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Court Upholds Ruling On Nebraska's I-300

Article-Court Upholds Ruling On Nebraska's I-300

Corporate farming ban is ruled unconstitutional by appeals court. Nebraska's 25-year-old corporate farming ban was dealt another blow Dec. 13 when a three-judge

Corporate farming ban is ruled unconstitutional by appeals court.

Nebraska's 25-year-old corporate farming ban was dealt another blow Dec. 13 when a three-judge panel of the U.S. 8th Circuit Court of Appeals ruled Initiative 300 violated interstate commerce.

“This ruling by the 8th Circuit Court has effectively put Nebraska's farms and ranches on a level playing field with the same opportunities as those in other states,” says David Bracht, attorney for the plaintiffs.

That recent ruling follows a federal court ruling in December 2005 that banned I-300 on grounds it interfered with interstate commerce, which is a violation of the U.S. Constitution.

Nebraska voters approved I-300 as a constitutional amendment in 1982 as a way to stop corporations and other businesses from owning farmland or engaging in agricultural activities.

The court challenge involved a lawsuit filed by ranchers who argued the ban prevented them from setting up corporations to keep their operations within their family or from joining forces with neighbors to control costs.

That's exactly what Bill Luckey, president of the Nebraska Pork Producers Association from Columbus, NE, did in the mid-'70s when he joined forces with 10 neighbors to form a sow cooperative. Their production system was grandfathered in and therefore exempted from I-300. The subchapter-S corporation has survived to this day.

For Luckey, the corporation meant an end to his days of farrowing in outdated facilities, enabling him to focus on finishing feeder pigs. He also custom-feeds hogs for another producer and raises corn and soybeans on 500 acres. A son, Lucas, manages the family's cow-calf and cattle feeding operations.

Luckey says the loss of I-300 probably won't bring dramatic changes to Nebraska agriculture. But he hopes it could lead to other livestock neighbors joining together in corporations, especially helpful for shouldering capital costs. These “neighbor corporations,” as he calls them, can prove especially beneficial for maintaining the vitality of communities, as well as bringing livestock back into the area. Nebraska has lost 75% of its pork producers since the early 1990s and currently has 2,500-3,000 producers.

Luckey, in his early 50s, wants to be one of the survivors and carry on the diversified farm that has been in the family for 60 years. Son Ryan works at a landscaping firm, Michael attends the University of Nebraska at Lincoln and Kyle is in high school. Luckey wants his sons to be able to stay on the farm if they choose to.

As for the fate of I-300, Nebraska Attorney General Jon Bruning has vowed to ask the entire 8th Circuit Court of Appeals to rehear the case, but he admits the chances of that happening are unlikely. The chance that the U.S. Supreme Court will agree to hear the case is also “remote,” says plaintiffs' attorney Steve Grasz.

A similar tactic failed in South Dakota in 2004, when the U.S. Supreme Court refused to hear an appeal of a ruling declaring South Dakota's ban on corporate farming unconstitutional. That ruling, also from the 8th Circuit Court of Appeals, said South Dakota's Amendment E was unconstitutional because it interfered with interstate commerce.