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Arbitration in Agriculture: Resolving Disputes in the Grain and Feed Industry

Arbitration in Agriculture: Resolving Disputes in the Grain and Feed Industry

Recent years have seen a rise in the use of Alternative Dispute Resolution (ADR), with mediation and arbitration now being necessary for the majority of civil disputes in Minnesota. Agricultural loan and foreclosure procedures now include mediation, making agriculture a pioneer in alternative dispute resolution (ADR). The FarmerLender Mediation Act, approved by the Minnesota Legislature in 1986, elevated agriculture to the forefront of extrajudicial conflict settlement. The Minnesota Legislature has mandated that all contracts about agricultural commodities include a language requiring mediation or arbitration, directing parties to the Minnesota Department of Agriculture for the process. A farm contract must be entered into in good faith by all parties, according to Minnesota Statute Section 17.94. Nonetheless, the usefulness and efficacy of ADR in agriculture have been put to the test by recent hedge-to-arrive (HTA) conflicts. One of the oldest industry-based arbitration systems in the nation is the National Grain and Feed Association's (NGFA) Arbitration System, which was established in 1946.

A voluntary organization of grain and feed enterprises, the National Grain and Feed Association (NGFA) is made up of more than 1300 businesses with more than 5000 facilities. Trade between NGFA members and all businesses in the grain, feed, and processing industries is facilitated by the Trade Rules, which were originally enacted in 1902. Every year, the NGFA's Trade Rules Committee makes sure the regulations are still applicable and up to date. The company represents the biggest agribusiness industry in the United States. Under both federal and state law, the enforceability of arbitration agreements is firmly established. Additionally, the US has ratified two international arbitration agreements, which are crucial for companies doing cross-border commerce with Canada and Mexico. Nonetheless, the bulk of cases are still ongoing in courts across the nation; just three cases have been resolved through arbitration. Two major arbitration systems—the American Arbitration Association and the National Grain and Feed Association—have arisen in the middle of the hedge-to-arrive controversy. The authority to eject a member for refusing to abide by an arbitration ruling was created early in the Association's history, and the NGFA's rules compel Active and Allied members to adhere to the Trade Rules and Arbitration Rules.

The foundation for jurisdiction over disputes filed with the National Grain and Feed Association (NGFA) is established by the NGFA Arbitration Rules. The arbitration system is in place and runs according to protocols that guarantee equity for businesses of all shapes and sizes. In addition to being accessible for settling disputes with non-members, NGFA members must engage in trade disputes with other Active or Allied members of the Association. There are three applications for the arbitration system: Three options are available for resolving disputes: 1) a clause requiring arbitration may be included in the contract between the NGFA member and nonmember; 2) the dispute may be settled through arbitration proceedings before the National Grain and Feed Association (NGFA). The National Secretary must receive a complaint before the arbitration procedure may commence to ascertain whether at least one of the parties is an NGFA member. If so, both sides to the disagreement draft an arbitration agreement for them to sign. The day a party gets notice from the National Secretary marks the start of the time frame for responding to concerns.

Arbitration is often used to settle disputes in a quick, fair, and economical manner. Formal discovery processes might make the process much longer, although informal discovery requests are still allowed. Madsen, the farmer, filed for arbitration in this American Arbitration case, claiming that the lift had committed fraud and requesting damages. A counterclaim was made by Watonwan Farm Service (the lift) alleging non-delivery under a 25,000-bushel hedge-to-arrive contract. By laying out the premises, the farmer was to ascertain the delivery date. The arbitrator concluded that there was no evidence of lift fraud and that the farmer was aware of the dangers associated with the arrangement. The arbitrator considered two different approaches to determining damages, but neither one was sufficiently certain to provide relief. The lift was supposed to get a profit margin of $0.10 per bushel, according to the initial damage claim; however, no proof of this was shown. The lift was unable to provide evidence of a particular offsetting grain purchase for the contract in issue, notwithstanding the second claim for the cost of "covering" the delivery obligation and testimony regarding the cash price of com in July 1996. In the absence of this paperwork, the arbitrator declined to grant damages. Nine hedge-to-arrive contracts were at issue in the lawsuit. Andersons, the lift, claimed that the contracts could be repeated and that delivery under them was not genuinely necessary. After being notified of the National Arbitration Committee's ruling in an arbitration dispute, the parties have fifteen days to either accept the conditions of the award or file an appeal.


[1] Barrett Jr, David C. "Arbitrating Agricultural Disputes: The National Grain and Feed Association's Experience." NDL Rev. 68 (1992): 539.

[2] Benda, Matthew L., and Edward E. Beckmann. "To Arbitrate or Not to Arbitrate: A Practitioner's Guide to Alternative Dispute Resolution in the Agricultural Context." Drake J. Agric. L. 2 (1997): 315.

[3] Halgas, Jordan TL. "Reach an agreement or else: Mandatory arbitration under the California Agricultural Labor Relations Act." San Joaquin Agric. L. Rev. 14 (2004): 1.

  • Alternative Dispute Resolution (ADR), including mediation and arbitration, is mandated for the majority of civil disputes in Minnesota, particularly in agricultural contexts.
  • The National Grain and Feed Association (NGFA) operates one of the oldest industry-based arbitration systems in the United States, facilitating dispute resolution among its members.
  • Arbitration offers a quick and cost-effective method for resolving agricultural disputes, but outcomes can vary based on evidence presented and arbitrator decisions.

BY : Vaishnavi Rastogi

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