WASHINGTON — Sen. Chuck Grassley today introduced legislation that would limit mandatory arbitration agreements. Grassley’s bill would amend the Packers and Stockyards Act to prohibit mandatory arbitration clauses from being included in contracts between livestock producers and packers. This would allow farmers the opportunity to choose the best form of settlement when a dispute arises.
Grassley said the traditional model of independent farmers selling to independent processors or cooperatives is quickly shifting toward contract production. Under these contract arrangements, large, vertically integrated agribusiness firms have the power to dictate the terms of "take-it-or-leave-it" production contracts to farmers.
"Often when there is a dispute between the packer and the family farmer, and the contract between the two includes an arbitration clause, the family farmer has no alternative but to accept arbitration to resolve the dispute," Grassley said. "Arbitration has its benefits in certain cases, so it should be an option, but it should not be the only option."
The bill sponsored by Grassley and Senator Russ Feingold of Wisconsin requires that any contract arbitration must be voluntarily agreed to by both parties to settle disputes at the time a dispute arises, not when the contract is signed.
Grassley and Feingold first introduced the Mandatory Arbitration Bill as an amendment to the farm bill in 2001. The amendment passed the Senate, but was taken out during conference committee negotiations.
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