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USDA Certified Organic: The Basics

Agribusinesses typically face tight margins that make it difficult to increase revenue long-term. Many turn to local and national programs for certain credits, grants or other financial incentives to offset these challenges. While the USDA’s Organic Certification Program isn’t exactly a quick fix, it does offer financial assistance that can help modernize your operations, create a wider market with higher price points, and qualify for private grant and partnership opportunities. What does it mean to be USDA Certified Organic? Generally speaking, organic certification incorporates better soil and water management practices, decreases reliance on synthetic products, and limits waste. The certification is available to a variety of agribusinesses, including aquaculturists, horticulturists, packers and handlers and livestock farmers. Where do I start? The first step to “certified organic” is contacting a certifying agent accredited by the federal USDA. Florida does not have its own separate organic certification process through the State’s Department of Agriculture. Federally accredited quality certification programs and services are operated by private or quasi-public organizations across the country, like Florida Organic Growers or Americert International in Florida. They have the USDA’s blessing to audit, inspect and approve applications for organic certification locally. You’ll want to think through which local certifier office to work with for the accreditation (consider the certifier’s fees, ability to certify to other standards, and distance from you since they conduct inspections regularly). How do I make it happen? Each industry has its own record-keeping requirements, audit and inspection timeframes. Plus, transitioning to a fully organic operation comes with its own set of limitations. For example, if you’re a tomato grower, no prohibited pesticide, fungicide, etc. can be used on the soil for the prior three years. Sodium nitrate compliance, feed inventory, and health records for livestock are all examples of record-keeping requirements depending on what you do. Like I said, the transition to organic is not so quick. However, if your gross organic annual sales are under $5,000, official certification through the USDA (and the corresponding cost) is not required.  You also aren’t responsible for putting together the more involved “Organic System” plan (think business plan, but for your organic practices) otherwise necessary to be considered organic. Note that if you do qualify for this exemption, you’re limited on what organic labels you can use. Is it worth the cost? The local certifiers can provide a breakdown of the anticipated costs for the organic switch specific to the size and complexity of your operations. There are also several financial aid programs available. For example, the USDA’s EQIP program currently offers up to $140,000 over the term of the 2018 Farm Bill for certain costs. See Florida’s local guidelines here. You can also get up to a $500 reimbursement for application fees and inspection costs through the USDA’s Cost-Share Program. And like we mentioned above, once you’re up and running, there are additional grant and partnership opportunities to continue to develop organic practices. Check out the Organic Farming Research Foundation here. Overall, the organic certification is an involved, transformative process. It’s costly, and it can take time to see its value. But it may make sense to look at the long-term effects depending on the market you’re in and what efficiencies it can bring to your agribusiness. Questions about USDA Organic Certification? Let’s chat. Contact us at contact@groveslaw.ag to schedule a consultation. Because we’re attorneys: This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel (hopefully Groves Law). All Rights Reserved. All Puns Intended.

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Chicks, Piglets, Foals–Oh My! Farm Animal Law around Florida

