Iowa Reaches Hog Production Agreement with Cargill

Agreement enables Cargill to pursue its plans to significantly expand its hog production contract in Iowa.

Published on: Jan 24, 2006

Cargill and the State of Iowa struck a deal to allow Cargill to significantly expand its hog production contracting in Iowa while still maintaining the rights of the contract producers in the state.

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

Iowa Attorney General Tom Miller says Cargill's expansion is important for economic development and competition in the pork business.

Cargill has agreed that when it contracts with Iowa pork producers it will be bound by rules guaranteeing fairness. "Cargill producers will be given a 'contract producer's bill of rights' and the ability to enforce the safeguards in court, including the prospect of receiving attorney fees if they are successful," Miller adds.

"The agreement also has strong protections that will allow Cargill producers to organize and use bargaining associations. This will increase the economic bargaining power of Iowa contract producers and give them the opportunity to negotiate for their fair share of the returns in swine production," Miller says.

In return for Cargill'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 Cargill, Miller says. The agreement has a term of ten years.

"There is no allegation here that Cargill violated Iowa law," Miller explains. "On the contrary: Cargill approached our office to begin negotiations prior to engaging in production contracting. The agreement settles a dispute about the constitutionality of Iowa law and avoids litigation. It permits Cargill to move ahead with its stated intention of significantly expanding its business operations in Iowa by engaging in hog production contracting -- in a manner that reasonably protects the economic and legal interests of contract producers."

For specific provisions of the agreement or background information, click HERE.