HB 306 -- Agricultural Producers Protection Act

Co-Sponsors:  Wiggins, Clayton, Shoemyer, Berkowitz, Ransdall

This bill applies to production contracts that relate to
production of a commodity owned by an active contractor and
produced by a contract producer at the contract producer's
operation.

An agricultural contract imposes an obligation of good faith, as
defined in the Uniform Commercial Code, on all parties with
respect to performance and enforcement of the contract.

The bill requires agricultural contracts to be written in plain
understandable language and be accompanied by a cover sheet that
includes a written statement of the material risks faced by the
producer, a statement advising the producer to read the
contract, and an index of the key parts of the contract.
Contracts may be certified by the Attorney General's Office for
compliance with these requirements.

A contract producer is given a three-day right to review and
cancel a contract, and inclusion of confidentiality provisions
is prohibited.

The bill establishes a first-priority lien for a producer for
amounts due under a production contract involving livestock, raw
milk, or crops to be enforced against the commodity, the cash
proceeds of the sale of the commodity, or the property of the
contractor.  The duration of the lien and the process for filing
and enforcing the lien are provided in the bill.

A contractor not claiming breach of contract by the producer
cannot terminate the contract unless the producer is given 90
days notice and pays damages to the processor.  Calculation of
damages is to be based on the value of the remaining useful life
of the facilities, machinery, or equipment.  A contractor
claiming the producer breached the production contract may not
terminate the contract until the producer is given 45 days
notice of the alleged breaches and the producer fails to remedy
the breaches within 30 days of receipt of the notice.  The
contractor is exempted from these provisions if the producer has
abandoned the contract or has been convicted of fraud against
the contractor.

A contractor may not require a producer to make capital
investments in addition to investment requirements included in
the original contract unless the contract producer receives fair
compensation.

The bill establishes the following unfair practices for
agricultural contracts:

(1)  A contractor or processor may not take action to coerce,
retaliate, or discriminate against a producer for joining a
producer organization, joining a production association, or
being a whistle blower;

(2)  A contractor or processor may not provide the producer
false information about producer rights or about producer
associations;

(3)  A contractor may not refuse to provide a contract producer
information used to determine compensation or to allow a
contract producer to observe weighing used to determine
compensation; and

(4)  A contractor may not use tournament compensation programs.

Agricultural contracts are to contain language providing for
resolution of disputes through mediation.  Both parties are
required to go through mediation and receive a mediation release
prior to going to court.

Contractors or processors in violation of the provisions of the
bill are subject to both civil and criminal penalties.  A right
of private action for producers and awards for attorney fees to
prevailing plaintiff producers is created by the bill.

Provisions of the bill are prospective and apply to certain
preexisting contracts.  All preexisting contracts when
materially changed are to be treated as new contracts.

Missouri House of Representatives
Last Updated November 26, 2001 at 11:43 am