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12/16/2005
HARKIN PROTECTS PRODUCER RIGHTS
Washington, D.C. – Senator Tom Harkin (D-IA) today joined a
bipartisan group of Senators in introducing legislation that would end
the use of mandatory arbitration clauses in livestock and poultry
contracts. Such contract clauses require that disputes be settled
through arbitration, generally conducted by a mediator chosen by the
packer or processor, and prevent producers from seeking legal remedy in
courts. Many producers believe mandatory arbitration is tilted against
them and there are documented cases of abuse and unfairness against
producers under mandatory arbitration clauses. Large processors demand
mandatory arbitration clauses as a stipulation to conducting business,
which often results in ongoing and unfair treatment for producers and
growers.
“Mandatory arbitration clauses allow large processors to escape
virtually any accountability for their actions.” said Harkin. “If a
producer or grower feels they have been subject to fraud or illegal
activity by a firm, then they should be allowed to pursue their rights
and remedies in our courts.”
Mandatory arbitration clauses have been a common practice in the
poultry industry and are gaining popularity in contracts offered by
processors in the livestock industry as well. Under these mandatory
arbitration clauses, the producer has to agree that any disputes or
disagreements that may later arise will be submitted to an arbitrator
for resolution. Producers typically have little or no choice to
acquiesce to such mandatory arbitration clauses in contracts since the
contracts are often offered by packers and processors on a
take-it-or-leave-it basis with no opportunity for two-way negotiation.
And since producers and growers have usually already invested in
buildings and equipment, they must sign contracts with mandatory
arbitration clauses or face receiving no birds or livestock to raise
for income. Thus, the mandatory arbitration clauses help to strengthen
the economic position of packers and processors versus producers.
“Producers should not have to forfeit their legal rights in order to do
business with these increasingly large and powerful food processors,”
Harkin said. “This legislation will help level the playing field for
producers and growers by ensuring they have access to courts instead of
being forced into an often unfair arbitration system.”
Senator Harkin is the ranking Democrat on the Senate Committee on Agriculture, Nutrition and Forestry.
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