2-32-201. Production contracts — Definitions.

2-32-201. Production contracts — Definitions. (a) As used in this section: (1) “Contractor” shall have its common meaning within the industry and shall include a person or entity who owns livestock or poultry, or both, that are raised or cared for by a grower; (2) “Grower” shall have its common meaning within the industry and shall include a person engaged in the business of raising and caring for livestock or poultry, or both, in accordance with a production contract, marketing agreement, or other arrangement under which a person raises and cares for livestock or poultry, or both, whether the livestock and poultry are owned by the person or by another person or entity; (3) “Material risk” means: (A) The duration of the production contract; (B) The conditions for the termination of the production contract before the designated expiration of the production contract; and (C) The terms relating to payment to be made to the grower, including, when applicable: (i) The party liable for condemnations; (ii) The method for figuring feed conversion ratios; (iii) The method used to convert condemnations to live weight; (iv) The per-unit charges for feed and other inputs furnished by the contractor; and (v) The factors to be used when grouping or ranking growers; (4) “Production” shall have its common meaning within the industry and shall include raising and caring for livestock or poultry, or both, for processing for human consumption under the terms of a production contract; and (5) “Production contract” shall have its common meaning within the industry and shall include any written agreement that provides for the raising and care of livestock or poultry, or both, by a grower for processing for human consumption for a contractor. (b) A production contract shall: (1) Be written in a readable form and be accompanied by a clearly written disclosure statement, signed by the grower, setting forth the nature of the material risk faced by all growers if the growers enter into the production contract; (2) Be negotiated, entered into, and executed in an environment free from unfair or deceptive trade practices or other violations of law; (3) Not prohibit or discourage a grower from associating with other growers to compare production contract terms or to address concerns or problems; (4) Not prohibit or discourage growers from seeking professional, legal, financial, and agricultural production advice and counsel related to the production contract's terms, obligations, and responsibilities; (5)(A) Not deny a party to the production contract the ability to address a dispute in a court of competent jurisdiction. (B) If after a dispute arises, all parties to the production contract agree, then a dispute arising under the contract may be submitted to arbitration; and (6) Contain certain disclosure notices, including without limitation: (A) The notices required under 7 U.S.C. § 197a, as it existed on January 1, 2015; and (B) Notice that the grower's execution of the production contract establishes that the grower understands and acknowledges that additional large capital investments, including without limitation the purchase of additional equipment, the completion of improvements, and the upgrade of structures housing poultry or livestock, may be required of the grower during the term of the production contract. (c)(1) A production contract or a provision of a production contract that violates a provision of subsection (b) of this section is void and unenforceable. (2) This subsection shall not affect another provision of a production contract, including a contract or related document, policy, or agreement that can be given effect without the voided provision. (d)(1) A grower who suffers damages because of a contractor's violation of a provision of subsection (b) of this section may obtain appropriate legal and equitable relief, including, but not limited to, injunctive relief and any damages allowable by Arkansas law. (2) In a civil action against the contractor, the court may award the prevailing party reasonable attorney's fees and other litigation expenses. (e) This section applies to a production contract entered into on or after September 1, 2005.