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Model legislation adopted by 16 states promises to help growers contract with large companies

Protect the producer, say Attorney General, Ag Commissioner

If a contractor agrees to buy grain from a farmer but then decides not to pay, to whom can the farmer turn?

If another contractor tells a poultry grower, “my way, or the highway” as they draw up an agreement, what are the grower’s options?

If a proposed law is approved by Mississippi lawmakers next year, these two unfortunate growers will have the power of the Attorney General’s office to back them

up. The model “Producer Protection Act,” which has so far been adopted by Mississippi Attorney General Mike Moore and the Attorneys General of 15 other states,

is designed to protect growers of all commodities who contract with companies.

“There is greater and greater disparity between processors and farmers with respect to market information and bargaining power,” Moore and his colleagues wrote in

a joint statement accompanying the proposal. “Large companies often offer contracts to producers on a take-it-or-leave-it basis. Risks to producers are buried in

pages of legalese, and producers easily can be stuck with unfair contract terms.”

One example is the grower who asserts his rights, then faces bankruptcy when the contractor retaliates by demanding he upgrade his facilities or make other changes

to the operation. Right now in Mississippi, one company is threatening not to deliver chickens if the grower doesn’t sign an agreement to waive his rights to get paid for

down time, said Special Assistant Attorney General Frank Spencer. And a group of Mississippi blueberry growers who renewed a contract with a Georgia company

have only been paid a portion of what they are owed. Having already lost money, the decision is whether to spend more on legal action.

With a law like the Producer Protection Act in place, these growers might be protected from these and other unfair practices, said Mississippi Commissioner of

Agriculture Lester Spell, who joins Moore in support of the bill.

“If that guy in Georgia gets a letter from the Attorney General of the State of Mississippi that says, ‘You have not honored your contract with the growers in my state,’

that’s one thing. But if I call him as a blueberry grower and complain, that’s something else,” said Spell.

Some of the highlights of the model legislation include:

• requiring contracts to be in plain language and contain disclosure of material risks,

• providing contract producers with a three-day right to review production contracts,

• protecting producers from having contracts terminated frivolously or as a form of retribution if they have already made a sizable capital investment required by the


• the right to discuss their contracts with other farmers,

• the right to join a producer association, and

• the right to use a contract lien to secure payment for their product.

The need for these rights is a necessity now that so many farmers are contracting with large companies, said Spell, who believes the contracts are good for farmers

because they save money by not having to independently market their commodities. The contracts also provide broader market access, which is particularly important

in a global economy, he said.

But, on the downside, there are increasingly fewer companies for farmers to deal with as smaller companies get bought by larger companies. With just a few large

companies to do business with, Mississippi’s approximately 42,000 farmers must have protection, said Spell.

He fears that without a law like the Producer Protection Act, these large corporations will gradually push the family farmer out of farming. As the number of family

farms diminish in the U.S., buyers will become dependent on other countries for food, and that will mean a hike in food costs for consumers. As it stands now,

Americans pay about 9 1/2 cents out of every dollar for food.

“The public doesn’t understand what’s going to hit them in the back pocket,” said Buck Alman of Pelahatchie, a poultry farmer for 25 years.

Alman predicts farming will not exist in his area in 10 years because of drought, NAFTA and the consolidation of the companies who contract with growers. Although

he does not view the Producer Protection Act as a “magic potion,” he does believe the new law would give growers and contractors more checks and balances and

the chance to stay in business.

“(Contracting) is like buying a used car. There are things under the hood you don’t know are there,” said Alman, who admits he hasn’t gotten his fair share at times

because of the way his contracts were structured. “The more commodities that are grown on contract, the more protection growers will have to have.”

Contact MBJ staff writer Kelly Russell at kelly@msbusiness.com or (601) 364-1027.


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