Indiana: the Crossroads of America. Also part of the North American Corn Belt. After three years of drought-like conditions, 2014 has been a phenomenal year for agricultural production (albeit the laws of supply and demand have driven prices down). Every year, the U.S. sees more and more small family farms evaporate in favor of big farm operations. How do you as a small farm owner or operator compete? Step one: get an attorney who knows agricultural law.
You have been doing business without a lawyer for years. So, why do you need an attorney? As farming evolves and the dynamic of the players in the market changes, there are an increasing number of issues that you may overlook that may not have mattered in the past. Agriculture is becoming a national and global arena as opposed to the former local market. It isn’t just about the “mom and pop” farm anymore, and unfortunately a handshake doesn’t mean what it used to.
So what is the lawyer going to do, and what is agricultural law? We are going to start off by meeting and discussing your current operations. Obviously, we don’t want to change something that isn’t broken. That being said, sometimes change is necessary, good, and advisable. We are going to talk about a lot of topics, some of which include the following:
Setting up a business structure
The first step to liability protection often includes setting up a business entity. But, you don’t want to just go out and set up a one page entity on the Secretary of State website. You need to carefully structure your business for ownership, liability protection, and business continuity. You may also need to evaluate the need for separating your farming functions into several separate business entities. There are also tax consequences to running your farm through a business, so we will probably need to address this with your accountant as well.
Liability Assessment and Mitigation
Just like no two pieces of land are alike and no two animals are alike, no two farms are alike. One mistake and you may be putting your entire farm and dream in jeopardy. You have a unique set of concerns and liabilities that need to be assessed and mitigated. We may be able to recommend adjustments to your operations, or we may be able to suggest other risk mitigation alternatives, such as obtaining specialized insurance to cover potential liabilities. Whether related to raising cattle, using heavy equipment, or new facility construction, you work hard, and we want to help you protect your dreams.
Sometimes accidents happen; and when they do lawsuits may get filed. Having a lawyer on call and who is familiar with your operations can mean the difference between quick resolution and a costly lawsuit. Having a long-term relationship with a lawyer can also save hundreds of dollars in legal expenses.
Cash rent and share leases
Farmers all over Central Indiana regularly engage in crop land leases. Historically, a handshake between owner and tenant was enough, but not anymore. Compensation is normally pretty straight forward, but do you know what the terms of the lease really are? How long does the lease last? Who is responsible for fertilizer and lime? When should fertilizer be applied? Are hunters allowed on the leased property, and if so, who and when? Are there any facilities or grain bins to be included in the lease? Does the lease auto-renew? Does your lease need to be recorded? You need a lawyer, and you need your agreement in writing. If you don’t, the inadvertent oversight could lead you to a costly and risky proposition.
Animal lease and purchase agreements
If you are in the market for a new addition to your herd, whether by lease or installment purchase, there are a number of concerns that you probably haven’t considered. What are the details and description of the herd? Who has the risk of loss if something happens to one or more of the animals? Who is responsible for upkeep of the fences and/or tracking of the herd? Will the herd be branded, and who is responsible for registering the brand with the state? Is organic certification important to you, or are there certain quality standards that you need to ensure? Unlike other types of contracts for goods, animals require care regardless of disputes between the parties. Do you have backup plans in the event that the agreement heads south? Clearly, animal leases and purchase agreements are much more complex than simply multiplying the number of animals by a dollar figure. You need a lawyer who can help you negotiate and clarify those issues that are most important to you and your farming operation.
Real estate purchases, sales, and development
Sometimes opportunities arise. Maybe a neighbor decides to retire to Florida or someone makes you an offer that you can’t refuse. Perhaps the town nearby keeps growing in your direction and a developer is looking to make a new subsdivision. These are big decisions, and you can’t leave the outcome to chance. Contracts of this nature are a delicate negotiation, and you will need someone to help you interpret what the terms are. Dillon Legal Group has experience drafting various types of real estate contracts, and we are eager to assist you in completing your transaction.
As you grow your farming operation, you will likely find the need to hire a hand or two around. With the addition of employees comes a whole new level of legal and financial concerns. In addition to payroll and tax issues, you also have to address compliance with worker’s compensation laws, unemployment insurance laws, and the Affordable Care Act. You will also need to assess your needs and whether you need seasonal employees or year-round and part-time or full-time. With the addition of employees comes the obvious question of employee compensation and general human resource
Land use issues
Farmers understand the changes in land all too well. Rivers change course, flooding alters the lay of the land, neighbors build a dam to create a pond and shift the drainage routes. These are just the tip of the iceberg. Perhaps it is time to look at selling and subdividing property to make room for new development. These are all times that having an attorney on-hand is critical to the continued or closing operations of your farm. The folks at Planning and Zoning may be helpful, but they aren’t there to protect you. You need a lawyer.
Laws are ever-changing, and farms are ever-evolving. There are many government agencies and organizations keeping a watchful eye on farmers to make sure that they are following all of the laws and regulations. Don’t wait to run damage control; talk to a lawyer to see how you can head off compliance issues.
This fall and winter, as you wrap up your annual operations and evaluate your plans for 2015 and beyond, give us a call to discuss how we might be able to help your farm compete in today’s agricultural market. We are happy to set up an appointment for you to come in and discuss your operations. Once we have a general idea of what you do, we will discuss setting up an on-site tour of your facilities.
As always, we look forward to serving you.
Dillon Legal Group. Protecting your bests interests.