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Court approves Tyson swine deal

By Staff | Sep 18, 2009

Iowa Attorney General Tom Miller announced Friday that a U.S. District Court decision approved an agreement between the state and Tyson Fresh Meats that allows Tyson to function as a vertical integrator, even though state law prohibits meat packers from owning their own swine herds.

Miller noted that Tyson was challenging the constitutionality of Iowa’s prohibition and the agreement was a way to avoid the uncertainty of the outcome of what could become a long and expensive court battle.

The agreement, Miller noted, enables Tyson to pursue its statewide plans to maintain business operations in four Iowa sites, while at the same time creates a “contractor producer’s bill of rights” to protect contractors who prosecute conflicts with Tyson.

The agreement was approved Friday by U.S. District Court Judge Robert W. Pratt. The terms of the agreement include:

  • Prohibits Tyson from coercing, retaliating or discriminating against contract producers which seek to resolve differences with the meat packer.
  • Forbids Tyson from requiring capital investments over and above the investments covered in the terms of producers’ contracts, unless fair compensation is paid to the producer.
  • Forbids Tyson from requiring producers to accept binding arbitration in resolving disputes.
  • Forbids Tyson from finishing its own hogs in company facilities until Sept. 16, 2010.

Tyson also agreed to not retaliate if its contract producers organize to form a collective bargaining association.

In addition, Tyson agreed that if it loses a court action with a producers, it can be liable for covering the producer’s attorney fees.

The agreement also requires Tyson to purchase 25 percent of the pigs slaughtered at Columbus Junction, Perry, Storm Lake and Waterloo on the open market for the next two years.

Friday’s agreement with Tyson is similar to agreements the state has made with other swine industry vertical integrators including Smithfield Foods in 2005, Hormel in 2006 and Cargill in 2006.

“I am pleased we have reached an agreement with Tyson,” Miller said, “especially since the likely alternative was lengthy and costly litigation with uncertain results.”

Ron Birkenholz, communications director for the Iowa Pork Producers Association, released a policy statement for IPPA on the issue. It reads:

“IPPA acknowledges the right of all pork producers of any size or type of production system to market access and opposes anything that hinders market access. IPPA does not encourage packer ownership of hogs.

“IPPA’s policy was adopted in January 2006 by delegates to the IPPA annual meeting and immediately followed the Iowa attorney general’s settlement with Smithfield Foods to allow packer ownership in Iowa. We are bound by the legal settlement in Iowa and the agreement remains alive and well in the state.

The Iowa Farm Bureau declined comment saying it no longer has an official policy on the issue, although it did in the past.

Contact Larry Kershner at (515) 573-2141, Ext. 453 or at kersh@farm-news.com

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