Fair Producer Contracts and Arbitration Reform
In the face of low commodity prices and ever increasing
market concentration, many U.S. farmers are turning to contracting
to try to achieve greater economic security. Some agricultural
products in the U.S. are produced almost exclusively by farmers
working under contracts (tobacco and poultry) and others (hogs)
increasingly so.
However, the concentration of power in the hands of a few companies
allows the possibility of contract abuse, as individual farmers’
bargaining power in the marketplace is reduced. Farmers under
contract lose the ability to make management decisions, and are
forced to follow the decisions of others with respect to their
own land. Contracts often include forced arbitration and require
large capital investments, causing farmers to carry huge debt
loads
• Include legally-mandated fair agricultural contracts,
including clauses to recapture capital investments if a farmer’s
contract is terminated and provisions that hold vertically-integrated
companies accountable for unfair and deceptive practices.
• Allow arbitration to settle contract disputes only if
both parties consent in writing after a controversy arises. Arbitrators
would be directed to provide the parties with a written explanation
of the factual and legal basis for an award. (Urge your Senator
to co-sponsor S.91, the Fair Contracts for Growers Act introduced
by Grassley (R-Iowa) and Feingold (D-WI)
• Grant the USDA administrative authority to stop unfair
practices in the poultry industry that matches its authority in
the beef and pork industry.
Check out the RAFI-USA
website and the Campaign
for Contract Ag Reform for more background information and
updates.