Cities and counties across the country have some surprising laws related to animal husbandry. One city may not allow piglets without a permit, another prohibits cows if you don’t have enough acreage. And while there may be statewide farm animal laws establishing certain guidelines, usually counties, cities and small towns have additional, and often strange, requirements. These unusual farm animal laws usually reflect the history of the area. Florida is no different. Below are some unique city and county farm animal laws to make you think twice before adding to your flock. Jacksonville Backyard Hens,  City Code Sec. 656.422 You might be surprised at how concerned the City is with the female gallus domesticus. Titled ‘Backyard Hens,’ Code Sec. 656.422 reflects that a single family dwelling may house up to five (5) hens per acre in certain residential zones (“Agriculture and Rural Residential-Acre” zones excluded) after applying for a permit (with fees) through the Planning and Development Department. You also have to take a chicken-keeping seminar with the Duval County Agricultural Extension Office. And there’s a whole list of requirements for how the backyard hens must be kept, including that they at all times be kept in a coop or enclosure, not to exceed 10 x 10 feet, located at the back of the property only, and screened from a neighbors’ view. Miniature Vietnamese Potbellied Pigs as Household Pets, City Code 656.422 We had to add this one, too. There are quite a few “pig pet” laws across the state, but this one is by far the most specific. It establishes a strict prohibition on any pig or swine as a household pet unless it is a registered purebred sus scrofa vittatus, or Vietnamese potbellied pig (pictured). One potbelly per acre and primarily kept inside. Interestingly, there’s an entire licensing application that must be renewed annually. It must include written certification from a veterinarian that the pig in the thirty days prior is negative for psuedorabies and brucellosis and an affidavit that no more than two potbellies are at the same home. The state also gets the opportunity to observe your pet piglet at that time. Lee County Special Exception for Certain Exotic Pets,  City Code Sec. 34.1297 Officially titled “Activities requiring special approval,” Lee County requires owners of certain exotic farm animals considered to have “possible adverse effects on the natural environment” or “potential hazard to surrounding property” to obtain a special exception in certain zoning districts for their keeping, raising or breeding. The list includes: “(a) American alligators or venomous reptiles; (b) Marine life which requires the storage of brackish or saline water; (c) Domestic tropical birds for commercial purposes; and (d) Class I and II animals” (as maintained by the Florida Fish and Wildlife Commission — we really mean lions, tigers, bears, oh my, here). For (a) and (d), the special exception must include the “number and type” allowed. Ocala Llama Law,  City Code Sec. 122.1221 Okay, so it isn’t just about llamas. This City of Ocala ordinance allows for farm animals in single family residential (not agricultural) for “accessory use” upon application to the planning and zoning commission and after a public hearing.  Though husbandry cannot be the primary use of the property, you’re still allowed to keep certain farm animals. You have to have at least five acres and there’s a limit per acre, as follows: “Equine (e.g., horse, mule, donkey, etc.) and bovine (e.g., cattle, bison, etc.) shall not exceed one for every two and one-half acres and caprine (e.g., goats), ovine (e.g., sheep) and lama (e.g., llama, alpaca, etc.) shall not exceed three for every one acre.” Poultry (chicks, goose, ducks) cannot exceed 25 total and no roosters. Piggies aren’t allowed. There’s also certain qualifications for manure storage. If you’re violating a part of this Code, you’re likely also violating general nuisance law. See our blog post here for more information on nuisance law. Palatka Running at Large,  City Code Sec. 14-2, 3. Once a trading post town, Palatka’s prohibition against farm animals “running at large” may be rooted in its history. Any “animal or fowl” tied out in the street (other than a dog) is considered running at large, and is technically a violation of the law. Moreover, if livestock tied to a “fence, shade tree, ornamental tree or shrubbery” does any damage to it because of the negligence or willfulness of the person who tied the livestock to it, you’ve violated the law, and may have to foot the bill for its repair. Questions about your Farm Animal Law? Let’s chat. Contact us at contact@groveslaw.ag to schedule a consultation. Because we’re attorneys: This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel (hopefully Groves Law).

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USDA’s 2021 Readiness Grants and Custom-Exempt Meat-Processing in Florida

COVID shed light on serious supply chain issues around the globe. The ease of disease-spread in large warehouse facilities meant massive production delays. For agribusinesses especially, this was most felt in the meat-processing industry. Meat processing plants across the nation faced with waves of infection among workers and government actions aimed at stemming the tides, were forced to close or severely reduce operations. As a result, processing became backlogged, farmers’ livestock became too large to sell commercially, and customers have seen rising meat prices as a result. This article focuses on one possible solution to this large-scale agriculture issue likely to continue for the foreseeable future: the development of more custom-exempt facilities–small-scale slaughterhouses that can only process meat on behalf of the livestock owner(s) or family members. Federal and Florida Regulation of Custom-Exempt Operations That’s because, generally speaking, it’s illegal for farmers who want to sell their beef, pork or poultry to slaughter their livestock for sale without a “grant of inspection” from a federal or state agency. There are four types in total — full federal, state level, custom-exempt and retail exempt. You can be one or a set of these depending on your operation. Custom-exempt operations are particularly appealing because the application process is much less burdensome. The clientele is limited, however. Custom-exempt operators service livestock farmers with one or multiple customers looking to buy and split the animal, or seasonal hunters looking for game to be slaughtered. They can also act as middlemen who purchases the livestock from the farmer as a representative of the final owner.  Further, retail sales are not allowed (products must be labelled “Not for Sale”), and they can’t sell across state lines. While custom-exempt operators are spared the “full” federal inspection, they must still apply to the USDA, which has the right to inspect the facility during harvest (typically once or twice a year) to make sure the livestock is processed in a “sanitary manner.”  These inspections mean maintaining up-to-date records related to sewage and waste (specifically identifying high risk material like the brain if you’re dealing with beef), chemical and water safety generally. Animals slaughtered must also be ambulatory, so that should be recorded as well. Also keep in mind that poultry, beef and pork may have their own set of processing rules. In Florida, custom-exempt operators are spared a state-wide slaughterhouse application process. The state, as well as county and local governments, still have general sanitation, zoning and animal cruelty requirements for these types of facilities though (see generally, Florida’s Humane Slaughter Act,  62-302 F.A.C.,  Hillsborough County Code Sec. Sec. 6.11.91, City of Jacksonville Code of Ordinances Sec. 462.901, 460.106). Starting and Growing a Custom-Exempt Operation Overall, the industry issues COVID highlighted may have some livestock farmers considering a custom-exempt slaughterhouse on-site, since it’s generally considered the least cost prohibitive. However, the startup expense is still typically in the seven-figure range between the space needed, the construction, and some of the state and local provisions listed above with their own inspection and application costs. On the heels of these issues, however, the USDA recently announced new Meat and Poultry Inspection Readiness Grants for existing exempt slaughterhouses (see the application packet here) to use up to $200k toward obtaining a higher inspection level. As a top meat-producing state, and with more farm-to-table-minded consumers exploring alternatives (if you’re one, start at this list of custom-exempt facilities!), Florida agribusinesses may be able to capitalize on this local focus and contribute to a much needed revamp of the industry. Considering a Custom-Exempt Operation or Have General Questions? Let’s chat. Contact us at contact@groveslaw.ag to schedule a consultation. Because we’re attorneys: This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel (hopefully Groves Law). All Rights Reserved. All Puns Intended.

