Resource Library
Common Questions People Ask Us:
Business Structure Questions:
Where do I start when picking a business structure for my farm/ranch?
An important part of starting your farm is figuring out the right structure of your farm business. Here’s what you need to make that happen.
Choosing a business structure for your farm can feel overwhelming. Thankfully, we have a helpful resource for you to reduce the overwhelm! Check out our Farm Business Structure Basics. It answers the most frequently asked questions farmers have when choosing a business structure, such as: I’m not sure I want to form a business entity? Can’t I just sell my products or services? Which one is better – a corporation or an LLC? If you are more of a visual learner, and want to see all your business structure options, follow the Farm Business Entity Flowchart in our free Understanding the Options article, an excerpt of our Farmers’ Guide to Business Structures. Through a series of Yes/No questions, this flowchart leads the reader to business structure options that are likely to fit the farm’s needs.
What should I know to run my farm as a sole proprietor or a partnership?
Running the farm as a sole proprietorship or partnership might be a great choice for your farm, but make sure you’re doing this with eyes wide open.
Many farmers choose to run their farm businesses as a sole proprietor. This is easy, after all, and doesn’t require filing anything with the state. But, is this risky or an acceptable course for legal resilience? We can help you find the answer for your situation. Start with Farm Business Structure Basics, which includes some tips on farm sole proprietorships and partnerships.
How does joining forces with other farmers/ranchers on a new venture impact business structure decisions?
Farm partnerships come with inherently more risk and reward than going at it solo. Here’s what you need to know to partner up while maintaining maximum legal resiliency.
Farming with other people – friends, family, romantic partners, and business partners – can be enjoyable and beneficial. But, partnering up can also come with some challenges, legal and otherwise. Many farmers and ranchers consider the personal liability risks of a general partnership to be too great so they’ll take the opportunity to form a business structure. To find out if this is the case for you, read Chapter 3 of the Farmers’ Guide to Business Structures, titled Sole Proprietorship and General Partnership Fundamentals (26pgs.). In that chapter, you’ll learn the ins and outs of those default business structures, including the inherent benefits and risks of partnerships. For example, partnerships can require less paperwork, BUT they do not offer personal asset protection. If you don’t want to be personally responsible for your partner’s actions, read up on forming a separate business structure in the pathway: I’m not sure which business structure is the right one for my farm/ranch. Where do I start?
I want to form a C corporation. What's next?
Structuring your farm business as a corporation may make a lot of sense for your farm. But before you incorporate, inquire about whether this really is the best option, and how to successfully run it.
Before you dive into setting up a corporation, it would be helpful to confirm that this is the right choice for your farm. Our free resource, Farm Business Structure Basics, offers several tips on forming farm business structures, including why you would form a corporation (or LLC) at all.
I want to form a non-profit farm. What's next?
Learn all about whether the non-profit structure is really an appropriate choice for your farm.
It’s an old joke among farmers: “I should really form a nonprofit organization because I certainly don’t make any profit!” While this may resonate within the farming community, in actuality running your farm as a nonprofit organization is not the right choice for most farms. However, it can be the right fit for farms with a truly educational and charitable mission. In our free resource, Basic Considerations for Choosing a Nonprofit Farm, you’ll learn basic motivations and limitations about the nonprofit model so you can make an informed decision.
I want to form a cooperative. What's next?
The cooperative model of doing business can be a great choice for certain farm operations. Find out if that’s you.
It seems like farmers everywhere are excited by the Cooperative business structure model and for a good reason: Cooperatives are businesses embodying the principle of “one member, one vote.” Fortunately, we have a helpful resource for you. Check out our Chapter 9: Cooperative Fundamentals (16pgs.) of our Farmers’ Guide to Business Structures. Learn the basics of this democratically-oriented business structure, including practical guidance on how to form and maintain a cooperative entity for your farm.
I want to form an S corporation. What's next?
The S Corporation may be the right choice for your farm but you want to understand what you’re getting into.
The “S” corporation has long been a standard-bearer for farm business entities! But, is this the right option for your farm? Make sure by starting with our free resource, Farm Business Structure Basics to get your answer. It answers questions such as: Which one is better – a corporation or an LLC? If you are more of a visual learner, follow the flowchart in our free Understanding Your Options which is Chapter 2 of our Farmers’ Guide to Business Structures. Through a series of Yes/No questions, this flowchart helps the reader confirm the difference between S corporations, C corporations, and LLCs.
Which business structures are best for an educational farm?
Learn how to structure your educational farm for maximum legal resiliency.
