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2008 Policy Book
First | Previous | Next | Last | 2008 Index | Policy Book Archive#37 PRODUCTION CONTRACTS
With the growing number of farmers who produce commodities under production contract with large contractor companies, there is a need to assure the contracts are fair and equitable. We support legislation that would:
- Require contracts be in plain language and contain disclosure of material risks (i.e., beneficial interests, price, basis, payment date and terms, quality, deductions, and discounts).
- Provide contract producers with a three-day right to review production contracts.
- Prohibit confidentiality clauses in contracts except as it relates to proprietary information and trade secrets. This provision will help maintain the market transparency that historically has been available to farmers through auctions, terminal and futures markets.
- Provide producers with a first-priority lien for payments due under a contract in case the contractor company should go out of business.
- Protect producers from having contracts terminated capriciously or as a form of retribution if farmers already have made a sizeable capital investment required by the contract.
- Make it an unfair practice for processors to retaliate or discriminate against producers who exercise rights, including the right to join producer organizations.
We support efforts by Michigan Farm Bureau to provide informational and educational programs to producers about production contracts.
We support legislation that would require processors and handlers who purchase perishable farm commodities from producers to make full payment within 30 days of date of purchase unless other provisions are made by written contract. We urge producers to be aware of their rights and responsibilities and use the Federal Perishable Agricultural Commodities Act. Failure of processors and handlers to pay within contract terms will result in a progressive level of penalties levied under the authority of the appropriate state agency.