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Florida Farm-to-Flask: SB 46 “Craft” Distilleries Bill – Get to Know Your Local Farmer, Fast

Hi Brewers’ Law distillers, vintners, brewers, distributors, industry followers! Kara Ann Groves here of Groves Law, the ag-focused branch of BrewerLong, subbing in to bring you the crossover you didn’t know you needed. I’ve been around since the start of Brewers’ Law, and we now collectively service and connect producers and wholesalers across these industries. And SB 46, or the Craft Distilleries Act, presents just the opportunity for me to drop by and talk through the big agricultural changes key to maintaining this new “craft” distillery license. Brewers’ Law already broke down how significant this is for the craft liquor and bar industry generally here. And while there are several other hurdles to jump before qualifying as a “craft” distillery, I’m here to talk about arguably one of the biggest. Because if you want to become licensed under the Act (qualifying for in-house consumption and producing three times more than you could previously!), it’s time to start buying local. Like Florida’s Farm Winery Act and many “farm” or “craft” bills around the country, SB 46 aims to facilitate partnerships between established craft beverage and ag producers. Specifically, by July 1, 2026, 60% of the total product of a craft distillery licensed under the Act must be distilled in Florida and contain at least one Florida “agricultural product.” So what exactly is an “agricultural product” and how can these industries make this work? After all, Florida’s infertile soil and harsh weather don’t always mix well with a variety of crops. Unfortunately, “agricultural product” is not defined under the Act, but there are a few definitions elsewhere in the Florida Statutes and other states that may shed some light on what will qualify. Licensing provisions of Chapter 604 Florida Statutes provides its definition as any “natural products” of a variety of agribusinesses. However, citrus (except limes), grain and sugarcane are not included. Its definition under “agricultural advertisements” (Fla. Stat. 571.03) is more expansive to include “any horticultural, aquacultural, viticultural, dairy, poultry, apicultural, or other farm or garden product.” In New York, rye, peaches, grapes, corn, oats, barley, hops, wheat, apples and cherries have come under that definition across the “farm” beverage industry. And while embracing a more expansive definition of what products qualify will likely spark diverse partnerships, Florida and its would-be craft distillers would do well to heed lessons learned around the country related to supply and demand. Namely, because these bills did exactly as intended, demand for certain new crops, like malt barley in New York, skyrocketed. But local farmers dared not produce it without insurance coverage, which hadn’t previously existed in that area because of, at least in part, the crop’s volatility. In other states, equipment and harvesting issues delayed distribution. Simply put, across the country, in some way, shape or form, supply chains had difficulty keeping up when everything took off. Leaving some established Florida distillers, and perhaps rightfully so, skeptical of whether they’ll be able to meet those ag requirements. But this is just the state to make it work. Florida’s tourism-centric economy invites something different. South Florida’s extensive sugarcane industry could mean vodka or rum, and perhaps its citrus groves for gin. We here at Groves law, as big fans of bourbon and rye-based drinks (Manhattan, anyone?), are most looking forward to North and Central Florida distillers doing something special with the established corn and grain producers in those areas. For those new to the industry, whether distiller or farmer, FDACP’s Farm to You portal may be just the place to start connecting. SB 46 goes into effect this July, so we mean it when we say get to know your local agribusinesses sooner than later. Here’s hoping the more the merrier. Questions about Craft Distilleries? Let’s chat. Contact us at contact@groveslaw.ag to schedule a consultation. Because we’re attorneys: This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel (hopefully Groves Law). All Rights Reserved. All Puns Intended.

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2021 Amendments to Florida’s Right to Farm Act: Farmers Benefit Big Against Nuisance Claims