In recent years there has been growing interest in growing food not just for profit, but for education. Most people think that a nonprofit is the only option for running an education farm. However, it turns out there are many different options and if you are entertaining the idea of an educational farm, you’ll want to understand these options. We have just the resource for you! Check out our guide, From the Field: An Educational Farm’s Path to Choosing Its Business Structure (11pgs.). Through the perspective of our case study, a group called Growing Food and Sustainability, you will learn about the various business entity options for farms, including non-profits, LLCs and worker cooperatives. Included at the end is a helpful chart comparing the different entities. Note: this resource and accompanying chart provides information specific to educational farms. For general farm business entity information, please use our Farmers’ Guide to Business Structures.
What are anti-corporate farming laws and should I be concerned?
If you’re thinking of creating an LLC or corporation and are in the Midwest, it’s critical that you first learn about anti-corporate farming laws.
Several Midwestern states limit the ability of corporations and limited liability companies (LLCs) to control farmland. The statutes laying out these rules are commonly referred to as “anti-corporate farming” laws. Although the laws vary, they generally prohibit LLCs and corporations from owning or leasing farmland, although many exceptions are available for family-owned or -controlled entities. Iowa, Kansas, Minnesota, Missouri, North Dakota, Oklahoma, and South Dakota and Wisconsin all have anti-corporate farming laws on the books, so if you are in one of these states, it’s a good idea to review the laws in your state before you form an LLC or corporation! Get the details in Anti-Corporate Farming Laws, which is Chapter 10 of the Farmers’ Guide to Business Structures. It includes written narrative and detailed flowcharts for every state to help you understand whether setting up your farm as a corporation or LLC will present any obstacles.
I'm starting a value-added production, agritourism, cottage food, educational, etc venture... Should I form a separate business entity?
An often-asked question when diversifying farm operations is, “Do I need a separate business structure”? Here is what you need to know.
For farms otherwise dependent on raw agricultural product sales, value-added products and diversification (agritourism, classes, jams and cottage foods, etc.) can tap into more profitable revenue streams. But! Each diversification opportunity presents interesting legal questions for the farm business entity. One of these questions is “should I form a new business entity for the new enterprise?” Fortunately, we have a workbook to help you answer that question. Check out the Farmers’ Workbook for Deciding on a Second Business Structure for a step-by-step decision-making guide that will leave you with confidence in your decision and clear next steps.
How can the right business structure help with farm succession?
It might feel strange to be thinking about farm succession (transferring your farm to the next generation) when you are just starting your farm, but here’s why it’s important…
Farm succession planning can be an immense undertaking. You are setting the stage for the future of your land, farm business, and family. So, where do you begin? From conservation easements, family trusts, and LLCs to capital gains, and estate and gift taxes, it can be easy to get overwhelmed by the complexities of farm transfer options. But, did you know that having the right business structure can make farm succession much more smooth? Check out our free Farm Succession Planning Basics for more information. In the video A Century-Old Farm Prepares for Changing Seasons, you’ll hear from farmer Adrienne Ploss of Hickory Hurst Farm in New York about the role of business structures played in succession planning for three generations of her family’s 100-year-old farm.
I want to form an LLC. What's next?
The LLC model can be a great fit for many farms, but before you make it official, make sure you know why you’re doing it and what it entails.
Creating and maintaining a limited liability company (LLC) for your farm business requires some extra effort and expense. How do you know if it’s worth it? A wise approach is to consider whether the benefits outweigh the costs. We have a resource to help you! Check out our free Forming an LLC for Your Farm Basics. This tipsheet will walk you through a series of questions and explanations to help you determine whether the LLC business structure is the right fit for your farm. Watch Farmers Speak on Business Structures to hear how farmers Phoebe and Hector of Hawk’s Nest Healing Gardens in North Carolina created their LLC and learn about the thoughtful steps they take to properly maintain the entity.
Funding Freeze Questions:
My federal contract or grant for funding is frozen or terminated. What can I do?
The freezing or termination of USDA funding under a signed contract can be devastating. Here’s what you need to know to get started in charting a path forward.
We have resources to help assess your options, take action, and gain a little more certainty in these turbulent times!
USDA notified me about aligning my signed agreement to Executive Orders. What are my options?
It’s unusual for an agency to seek an amendment as a result of an Executive Order, which makes it unpredictable. We have resources to support you in navigating this challenging situation.
Being asked to consider amending a signed agreement isn’t an easy position to be in. As farmers, business owners and nonprofit directors, we expect contracts to be honored. We know the law is there to hold each side to their commitments as signed. However, we also know the implications of lost contracts and the difficulty of legal enforcement in this environment can weigh heavily. We each must consider our needs, values, and community in our minds as we navigate how and whether to make amendments to existing USDA agreements.
Farm Succession Questions:
How can the right business structure help with farm succession?
