MOINES, Iowa, January 27, 2003 -- CropChoice news:
A federal judge in Des Moines on Wednesday struck
down an Iowa ban that prevents pork processors
from owning hog operations, saying the state law
violates the commerce clause of the U.S. Constitution.
The ruling by Judge Robert Pratt in a case involving
Smithfield Foods Inc., the world's largest pork
producer and processor, drew immediate criticism
from farmers and politicians.
If the decision withstands an appeal, it would
undermine decades of efforts in Iowa to protect
small farmers from competition from conglomerates
and it would open the way for further consolidation
"This ruling can only be viewed as devastating
to family farmers in Iowa," said Curtis Meier,
a hog producer from Clarinda who is president
of the Iowa Pork Producers Association. "The
Iowa law, first adopted in 1975, was intended
to allow packers to be packers and let farmers
The case emphasizes the "urgent need for
Congress to pass . . . a nationwide ban on packer
ownership of livestock," said Sen. Tom Harkin,
Dem-Iowa. Richard Poulson, Smithfield's executive
vice president and general counsel, disagreed.
"Restrictive laws do nothing more than harm
the people they are designed to protect,"
Smithfield's lawsuit was the first constitutional
challenge to Iowa's corporate farm law, which
was passed in 1975. The law was amended in 1988
and again last year to ban packer financing of
In the ruling, the judge said he "deeply
sympathizes with Iowa's attempt to protect its
family farmers," but added, "the evidence
makes clear that the State enacted (the corporate
ban) with an eye towards nothing more than protecting
local economic interests from out-of-state behemoth
The packer ban "unconstitutionally discriminates
against out-of-state interests in favor of local
ones," Pratt wrote. "The statute blatantly
protects the rights of Iowans to engage in conduct
forbidden to out-of-state entities," including
Smithfield and two related hog producers in Iowa,
Murphy Family Farms and Prestage-Stoecker Farms,
sued the state after Smithfield acquired Murphy,
a nationwide company with sizable hog operations
in Iowa, three years ago. Murphy tried to sell
its Iowa hog operations to Prestage-Stoecker,
but Iowa Attorney General Tom Miller called that
sale a "sham" and moved to block the
Smithfield's Poulson said: "We believe our
system" of raising hogs on contract with
farmers "will be best for Iowa and will do
more to preserve the family farm in Iowa."
Attorney General Miller said he was disappointed
by Pratt's ruling and expects to appeal it to
the 8th Circuit Court of Appeals.
"We argued strongly that Iowa's law is constitutional,
that it makes no distinction between in-state
and out-of-state swine processors, and that the
Legislature's stated purpose - "to preserve
free and private enterprise, prevent monopoly,
and also to protect consumers" - is legitimate
and not discriminatory," Miller said.
Smithfield, with headquarters in Smithfield,
Virginia, has annual sales of $8 billion, produces
12 million hogs a year, and processes 20 million
Its challenge to Iowa's corporate farm law pitted
the powerful, multinational company against the
leading hog-producing state in the country. There
were 15.3 million hogs on Iowa farms in December,
according to the U.S. Department of Agriculture,
or about one-quarter of the U.S. swine inventory.
Iowa packing plants slaughter more than one-quarter
of the hogs in the United States.
The case spotlighted a national debate over the
structure of agricultural production and states"
attempts to ensure that independent producers
can compete against giant, vertically integrated
corporations such as Smithfield, which raises
60% of the hogs it slaughters. Miller said the
ruling shows the need for Congress to pass a national
ban on packers owning hogs.
"Congress has clear authority to act, and
to act in all states," Miller said. "It
should do so now." In its complaint against
the Iowa law, Smithfield said its vertical ownership
of hog production and processing allows it to
maintain "a high degree of quality control
. . . to produce a consistently excellent line
of value-added pork products and processed meats
for national and international consumption."
Smithfield's lawyers argued that the Iowa law
banning packer ownership of livestock amounts
to taking property without just compensation.
The law also discriminated against Smithfield
because cooperatives and other businesses with
more than 60% farmer ownership are exempt from
the ban, the pork processor argued.
The Iowa law prohibits beef or pork processors
from owning, controlling or operating livestock
operations. It also says that a processor cannot
enter into contract feeding arrangements with
Iowa hog producers. Companies were granted two
years to comply with the law.
Iowa is one of nine Midwestern states that enacted
statutory limitations on how agriculture ownership
can be structured. The Iowa law has been used
as a model for other state laws.
A federal court in South Dakota on May 16 overturned
a similar state law, calling it unconstitutional
for different reasons from those argued by Smithfield.
The decision has been appealed to a federal appeals
court in St. Paul, Minnesota.
A similar ban on packers owning livestock was
contained in a version of the farm bill that passed
the U.S. Senate, but the ban was dropped from
the final version because of opposition in the
U.S. House. Both of Iowa's senators --- Republican
Charles Grassley and Democrat Harkin --- support
a national ban. Grassley has said he will re-introduce
legislation banning packer ownership of livestock