Florida’s Right to Farm Act, Florida Statutes 823.14, is one of many laws around the country meant to protect farmers from encroaching development. Enacted in 1979, the Act shielded certain agricultural activities from not-so-neighborly litigation–namely, nuisance-type claims alleging injury for odors, waste overflow, or noise. Essentially, the Act codified the idea that you can’t be heard to complain if you move toward a nuisance. Especially where heavily-protected agriculture is concerned. So if the farm operation had existed for over a year, the nuisance claim was more-or-less barred. Over time, however, clever neighbors and their attorneys had relative success working around these protections, and as new agricultural practices developed, Fla. Stat. 823.14 began to show its age. In line with similar amendments across the country, egg farmer and Senate President Wilton Simpson spearheaded SB 88 during the 2021 legislative session, and will go into effect July 1, 2021. Here’s what you need to know. The Right to Farm Act has always given “farm operations” established for more than a year special protections from nuisance claims, which otherwise could open agribusinesses to damages for property repairs, diminution in value or loss of income, medical bills or forcing a stop to the activity altogether. And while Fla. Stat. 823.14 identified certain protected “farm operations,” little other guidance existed for agribusinesses falling outside of what the Act defined. Moreover, what constituted “generally accepted agricultural and management practices” (and would thereby trigger the Act’s protections) in emerging fields created issue. Similarly, whether the underlying issue could be considered a nuisance depended heavily on the judge weighing the value of the activity over the harm caused. SB 88 ends much of that ambiguity. Agritourism activities are now specifically included, so that additional noise or the like from u-pick ventures or weddings will likely come under the Act’s purview. The definition of what claims fall under the nuisance statute is also broader, meaning plaintiffs trying to get around the Right to Farm Act will likely fall under it, regardless of the type of claim brought–if the trespass or personal injury action arises from an issue with your property or your person because of emissions, noise or vibrations, Fla. Stat. 823.14 applies. SB 88 also narrows how far away you can be to bring those claims. If you aren’t within a half-mile of the alleged nuisance, you’re essentially barred. The most expansive change under SB 88 is arguably the application of the clear and convincing standard. Typically, tort-based actions are subject to a much less stringent “more likely than not” threshold, meaning that the fact-finder need only find it 50.1% likely that a nuisance existed. Clear and convincing creates a “highly probable” burden of proof for ag neighbors, making it much more difficult to succeed. And part of that burden now requires a showing that the nuisance does not comply with “state or federal environmental laws, regulations, or best management practices.” The amendments are clearly a win for agribusiness, but some concerns remain over the difficulty to bring an action for more problematic farming activities. Crop burning in Florida presents a particular problem for nearby residents, especially sugarcane burns. A few years ago a class action lawsuit was brought in South Florida after residents suffered asthmatic and other respiratory issues, and there’s some literature that the burning of sugarcane releases certain carcinogens. Overall, however, environmental violations, specifically related to wellfields and water practices generally, as well as livestock and waste-related abuses, are not protected under the statutes. While the amendments are encouraging that agribusinesses will be well insulated from the financial stresses of litigation, farmers should always be mindful of local noise or wastewater ordinances, as well as maintain up-to-date records on best management practices in their industry. If you’re worried that some of your farms operations may no longer be compliant with local or federal law, or are already involved in a nuisance claim, contact us immediately. Questions about ingestible CBD? Let’s chat. Contact us at contact@groveslaw.ag to schedule a consultation. Because we’re attorneys: This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel (hopefully Groves Law).

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How to Start a Small Farm Business In Florida

Thanks to its warm and humid climate, Florida is an ideal place to start a farming business. In 2017, there were over 47,000 commercial farms and ranches in Florida that collectively used more than nine million acres of land.  However, learning how to start a farming business in Florida isn’t easy. The process is not as straightforward as you might think and requires significant planning. If you’re wondering how you can start a farm in Florida, then read on to learn about the ins and outs of the process. Also consider reaching out to a qualified agribusiness attorney to help you navigate the legal requirements and achieve your farming dreams.  Step 1: Know Yourself Knowing how to start a farm in Florida begins with knowing yourself. Before you take any other steps, you need to understand whether operating a small farming business is a good fit for you. Starting and running a farming business is no small task. Some people simply aren’t cut out for it.  So take a moment to self-assess and consider whether you have the key qualities to start and manage a small farming business. Here are some questions you should think about: Do you like working outside? Can you stay determined and optimistic after experiencing a setback? Are you good at making a plan and sticking to it? Are you financially savvy? Are you a hard worker? Can you take risks? Knowing how to deal with clients, maintain a budget, and supervise employees are also potentially important skills. Step 2: Set Goals for Your Farming Business The next step in learning how to start a farming business is defining your business goals. For example, how much money do you want your farming business to make? The USDA defines a “small” farm as any farm receiving less than $350,000 in gross farm income. Depending on the size and income of the farming business, you will have to comply with different tax and regulatory requirements. There are plenty of other questions you should consider when developing your farming business goals: What kind of crops do you want to grow?  What kind of animals do you want to raise?  Do you want to be able to bring visitors onto your farm?  Do you want to work by yourself or hire a few employees to work on your farm?  The answers to all these questions will affect your legal options and obligations. Step 3: Develop Your Farm’s Business Plan Understanding how to start a farm in Florida also involves creating a business plan. Essentially, a business plan summarizes how you will use your available resources to accomplish your goals. It also announces your vision and mission for your farming business. In other words, if Step 2 is about helping you make your goals, Step 3 explores how you will achieve your goals.  Although the format and length of business plans vary significantly, you’ll want the following sections in your plan. Executive Summary This section focuses on the farming business’s mission, vision, and operating goals. It also relates key statistics of the financial characteristics, marketing strategies, and other components of the business. Finally, the executive summary typically includes a brief discussion of the key personnel in the farming business. Financial Plan The financial plan of the farming business summarizes the business’s assets, liabilities, projected income, and profit margins. It also discusses global financial indicators and trends. Business Description The business description relates the basic information of your farming business. Specific items include the farming business’s name, location, and organizational structure. This section will also list which crops the farm has and what animals are present. There are several other sections of a business plan, like an operational plan and a human resources plan. An experienced agribusiness attorney can help you create a business plan that puts you in the best position for success.  Step 4: Finance Your Small Farming Business Once you have developed a business plan, you need to find enough financial resources to get your business off the ground. To complete this step, you must understand what resources you already have and what items you will need to pay for.  Do you own your farmland, or are you leasing it?  How much will your farming equipment, seeds, and animals cost to purchase?  What are your main sources of income?  Are you obtaining loans from a bank or from investors?  Do you have a good enough credit score to qualify for the loans you need?  Do you need co-lenders?  Asking yourself these questions is essential to priming your small farming business for success. You can discover more about how you can fund your business by contacting a qualified business attorney. Step 5: Formally Create Your Business The final part of knowing how to start a farm in Florida is understanding how you should form your business. There are many ways to structure a business. Each type of business features unique advantages and disadvantages.  For example, the most simple form of business is a sole proprietorship. One advantage of a sole proprietorship is that the business owner controls all of the business’s profits. There are also relatively few regulations that apply to sole proprietorships, and they are easy to start. However, an owner of a sole proprietorship cannot separate their personal assets from their business’s assets. This means that they are personally liable for all the business’s debts.  Depending on your objectives, you may want to consider making your business a limited liability company (LLC) or a corporation.  Again, you will have to assess your personal needs and goals and decide which form of business is the best fit. Once you have made your choice, you will need to file the required forms and pay the necessary fees to register your business with the state. You will likely also need to obtain special permits from the state government.  Want to Know More About How to Start a Small Farm Business? Starting your own small farm business isn’t easy. We know the […]

