AALA

Every year, we hear fascinating legal updates at the American Agricultural Law Association’s annual conference.  Thanks to presentations by Todd Janzen and Brianna Schroeder of Janzen Ag Law in Indianapolis, we were inspired to learn a little more about trends in meat law.  For readers with a livestock operation, these legal issues can present great challenges, and keeping up to date on legal trends helps farmers stay prepared.

Veal, pork, and eggs: states battle each other on minimum confinement space regulations.

California voters passed Proposition 12 in the November 2018 election, which will require producers to comply with minimum confinement space regulations in order to sell certain products in California.  The Prevent Cruelty California Coalition placed the proposition on the ballot, expanding a previous regulation on in-state suppliers, but the new law would apply to any producer trying to sell veal, pork, or eggs in California.  By 2020, veal calves must be housed with at least 43 square feet of usable floor space, breeding pigs must be housed with at least 24 square feet of usable floor space, and egg-laying hens must have at least 1 square foot of floor space.  However, by 2022, egg-laying hens must be cage free.  Proposition 12 strengthens requirements approved by California voters in 2008’s Proposition 2 by imposing the requirements on out-of-state producers who want to sell their products in California.

In 2016, Massachusetts voters approved a ballot measure that would require eggs sold within the state to be cage free by 2022.  Thirteen states, led by Indiana, have sued Massachusetts in the United States Supreme Court in an attempt to stop Massachusetts from enforcing the requirement.  These states allege that the restriction is an attempt to regulate how farmers in other states operate, which violates the rights of other states to create their own regulations.  This would be a constitutional question under what is known as the Dormant Commerce Clause, which prohibits states from unfairly regulating business activities that have impacts beyond a state’s border.  Status updates on the lawsuit are available here.

Trying a legislative solution to slow the trend of cage-free restrictions, Iowa passed a law earlier this year that requires grocers that sell cage-free eggs to also sell conventional eggs if they want to receive benefits from the USDA WIC program.  Supporters of the law argued that cage-free eggs are often more expensive and excluded from the WIC program.  They argue that as a result, when grocers make commitments to sell only cage-free eggs, they make it more difficult for low-income families to purchase eggs.

Beef: non-meat proteins continue to target beef.

The “Impossible Burger” wants to convince consumers that a non-meat burger patty that tastes just like meat is just around the corner.  Veggie burgers are not new to the grocery store shelves, but recent innovations that have allowed non-meat proteins to improve in taste and texture have raised concerns among meat producers that these products are becoming a serious threat.  Given that many of these innovations have taken aim at the burger market, beef producers in particular have felt a target on their backs.  As we reported in a previous edition of The Harvest, Missouri became the first state this year to regulate labeling of non-animal products as being derived from an animal, and the U.S. Cattlemen’s Association has petitioned the USDA to consider regulating labels involving animal terms like “meat.”  Other speakers at the AALA conference indicated that the USDA is currently debating how to regulate labels, but has yet to develop a comprehensive rule package.

Dairy contracts: always know what you are signing.

The market has been very tough for dairy producers.  Having a long term supply contract in place is certainly preferable to no contract, but depending upon the terms of the contract, unfortunate surprises may be in store.

Purchasers often write the contracts, and include terms that favor them.  For example, many contracts contain termination provisions that allow either party to end the agreement for essentially any reason with prior notice, often 30 days.  When producers invest in their operations under the expectation that the contract will stand throughout the term specified, these termination provisions can result in devastating surprises.  As another example, many contracts contain confidentiality agreements that make it difficult for a producer to determine whether the deal they are offered is great, average, or actually bad.  Equally concerning for producers are provisions that shift liability for problems with the milk to the producer, and away from the purchaser who sells the milk on the market.  With modern technology, tracking where milk originated makes this possible.  Courts are likely to enforce these agreements because the law of contracts favors enforcement of private agreements.

Given the current market, many dairy producers felt that they are not in a position to negotiate better terms, for fear that another dairy close by will accept the terms as-is.  This position is made worse by the inability of producers to talk about their contracts with one another because of confidentiality provisions.

What a producer can do is to read the contract carefully and make sure that he or she understands the terms of the contract.  It may be wise to speak with an attorney to verify that the producer’s understanding of the contract matches how the contract is likely to be read by a court.