Dawn’s research into state law – 2

I looked at Iowa anti corporate farm legislation again, and it seems that the legislation mentioned in my previous email – “Iowa recently amended its anti-corporate farming statute to ban output contract farming. Iowa Code Ann. ¤9H.4 (West 1995). The law prohibits corporations, limited liability companies, and trusts – other than family farm corporations, authorized farm corporations, family farm limited liability companies, authorized limited liability companies, family trusts, authorized trusts, revocable trusts, or testamentary trusts – from acquiring an interest in any agricultural land in the state. – was overturned.


This is a study from Drake University.  http://students.law.drake.edu/aglawjournal/docs/agVol09No1-Chester.pdf


In May 2002, a federal district court in South Dakota held that South Dakota’s anticorporate farming amendment violated the Dormant Commerce Clause. Eight months later, a federal district court in Iowa invalidated that state’s anticorporate farming statute on the theory that it violated the Dormant Commerce Clause as well. These two blows dealt to anticorporate farming legislation will have wide-ranging effects on the future of anticorporate farming statutes.


Eight months later, in January 2003, a federal district court in Iowa struck down that state’s anticorporate farming statute as being unconstitutional in a farther-reaching opinion than Hazeltine.  In Smithfield Foods, Inc. v. Miller, a federal district court in Iowa concluded that Iowa’s anticorporate farming statute was facially, purposefully, and effectually discriminatory and hence, unconstitutional under the first tier of the Dormant Commerce Clause inquiry. The Iowa court held that the anticorporate farming statute “narrowly tailors its prohibitions to cast a wide net around [p]laintiffs’ economic activities, all the while reserving the same economic activities for Iowa cooperatives or cooperatives with an Iowa component.” While the court thought the preservation of family farmers was a “noble” goal, in strong language the court held, “[a]fter careful consideration, the [c]ourt is left with but one conclusion, [Iowa’s anticorporate farming statute], on its face, in its purpose, and in its effect unconstitutionality discriminates against out-of-state interests in favor of local ones.”143 Moreover, after the state argued that the specific clause in question be severed from the entire statute, the court responded, “simply severing the cooperative exemption from [Iowa’s anticorpo-rate farming statute] does not remedy the statute’s defects . . . the Act was passed with a discriminatory purpose to effect a discriminatory result. Accordingly, while severing the cooperative exemption might cure some of the facial defects, the Act’s discriminatory purpose and effect persist.” Appeals from the rulings in Hazeltine and Smithfield are currently pending.

The increased value of farmland has been dramatic. In Iowa, for example, the estimated market value of farmland and buildings, averaged per farm, jumped from $283,597 in 1987 to $566,587 in 1997. The same holds true in Nebraska, where the value of land and buildings per farm has increased from $344,253 in 1987 to $567,468 in 1997. It appears that by restricting potential buyers of farmland, anticorporate farming legislation has increased the value of land. However, the effect of the corporate prohibition means a small family farmer is prohibited from selling land to those who might be able to afford it, such as large agribusinesses. This effect of “locking in” small family farmers has hindered their financial status and success….

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