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What Should Go into Your Farm Land Lease Agreement

Farming and agriculture in the U.S. rely heavily on lease agreements. It isn’t always possible or profitable for you to work your own land. Instead, you and your family might benefit from leasing portions of your land to operators. Developing a successful relationship with an operator takes time. It also takes putting your agreement into writing to avoid confusion and disputes. If you’re leasing your farmland for the first time or you’ve run into problems in the past, talk with Groves Law about what should go in your farmland lease agreement. Types of Farm Land Leases There are many ways to arrange the payment terms in a farm lease. Fixed Cash Rent Agreements Some landowners require a predetermined fee to use their land that does not depend on the yield or crop prices. The rental rate may be a certain amount per acre each year. This type of land lease agreement protects the landowner from market risk and lets the tenant control how they produce and market the crop. Flexible Cash Agreements In this type of farmland lease agreement, landowners use a formula to calculate rent. There’s a base cash rent amount, usually paid in advance. Then, there’s a possible bonus payment after the harvest. The bonus payment is based on the yield multiplied by the price. In this type of arrangement, landowners take on some of the risk, but the base rent ensures they receive something. Crop Share Agreements A crop share is a farm rental agreement through which the landowner and operator divide the income from the crops by a predetermined percentage or ratio. For example, the tenant might keep 75% of the proceeds while the landowner received 25%. For a landowner to receive a higher percentage, they usually have to pay for a portion of production costs. Fixed Bushel Agreements In this farm lease agreement, the rent is a predetermined number of bushels of grain per acre. The tenant delivers the bushels to the local elevator in the landowner’s name. Then, it’s up to the landowner to market and sell the grain. In this arrangement, the landowner doesn’t take on production responsibilities and risk, but it does take on marketing risk. Flex Leases Some agricultural land lease agreements are more complicated. For example, a landowner and operator can agree to a fixed price per bushel multiplied by the average yield of that field. This arrangement links the rent to the production capacity of the fields, and the landlord doesn’t take on any production or marketing risks. Which Arrangement Is Right for You? You have to decide the level of responsibility you want and the amount of risk you’re willing to take on. You can negotiate an agreement in which you receive fair compensation for the use of your land while the tenant takes on full responsibility for producing and marketing the crop. If you have a low risk tolerance, you may prefer an upfront cash payment. However, if you’re willing to accept some risk, you can tie your rent to the production and sale of the crop. Your ability to financially contribute to the arrangement also impacts your choices. You may be able to negotiate more revenue if you take on some of the financial risk during production and marketing. Basic Farmland Lease Agreement Terms Every farm lease needs specific provisions, even if it’s an informal agreement among family members or long-term neighbors. These may include: Defining the acreage involved in the lease; Houses, buildings, and structures on the land available to the tenant; The rental rate; When payments are due; Who receives USDA program benefits; The beginning and end dates; A renewal term; Crop restrictions; Pest control and other production restrictions; Conservation and land fertility requirements; Cost sharing; The landowner’s duties; The tenant’s duties; Equipment use; Drying and storage facilities; Building and equipment maintenance; Transportation; Stover removal; Property taxes; and Insurance coverage. The contract should state when and how you have a say in what goes on. Most landowners don’t have any input in cash-based leases, which is why this type of farm lease works best if you don’t want to be involved in decision-making and production. In other farm lease arrangements, the owner has a greater level of responsibility and risk. USDA Commodity Program Payments Your farmland lease agreement should address U.S. Department of Agriculture programs and who receives any payments. You or the tenant may receive the full payment, or you may split the payment. This depends not only on your preferences but on USDA regulations. The terms of the agreement dictate whom the Farm Service Agency will pay. Necessary Legal Provisions Every farmland lease agreement should have certain legal formalities, too: Right of entry: You should reserve the right to come onto the land. Mineral rights: The lease shouldn’t give the tenant any mineral rights unless you intend to do so. Recreational use: You should address whether the land can be used for hunting or other recreational uses without your express permission. Liability for injury: You should include provisions that limit your liability for harm caused by a farming hazard. Transfer of interest: You may want to prohibit the tenant from leasing or subletting any part of the land without your permission. Binding on heirs: Typically, you would make the agreement binding on the tenant’s heirs or executors. Liens and security interests: You can include provisions to give you a lien and security interest in the crops. Default: Address what happens if one of the parties breaches the contract, including the amount of interest you can charge the tenant on late payments. Arbitration: You can include an arbitration clause requiring you and the tenant to resolve disputes through arbitration instead of filing a lawsuit. Attorney fees and court costs: Address who is liable for paying attorney fees and court costs in the event of a dispute. Indemnification: In an indemnification clause, the tenant agrees to defend or indemnify the owner against any liabilities or damages from the tenant’s breach of the lease agreement.  […]

