Iowa’s Attorney General has reached a settlement of a lawsuit by Smithfield Foods that challenged the Iowa law that sought to prevent packers from owning livestock. Smithfield sued and won after the A-G tried to use the law to block the company’s purchase of the pork growing operations of Murphy Farms nearly six years ago. The Legislature then changed the law and the case went back to court. Attorney General Tom Miller says they’ve now decided to settle the issue.He says, “We have recognized that it’s going to be difficult to restrict in a substantial way vertical integration, particularly involvement in contracting by the packers.” Miller says he consulted with the governor and legislative leaders and agreed to try and end the litigation. He says they have in the context of Smithfield accept vertical integration as a reality in the country in return for getting “substantial protections” for farmers involved in contracting. He says they’re telling Smithfield they can make the contracts, but they have to do them right. Miller says the agreement gives contract producers the right to join an association, the right to be a “whistleblower” and the right to review and disclose contract terms. Miller says in return Smithfield has agreed to refrain from some activities. He says, “They would include any kind of coercion or intimidation or retaliation for exercising these rights, including the right to associate and organize.” Miller says Smithfield will also have to provide compensation to the producer for any capital investment beyond ordinary capital investment. Miller says producers will retain the option to take Smithfield to court over these issues. “One of the bad features we think of uh contracts in a whole series of situations, not just with farmers, but with consumers as well, is the requirement that any dispute be settled by arbitration and not by going to court,” Miller says, “the company cannot put that provision in their agreements and require arbitration.” Miller says there are other provisions involving the purchase of hogs.He says Smithfield has agreed not to finish hogs for a period of five years and for two years they’ll have at least 25-percent of its purchases of hogs in the Iowa and South Sioux City markets on the open market. Smithfield Foods has Iowa plants in Sioux City, Denison, Carroll. Smithfield attorney Richard Poulson says this ends a “six-year travail” for his company. He says,”Unfortunately this was a bad law. It took a higher authority on two occasions to deem the law in valid. I remain totally convinced that had we continued to pursue this matter in the courts that we would have won. But frankly, in most cases a good settlement is far better, far rewarding than even a victory in the courts.” Poulson says the settlement is good for both sides. He says they’ve reached a reasonable resolution that benefits both parties. Poulson says he doesn’t anticipate Smithfield having any problems with the provisions in the agreement. “As far as the grower’s rights are concerned, Smithfield’s growers already have most of those rights. This was an easy thing for use to agree to,” Poulson says, “We do not mistreat our growers. We have 50-percent more contract farmers in Iowa today than when we did when we first bought Murphy Farms. Things like arbitration, that’s not important to us. If our farmers aren’t happy, they can not deliver the product that we need in order to make Smithfield work.” Smithfield also agreed to pay 100-thousand dollars per year for 10 years to fund an environmental program at Iowa State University. They’ve also agreed to pay 100-thousand dollars for 10 years to fund a grant program for Iowa organizations that pursue innovative ways to advance swine production. And they’ve agreed to fund a scholarship program for the children and grandchildren of Smithfield employees for four years at 60-thousand dollars a year. This settlement only covers Smithfield operations, and is not binding for other packers in the state.
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