Smithfield Foods filed a lawsuit Tuesday in federal court in Des Moines, seeking to have Iowa's ban on packer ownership of livestock declared unconstitutional.

The company believes the Iowa Legislature unfairly singled out the company last spring when it strengthened Iowa's prohibition of packers owning livestock in the state, according to Richard Poulson, Smithfield's attorney.

The law already prohibited beef or pork processors from owning, controlling and operating livestock operations in Iowa. The amendment banned packer financing of livestock operations as well.

The Iowa law also says that a processor can’t enter into a contract feeding arrangement with a pork producer in this state. Cooperatives and other business entities with more than 60 percent farmer ownership were exempt from the ban.

Iowa is one of nine Midwestern states that have statutory limitations on how agriculture is structured.

Smithfield's legal challenge to Iowa is the latest skirmish in a continuing controversy over agricultural consolidation. Congress is expected to reintroduce next year a federal proposal that bans packer ownership of livestock. The proposal failed this year.

Bob Brammer, a spokesman for Iowa Attorney General Tom Miller, says Miller and his staff were reviewing the lawsuit. Miller released the following statement about the lawsuit:

“As always, we will vigorously defend the validity of the statute enacted by the Legislature. Two successive General Assemblies took action to amend and strengthen Iowa law regulating corporate farming. The purpose of the law stated by the Legislature is to preserve free and private enterprise, prevent monopoly and protect consumers.”

Joining Smithfield as plaintiffs in the lawsuit were Murphy Farms LLC and Prestage-Stoecker Farms Inc.

Questions about the financial relationship between Smithfield and Prestage-Stoecker Farms, which purchased Murphy Family Farms' Iowa operations, led to the amendment.

The plaintiffs claim the newly amended law is protectionist, discriminates against them and is aimed at forcing them out of the state. Smithfield claims in the lawsuit that the state is trying to restrict out-of-state commerce and is impairing Smithfield's ability to comply with existing contracts, violating the U.S. Constitution.

In addition to asking the court to find the Iowa law unconstitutional, the companies also want to prevent the state from enforcing the law against them, as well as award them attorneys" fees and costs.

Some farm law experts expressed surprise that Smithfield had filed the lawsuit.

"I doubted that they would go ahead and file it," says Neil Harl, an Iowa State University Extension economist. Harl adds that he thought the law gave Smithfield adequate time to divest itself of its interests in the state.

A federal court in South Dakota on May 16 overturned a similar state law, finding it unconstitutional. The decision is expected to be appealed.

"I have great doubt that the South Dakota (federal) decision will stand," says Harl. "The record is fairly clear that the court has generally upheld the right of states when there's a compelling state interest in the way agricultural activity is organized," he adds.

Des Moines Register