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Should I Agree to a Custom Farming Agreement?

Getting the most from your land may not mean farming it yourself. Instead, you might benefit from hiring someone else to work the land on your behalf. Though you have to pay an operator for their services, you can profit from the entire crop as long as you’re confident in your ability to store and market it. If you’re interested in hiring a farm operator, talk with Groves Law about creating a custom farming agreement. You should always put your plans into writing. It’ll help you avoid disputes and, hopefully, create a fruitful long-term relationship. What Is Custom Farming? Custom farming is where a landowner hires an operator to produce a crop on their land for a specific price. Typically, you pay the operator a certain rate per acre of land in one or multiple installments. You decide what happens on your land and pay for all the production costs, including seed, fertilizer, chemicals, fuel, and insurance. You retain control, receive all the grain produced on your land, and are responsible for storing and marketing it. Usually, the operator delivers the grain to your owned or rented storage facility or a predetermined grain elevator. In some cases, a custom farming agreement is for a specific service and not the entire production. You may lack the capital to invest in a particular piece of equipment, so it may be economical to rely on hiring out that particular task. How Custom Farming Differs From Farm Lease Agreements Custom farming allows you to control what happens on your land without doing the physical work. You pay the operator to do the physical labor but own the entire crop. Under a farm lease, the tenant determines what happens with the land and owns all or most of the crop. You receive payment for the use of your land.   The Pros and Cons of Custom Farms for Landowners There are many advantages to custom farming agreements. You can earn income from your land without coming up with the capital necessary to invest in farm machinery and equipment. Lack of capital consistently holds back farmers in the U.S. from taking full advantage of their land. Custom operators often have new, high-tech equipment, and it’s theirs to maintain. They also tend to have years of farming experience you can rely on. You might have a full-time job and not have the time or inclination to farm the land yourself. Some owners rely on leases. But if you use a farmland lease, you have to negotiate rates and worry about collecting payments. Not every owner wants the risk associated with being a landlord. Also, while USDA program payments may go to the operator under some farmland lease agreements, you typically receive all the USDA payments under a custom farm agreement. There are disadvantages, though. Timing is important in farming, and some owners find operators don’t perform tasks within the appropriate time. You might feel the operator doesn’t perform specific tasks on time or rushes other tasks. It’s also costly. You are responsible for all the costs, yet your profit depends on the yield and selling price. You take on all the market risk, but you benefit the most from the arrangement in a good year. The Pros and Cons for Farm Operators Famers who have the proper machinery and equipment may be able to cultivate more land than they own. They’ve already made the capital investment into machinery and equipment, which they should use to the fullest extent possible. By taking on custom farming contracts, they’re usually only dealing with additional fuel, lubricant, and repair costs. Working under a custom farm agreement provides them with a fixed income without worrying about yield or the market. However, rates for custom farming aren’t particularly high. It may not feel worth it depending on the effort required for the crop. Customizing Your Agreement Traditional custom farming agreements rely on fixed cash payments. That isn’t essential, though. You and an operator can form a different arrangement, one in which the operator receives a portion of the crop and USDA payments. Another option is for the operator to receive a bonus depending on the final profit. The benefit of this arrangement is that the operator has a more sincere interest in the crop and yield. Their income could be affected if they don’t handle production well. You’d have a slightly lower cash output, and if the yield or price isn’t particularly good, you would have paid the operator less. This isn’t an easy arrangement. You and an operator would have to come to a fair division agreement. However, an experienced agriculture lawyer can help negotiate a fair agreement using standard formulas and ratios for the industry in your region. What Should Go into Your Custom Farming Agreement Custom farming arrangements often come from casual circumstances. You may connect with an operator in your community or through friends or neighbors. But you should set out any custom farming agreement in writing to protect both parties’ interests. The contract should include several provisions including: The nature of the relationship—the operator is an independent contractor Description of the acreage the operator will work Description of work expectations Procurement of seed, fertilizer, chemicals, and other inputs Timing of planting and harvesting Pay rate per acre or operation performed Drying charges Incentive payments Payment dates Any cost-sharing Insurance coverage Production restrictions Any machinery, equipment, buildings, or structures the operator may use Consequences of delays Consequences of weather or other events Final delivery location The agreement should make it clear what your expectations are for the operator. This avoids any confusion or disputes. It also allows you to retain control over how your land is farmed—the operator shouldn’t make significant operations decisions unless you explicitly gave them this right. Have Questions About Custom Farming? If you have questions about custom farming or want to negotiate a contract, reach out to Groves Law. Kara Groves can help you negotiate a custom farming agreement that considers your individual needs and protects […]

