Deception in Agricultural Contracting

Domina Law Group Helps!

Farmers, ranchers, and cattle feeders still remember the independent era when they controlled their own destiny. Weather, market, and production risk were the risky parts of a business. Now there is another risk: a hostile marketplace where the producer has little or no voice because the packer or processor controls too much power over the independent businessperson whose life is devoted to the production of food.

Sale barns, local elevators, and auctions to buy and sell commodities and determine price have largely disappeared. These have been replaced with "contracts" i.e., agreements between packers and those they choose to buy from, for transfer of raw agricultural goods at the processor’s agreed price.

Abuse of the Contract System

The rise of agricultural contracting, and the proportionate fall of open market transactions has limited producer independence and increased opportunities for packers, processors, and poultry integrators to abuse the contract system through their market power and through reported deception and misrepresentation. Often, the dangerous contracting process looks attractive to unwary producers.

They look to contracting because they are promised reduced price risk, assured sales and a guaranteed relationship. Bankers may encourage, or even demand producers sign a contract with a packer as a loan approval condition. Unfortunately, the price protection and risk reduction assurances often are untrue. When the packer becomes ever so slightly displeased with the price, the condition or other matters related to the goods, producers are easily victimized.

A whole operation is automatically at risk when a producer, who financed expansion based on a packer contract, faces termination of the agreement and is forced to go to lawyers for help. Even then, the deception in a contract’s fine print can cause more problems. Packer-form contracts often waive trial by jury, require arbitration, and include provisions making it impossible for the producer to get his/her dispute heard before a decision-making body of people who can place the packer and producer on common ground.

We handle cases for cattle, hog, corn, soybean and other producers. Our firm has been called upon to assist raisin producers in California’s San Joaquin Valley, dairymen in New Mexico, and alfalfa farmers in Arizona as well as many farmers and ranchers in the Midwest. Cases range from overreaching price restrictions to breaches of contracts, to plain deception.