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CONTACT: Geoff Greenwood, Communications Director
515-281-6699, geoff.greenwood@iowa.gov
FOR IMMEDIATE RELEASE, March 30, 2011

State Reaches Hog Production Agreement with Christensen Farms Midwest

 

(DES MOINES, Iowa)  Attorney General Tom Miller announced that United States District Court Judge Robert W. Pratt approved a consent decree Wednesday jointly submitted by the State of Iowa and Christensen Farms Midwest, LLC, of Sleepy Eye, Minnesota. Christensen owns and operates hog production facilities throughout Iowa and the Midwest.


The Consent Decree sets out the terms of a settlement reached between the State and Christensen Farms Midwest resolving a dispute over the constitutionality of Iowa’s prohibitions against processors vertically integrating into pork production in Iowa.


“This agreement protects the rights and interests of Iowa’s contract producers working with Christensen Farms Midwest, and at the same time allows the company to continue doing business here in Iowa,” Miller said.


Christensen Farms Midwest indicates that it plans to increase its pork processing capacity and expand its hog contracting business.  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.


“We had concerns about fairness to contract growers, and this consent decree addresses our unease,” Miller said.  “This agreement allows Christensen to expand in a way that protects contract growers, and it gives them both a voice and enforcement tools, if needed.”


In return for Christensen’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 Christensen.  The agreement expires on September 16, 2015.

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Background Information

Specific provisions of the Christensen Farms Midwest agreement include:

Contract Producers’ Rights. Christensen has agreed that its Iowa contract producers will have a set of identified producer rights, including the right to be a “whistle-blower,” the right to join an association, the right to use a contract producer lien, and the right to publicly discuss and disclose the terms of their contracts.
Christensen’s Obligations. Christensen has agreed to certain terms, including:

  • Christensen 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;

  • Christensen 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;

  • Christensen will not provide false material factual information to contract growers or prospective contract growers regarding other contract growers, associations and organizations and their rights;

  • Christensen will provide statistical information and data used to determine payment to the contract grower;

  • Christensen will allow a contract grower or representative to observe weights, measures and weighing used to determine compensation;

  • Christensen 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;  Christensen can require contract growers to make necessary capital improvements at contract growers’ expense to meet statutory or regulatory standards and requirements;

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

  • Christensen 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, Christensen agrees to purchase at least 25-percent of the swine slaughtered at the qualified processor to which Christensen delivers market hogs from sellers other than Christensen-owned facilities.

The Christensen litigation:

The consent decree, signed today, settles a lawsuit filed Tuesday by Christensen in the United States District Court for the Southern District of Iowa.  In its lawsuit, Christensen asserted that Iowa Code section 202B.201 violates the United States Constitution.  The Attorney General denies that Iowa Code section 202B.201 violates the United States Constitution.

The Smithfield Foods, Cargill and Hormel litigation:

The agreement with Christensen announced today is very 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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