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Starting a Solar Farm Business in Florida

There is plenty of sunshine in Florida. Excitingly, Florida’s sunny sky gives you access to a business opportunity that can help the environment and boost your portfolio. Florida landowners have a unique opportunity to sell energy they generate on solar farms. To take advantage of this opportunity, you must understand how to start a solar farm business in Florida.  Florida’s Energy Needs Florida’s power use is higher than the national average. Though there are alternatives to generating electricity, Florida’s electricity production is majorly dependent on one source: natural gas. According to a November 19, 2020 report from the U.S. Energy Information Administration, natural gas fueled about 74% of Florida’s electricity net generation in 2019. Florida solar farms present great opportunities to diversify Florida’s energy sources and reduce its carbon footprint. Currently, only 3.5% of Florida’s electricity comes from renewable resources.  Solar power is Florida’s largest source of electricity from renewable resources, but solar power could have a greater presence in Florida’s energy grid. Using your land as one of the solar farms in Florida could be a boon for you and your community. How Do I Start a Solar Farm? Starting a solar farm can be complicated on the front end, but once you understand what you need and you have the proper permits, the task of running a solar farm isn’t as daunting.  Start with a Business Plan When starting solar farms, business plan formulation should be the first action item for an entrepreneur. Starting any business requires many steps, and a business plan can help you organize your needs and objectives and help you determine how to achieve each step of business formulation and maintenance. A business plan can also help you secure funding from financial institutions and investors. Once you understand your business needs, you can determine what kind of solar farm business you want to start. You can also determine how much help you will need from others.  What kind of capital do you need to start your solar farm business? The largest component of your solar farm business is the land. If your land is in a high-sun-intensity area, you generally need a minimum of two-and-a-half acres to produce one megawatt of electricity. One megawatt of electricity can power 650 homes per day. As sun intensity decreases, the amount of acres you need to generate sufficient power increases.  You may need as many as six acres of land to generate one megawatt of electricity. On six acres of land, you may need as many as 4,000 solar panels, which could cost you $3 million dollars to build. If the price of building your own solar farm is too steep, you can lease your land to a solar farm developer. Y ou could make hundreds to thousands of dollars in rent per acre. Once you determine what kind of capital you need to start your solar farm business, you need to determine the structure of your business. What kind of business entity should you form for your business? In Florida, you have many options for the kind of business entity you can form. There are five types of business entities you can form: A corporation,  A limited liability company (LLC), A general partnership,  A limited partnership, or  A sole proprietorship.  Each entity has its advantages and disadvantages. For example, if you choose to spend a large amount of money to build your own solar farm, you may want to choose an entity that limits your liability for debts and business mistakes. LLCs and corporations limit your liability for business debts and obligations. If you do not want to deal with the paperwork and formalities required to start and run a limited liability entity and you want to assume the risk of personal liability, you may want to start a sole proprietorship.  You should review your business entity options with an attorney during the developing stages of your business. An attorney can help you make the best choice for your unique business needs.  Your Business Needs Approval from Multiple Government Entities Once you determine your business structure and what your business needs are, you need to follow regulations and file for approval with multiple municipal, state, and federal agencies. Solar energy businesses must follow regulations and obtain permits related to zoning and building, environmental protection, public safety, and state and federal taxes. You may have to reach out to as many as 12 different government agencies to comply with municipal, state, and federal laws for renewable energy businesses.   Your Business Should Have the Backing of Financial and Legal Services As you can see, there are many intricate steps involved in starting solar farms in Florida. If you want to see a great return on your investment of time and money, you should seek the services of financial professionals and legal experts early.  While the sun is abundant in Florida, the weather is still unpredictable and equipment can break in unexpected ways. Having insurance to cover your business can protect you from a lot of misery on a rainy day (literally). Also, taking advantage of good interest rates for your business’s bank account can help you reap high yields for your business. Ask your bank for a more in-depth review of the different options it has for business accounts. You want as many professional buffers as possible to help your business succeed. An accountant can ensure your business complies with the necessary tax laws. An accountant can also help you find deductions and credits to boost your business’s profitability. An attorney can ensure that you follow the correct laws and regulations, and they can help you establish your business in the smartest and safest ways. If you choose to lease your land to a solar developer, an attorney can help you draft lease documents that properly protect your interests.  Contact an Attorney for Help Starting a solar farm in Florida is a great business opportunity. Do not let the many laws and regulations for renewable energy scare you […]

