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.