Government subsidized loan programs for chicken facilities and Becerra v. The Coca-Cola Co.

Late last week I read two interesting short pieces on food law, one an email to a listserve by Susan Schneider, a Professor of Law and the Director of the LL.M. Program in Agricultural & Food Law at the University of Arkansas School of Law on using government subsidized loans to build chicken facilities for contract production, and one a Public Citizen blog post by Stephen Gardner, former litigation director for the Center for Science in the Public Interest, criticizing the Northern District of California District Court’s recent opinion in Becerra v. Coca-Cola. 

Professor Schneider wrote the following:

For a long time, I have questioned the use of government subsidized loan programs through USDA and SBA to fund the huge loans needed to build chicken facilities for contract production.  As noted in Food, Farming, & Sustainability, I have argued that those loans supported the one-sided contracts that are used throughout the industry. Lenders would rarely fund operations based on these short term and risk laden contracts without a government guarantee.  In this regard the subsidized lending programs, designed to help small business, have actually been used to support the integrated industry. 

The SBA Office of Inspector General has just published a report that lends support to this analysis. It provides a good description of the contractual relationship, the risks associated with the contract terms, and the role of  SBA in supporting this system of production. And, it is a fascinating look at the billions of dollars of SBA loans going to poultry growers. It finds that the control exercised by the integrator is so extensive that the integrator and the grower are “affiliated enterprises,” and that as such, about $1.8 billion in loans should have been ineligible.  “SBA guaranteed loans to affiliative enterprises are inconsistent with its stated mission to assist small business concerns.”  

For anyone writing or teaching about the system that produces our inexpensive and abundant  supply of poultry, I highly recommend this report. 

Evaluation of SBA 7(A) Loans Made to Poultry Farmers, SBA OIG, Rep. No. 18-13 (Mar. 6, 2018). 

Appreciation to Politico, Morning Ag Report for bringing this report to my attention.

 

The link to Mr. Gardner’s piece is here: http://pubcit.typepad.com/clpblog/2018/03/illustration-of-the-problem-of-judges-substituting-their-own-opinions-of-facts.html

 

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