DES MOINES - The 8th U.S. Circuit Court of Appeals on Friday set aside a lower court ruling that found Iowa's ban on meatpacker ownership of livestock operations to be unconstitutional.

A three-judge panel of the court sent the case back to U.S. District Court in Des Moines for trial.

Virginia-based Smithfield Foods, the world's largest pork processing company, had sued the state in 2002, claiming Iowa's ban on packer ownership of livestock infringed on interstate commerce.

The state's 1975 packer ban prohibited processors from owning, controlling or operating a feedlot in Iowa. An amendment in the spring of 2002 expanded the law to include former executives of meatpacking companies and prohibited meatpacker financing of livestock operations.

Smithfield, through its Murphy Farms subsidiary, contracts with Prestage Stoecker, an Iowa hog farm. Both companies joined Smithfield in the lawsuit.

Smithfield is a proponent of hog ownership from farrowing pen to table, a concept known as vertical integration. In its complaint, Smithfield said the concept allows "a high degree of quality control … to produce a consistently excellent line of value-added pork products and processed meats for national and international consumption."

In January 2003, U.S. District Judge Robert Pratt issued a summary judgment saying that the ban discriminates against out-of-state interests in favor of local ones.

In a statement issued Friday, Iowa Attorney General Tom Miller said the state looks forward to a trial to show that the law doesn't discriminate "and that any burden on interstate commerce is clearly outweighed by the benefits to producers and consumers."

Smithfield, too, is prepared to go back to court, said Richard Cullen, an attorney from Richmond, Va., representing the company.

"The decision today was not a decision on the merits. The last federal judge who has looked at this on the merits has found that the statute is unconstitutional," Cullen said. "The 8th Circuit has asked him to look at it again in light of the amendment to the statute."

Iowa lawmakers amended the packer ban again in 2003.

"Smithfield believes that the statute remains unconstitutional and is prepared to go back to court once again," Cullen said.

Iowa is the nation's leading pork producer.