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8 Times to Hire an Agribusiness Lawyer

Agriculture is one of the most highly regulated industries worldwide, from planting seeds to stocking store shelves and everything in between. There is more to agriculture operations than just production, and this is where having a relationship with a dependable agribusiness lawyer can make a difference in your ability to succeed and prosper.  8 Time to Hire an Agribusiness Lawyer Whether you are a single grower, a cottage foods producer, a small family farm, or a large corporate entity, there are a plethora of situations where the guidance of an agribusiness lawyer could be beneficial, including: Labor and employment law Land use and zoning Environmental regulations Intellectual property Supply, distribution, and sale contracts Banking and finance Water rights Product liability These are just a handful of areas where an agribusiness lawyer can help you succeed and overcome specialized legal challenges.  Labor and Employment Law Virtually all agricultural employees are covered by the Fair Labor Standards Act (FLSA), but there are several exemptions regarding overtime and minimum wage regulations that could be relevant for your operation. Whether you are employing your seasonal workforce through the H2-A foreign labor visa program, hiring high school students to work after school, or have a full-time domestic labor force, there are many areas of employment that you need to consider to remain compliant.  Land Use and Zoning  How you use your land can be a point of contention. Zoning laws vary between counties and municipalities. What you may be able to do on one piece of property may not be allowed on another. Rezoning your property is a complex endeavor that could make or break your business plans. An agribusiness attorney with knowledge of land use and zoning laws could prevent lengthy battles for the right to use your property the way you see fit to benefit your operation.  Environmental Regulations No one wants to be the person that causes environmental damage for financial gain. There is a fine balance between conducting your business operations efficiently and following all regulations. It is not uncommon for environmental regulations to impact agricultural operations. When you are faced with complicated environmental regulations, a knowledgeable agribusiness firm can guide you through effective compliance or mount a defense for pending litigation.  Intellectual Property Intellectual property plays an important role in many aspects of the agriculture industry. From crop and livestock genetic breeding, to equipment design, to precision agriculture technology, trademark and copyrights can have a significant impact on what you can and cannot do with your operation and the way you market your products. Agricultural intellectual property is a specialized area of agribusiness law that requires careful attention to detail, whether you are the one applying for protection or defending against an alleged violation.  Supply, Distribution, and Sale Contracts There are very few areas of agriculture that operate without contractual negotiations. Even small cottage food farmers engage in transactions that implicate the buying and selling of goods. On a larger scale, corporate operations often maintain dozens to thousands of contracts for things such as supplies for products, distribution of products, sale of products, warehouse space, transportation, and so much more. If any parts of this well-oiled machine were to break down because of a breach of contract, you should seek help from an agribusiness lawyer who understands how to interpret the legal obligations of each party and find resolution through specific performance or compensation for damages.  Banking and Finance Despite modern technology and farming practices, there are some areas of agribusiness that remain unpredictable. Whether you are negotiating with crop insurance adjusters or evaluating the possibility of government subsidies, it is important to understand how these funds impact your business. Other areas of agrifinance that may require the help of an agribusiness lawyer include farm loans, restructuring, estate planning, mergers, and acquisitions. Water Rights Water is one of the fundamental elements of production agriculture. Approximately 80% of U.S. water consumption is allocated to agriculture. Ground and surface water rights are competitive among water users. Balancing the water needs of agriculture, environmental, and municipal interests is known to spark complex legal disputes. This is not an area of controversy that you want to face alone.  Product Liability Agricultural product recalls happen daily. Even with the most stringent quality control regulations, life happens. Though carrying product liability insurance is a great first step in preventing a detrimental experience, the size and scope of the issue could impact how your operation recovers. A knowledgeable agribusiness firm will negotiate with insurance companies on your behalf and can be there with you throughout the process should litigation arise.  Hiring an Agribusiness Lawyer The agribusiness law firm of Groves Law has a passion for the agriculture industry and helping clients succeed. We focus on all aspects of agribusiness law from planning and production, through growth and succession. Contact us today and let us help you keep your business moving forward.

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