subsidiary of Nippon Meat Packers Inc. of Osaka, Japan, which is a meat product processor.

The consent decree sets out the terms of a settlement reached between the State of Iowa and Texas Farm resolving a dispute over the constitutionality of Iowa’s prohibitions against processors vertically integrating into pork production in Iowa.

“This resolution with Texas Farm protects the rights and interests of the state’s contract growers,” Attorney General Tom Miller said.  “At the same time it allows the company to do business here in Iowa and expand its operations.”

Texas Farm plans to expand its hog contracting business.  Iowa law prohibits a processor from directly or indirectly operating, financing or controlling a swine operation in Iowa 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 Texas Farm’s compliance with its commitments under the settlement, the State will not pursue enforcement of the ban on packer involvement in swine production with respect to Texas Farm.  The agreement expires on September 16, 2015.

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Background Information

Specific provisions of the Texas Farm agreement include:

 

Contract Grower Rights:  Texas Farm 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.

Texas Farm’s Obligations:  Texas Farm has agreed to certain terms, including:

  • Texas Farm will not impose less favorable terms and conditions in contract grower agreements on the basis of a contract grower or prospective contract grower’s membership or activities in a contract grower’s association;
  • Texas Farm 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;
  • Texas Farm will not provide false material factual information to contract growers or prospective contract growers regarding other contract growers, associations and organizations and their rights;
  • Texas Farm will provide statistical information and data used to determine payment to the contract grower;
  • Texas Farm will allow a contract grower or representative to observe weights, measures and weighing used to determine compensation;
  • Texas Farm 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;
  • Texas Farm can require contract growers to make necessary capital improvements at contract growers’ expense to meet statutory or regulatory standards and requirements;
  • Texas Farm 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.  Texas Farm agrees not to retaliate or discriminate against such contract growers or prospective growers and to negotiate in good faith with any such association;
  • Texas Farm 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;
  • Texas Farm will provide the Attorney General 90-day written notice of the closure of any permanent swine slaughter facility which it owns, constructs, or acquires;
  • At the time of execution of this Consent Decree, Texas Farm sells all of its swine fed under contract in Iowa to processors of which Texas Farm is not an owned affiliate and has no plans to sell swine fed under contract in Iowa to a processor of which it is an owned affiliate.  For a period of two (2) years following the execution of this Consent Decree, Texas Farm agrees that if it sells swine fed under contract in Iowa to a processor of which it is an owned affiliate, at least twenty five percent (25%) of the swine slaughtered at the processor to which Texas Farm delivers market hogs (determined collectively on a rolling 30-day basis) will be purchased from sellers other than Texas Farm owned affiliates.

Summary of the Texas Farm litigation

The consent decree, filed today, settles a lawsuit filed last week by Texas Farm in the United States District Court for the Southern District of Iowa.  In its lawsuit, Texas Farm asserted that Iowa Code section 202B.201 violates the United States Constitution.  The Attorney General denied that Iowa Code section 202B.201 violates the United States Constitution.

Summary of the Christensen Farms litigation
The agreement with Texas Farms announced today is similar to the resolution of litigation between the State of Iowa and  AgFeed, announced on September 15, 2011; Christensen Farms Midwest, LLC, announced March 30, 2011; between the State of Iowa and Hormel announced April 6, 2006; between the State of Iowa and Cargill announced January 19, 2006; and between the State of Iowa and Smithfield Foods announced Sept. 16, 2005.

On March 29, 2011, Christensen Farms Midwest LLC filed suit against the Attorney General in the United States District Court for the Southern District of Iowa, Christensen Farms Midwest, LLC v. Miller, No. 4:11-CV-145.

Summary of the Smithfield Foods, Cargill and Hormel litigation

The agreement with Texas Farm announced today is also similar to the resolution of litigation between the State of Iowa and Tyson announced September  11, 2009; between the State of Iowa and Hormel announced April 6, 2006; between the State of Iowa and Cargill announced January 19, 2006; and between the State of Iowa and Smithfield Foods announced Sept. 16, 2005.

Summary of the Smithfield litigation

On July 22, 2002, Smithfield Foods, Inc., Murphy Farms, LLC, and Prestage-Stoecker Farms, Inc. (“Smithfield Producers”) filed suit against the Attorney General in the United States District Court for the Southern District of Iowa, Smithfield Foods, Inc., Murphy Farms, LLC, and Prestage-Stoecker Farms, Inc. v. Miller, No. 4:02-CV-90324.

The lawsuit asserted that Iowa Code section 9H.2, the predecessor to current Iowa Code section 202B.201, violated the United States Constitution.

On January 22, 2003, the United States District Court for the Southern District of Iowa permanently enjoined the Attorney General from enforcing Iowa Code section 9H.2.
Iowa Code section 9H.2 was amended by the Iowa Legislature in 2003 during the pendency of the appeal of the District Court’s ruling by the Attorney General, and recodified at Iowa Code section 202B.201.

The United States Court of Appeals for the Eighth Circuit vacated the District Court’s January 22, 2003, ruling and remanded the lawsuit for further proceedings in light of the 2003 amendment.
On December 30, 2004, the United States District Court for the Southern District of Iowa issued an order scheduling trial for the case to begin on March 13, 2006.

By agreement dated September 16, 2005, and with the approval of the United States District Court for the Southern District of Iowa, the Attorney General consented to an injunction prohibiting the enforcement of Iowa Code section 202B.201 by the State of Iowa with respect to the Smithfield Producers.

Summary of the Cargill litigation

On January 18, 2006, Cargill, Incorporated, Cargill Meat Solutions Corporation, and Cargill Pork, LLC (collectively “Cargill”) filed suit against the Attorney General in the United States District Court for the Southern District of Iowa, Cargill, Incorporated, Cargill Meat Solutions Corporation, and Cargill Pork, LLC v. Miller, No. 4:06-CV-20.

The Cargill lawsuit asserted that Iowa Code section 202B.201 violated the United States Constitution.

By agreement with Cargill dated January 19, 2006, and with the approval of the United States District Court for the Southern District of Iowa, the Attorney General consented to an injunction prohibiting the enforcement of Iowa Code section 202B.201 against Cargill by the State of Iowa.

Summary of the Hormel litigation

On April 6, 2006, Hormel Foods Corporation (“Hormel”) filed suit against the Attorney General in the United States District Court for the Southern District of Iowa, Hormel Foods Corporation v. Miller, No. 4:06-CV-00161.

The Hormel lawsuit asserted that Iowa Code section 202B.201 violated the United States Constitution.

By agreement with Hormel dated April 6, 2006, and with the approval of the United States District Court for the Southern District of Iowa, the Attorney General consented to an injunction prohibiting the enforcement of Iowa Code section 202B.201 against Hormel by the State of Iowa.

Summary of the Tyson litigation

On September 11, 2009, Tyson Foods, Inc. (“Tyson”) filed suit against the Attorney General in the United States District Court for the Southern District of Iowa, Tyson Fresh Meats, Inc. v. Miller, No. 4:09-CV-00351.

The Tyson lawsuit asserted that Iowa Code section 202B.201 violated the United States Constitution.

By agreement with Tyson dated September 11, 2009, and with the approval of the United States District Court for the Southern District of Iowa, the Attorney General consented to an injunction prohibiting the enforcement of Iowa Code section 202B.201 against Tyson by the State of Iowa.

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