DES MOINES -- Iowa Attorney General Tom Miller announced that a U.S. District Court judge has approved a settlement reached between the state and Cargill resolving a dispute over the constitutionality of Iowa's prohibitions against processors vertically integrating into pork production.

"This agreement enables Cargill to pursue its stated plans to significantly expand its hog production contracting in Iowa," Miller said, "and it protects the rights and interests of Cargill's contract producers.

"I am pleased we have reached an agreement with Cargill that is very beneficial for Iowa's pork industry," Miller said, "especially since the likely alternative was lengthy and costly litigation with uncertain results. In the agreement, Cargill states a desire to significantly expand its business operations in Iowa, including hog production contracting. The agreement will allow this expansion to proceed, which is important for economic development and competition in the pork business.

"At the same time, Cargill has agreed that when it contracts with Iowa pork producers, it will be bound by rules guaranteeing fairness. Cargill producers will be given a 'contract producer's bill of rights' and the ability to enforce the safeguards in court, including the prospect of receiving attorney fees if they are successful. This is an important enforcement tool," Miller said.

"The agreement also has strong protections that will allow Cargill producers to organize and use bargaining associations. This will increase the economic bargaining power of Iowa contract producers and give them the opportunity to negotiate for their fair share of the returns in swine production."

In return for Cargill's compliance with its commitments under the settlement, the state will not pursue enforcement of the ban on packer involvement in swine production with respect to Cargill, Miller said. The agreement has a term of ten years.

"There is no allegation here that Cargill violated Iowa law," Miller said. "On the contrary, Cargill approached our office to begin negotiations prior to engaging in production contracting. The agreement settles a dispute about the constitutionality of Iowa law and avoids litigation. It permits Cargill to move ahead with its stated intention of significantly expanding its business operations in Iowa by engaging in hog production contracting -- in a manner that reasonably protects the economic and legal interests of contract producers."

Cargill contract producers will have the right to organize, and Cargill won't be able to retaliate or discriminate against them based on their organizations. The producers will be able to be whistle blowers without discrimination or retaliation from the company. The producers also have the right to disclose the terms of their contracts.

The agreement was approved by the governor and legislative leaders. This allows Cargill to expand in Iowa, and Miller said the state will be better off with this "balance of rights and responsibility and authority."

Tom Hayes, president of Cargill's Meat Solutions Corp., said they look at the agreement as another choice for pork producers in Iowa. He said it allows his company to do contract pork production.

"It's good for Iowa; it's good for Cargill; and it's ultimately good for pork producers here in Iowa," Hayes said. As part of the agreement, Cargill plans to keep its Ottumwa, Iowa, pork plant open, and the company will give 90 days notice of any plant closure. The agreement is similar to one with Smithfield Foods that was announced in September of 2005.

The official press release and more information are available at the Iowa Attorney General's Web site.

SOURCE: Iowa Attorney General news release.