It might feel strange to be thinking about farm succession (transferring your farm to the next generation) when you are just starting your farm, but here’s why it’s important…
Farm succession planning can be an immense undertaking. You are setting the stage for the future of your land, farm business, and family. So, where do you begin? From conservation easements, family trusts, and LLCs to capital gains, and estate and gift taxes, it can be easy to get overwhelmed by the complexities of farm transfer options. But, did you know that having the right business structure can make farm succession much more smooth? Check out our free Farm Succession Planning Basics for more information. In the video A Century-Old Farm Prepares for Changing Seasons, you’ll hear from farmer Adrienne Ploss of Hickory Hurst Farm in New York about the role of business structures played in succession planning for three generations of her family’s 100-year-old farm.
I need help with farm succession planning
Learn about legal tools to help you make a plan for passing the farm business on.
For all farm and ranch businesses, there will come a time when the operator(s) need to retire. As this time approaches, farmers and ranchers often ask, what tools are available to producers who want their business to continue after retirement and, eventually, after they pass? This question is about farm succession — the business succeeding to the next generation of owners and operators. Creating a succession plan is a big and important endeavor that requires the retiring farmer to spend significant time and energy on planning, strategizing and collaborating with business partners, family members, professionals (such as attorneys, tax professionals, and meditators), and the aspiring farmer(s).
Sales & Contract Questions:
Getting a grip on farm sales agreements, generally
You’ve worked so hard to grow beautiful brassicas and to-die-for daikon radishes. Now you need to get them into the hands of your customers. How do you do minimize complications and maximize success? Check out our free Farm Sales Agreements Basics, a tip sheet that addresses some of the most typical farm sales issues. If listening is more your jam, check out our free 29min. long Podcast Episode Six: Will Sign for Food!, to hear from some farm sales agreements experts on the issues that matter most in this arena.
I need a model sales contract
When it comes to model contracts, we’ve got you covered.
Start with our Farmers’ Availability Sheets and Invoices Toolbox, which includes a Model Basic Sales Agreement, Model Availability Sheets and Model Invoices. We also have a model for production contracts in Farm Production Services Agreements (43pgs.) and a model wholesale agreements in Farmers’ Guide to Wholesale Agreements(36pgs.)
Comparing market channels, legally speaking
So much of the farmer’s focus is naturally on the growing part. Getting outside and getting your hands in the dirt is a big part of why you chose this profession. But, you can’t forget that the selling part is just as important. Do you sell to restaurants? At farmers’ markets? To grocery stores? Do you start a CSA or have a farm stand?
If you are still exploring this decision and need a comparison of the legal perspectives on each, the Legal Considerations for Choosing Direct to Consumer Farm Markets (20pgs.) provides helpful guidance. It explores the legal risks and benefits of different market channels with an eye to small-scale producers.
Selling your labor, or production services contracts
It turns out there are lots of innovative alternative approaches to selling your farm goods. One such approach is to sell your production services rather than what you produce. For example, instead of growing tomatoes and selling the red orbs, you can enter into a contract for your labor before you even put seed in the ground. For example, a buyer may contract with you to trial a special product or seed variety. Such an arrangement can offer terrific stability! But, production service arrangements are not without there hiccups and careful attention should be paid to rights and obligations.
Community Supported Agriculture (CSA) and written agreements
The Community Supported Agriculture (CSA) sales model can provide great security for farms, providing much-needed capital at the start of the season, and it can also bolster community connection. Like most things though, legal issues abound.
To sort them out, look no further than the Legally Resilient Community Supported Agriculture (CSA) Program Guide(43pgs.), which will help you navigate the issues around sales, sharing risk, offering gift certificates, dealing with securities laws, managing drop sites, combining farm product, working with volunteers, hosting events, and managing food safety.
Help with negotiating and drafting agreements
If you are in conversation or negotiation around a sales agreement, you will find our resource, Farmers’ Guide to Negotiating and Drafting Agreements (31pgs.) very useful in helping you through this process. This resource will boost your negotiation and drafting skills. After working through it, you should know how to skillfully negotiate a successful deal, understand the benefits of entering a written contract, understand the guidelines for drafting a contract, know what makes an agreement a legally valid contract, and know when to seek the help of an attorney.
Wholesale Agreements
Get the tools you need to successfully sell your farm products through wholesale market channels such as to grocery stores, distributors, and large institutions like schools and government agencies.
Selling wholesale – to grocery stores, distributors, and large institutions – can be a valuable market channel for small farmers. However, successfully selling into these markets can require foresight and preparation to avoid risk. Involving substantially higher volume along with quality specifications, specific handling and packing standards, fulfillment timeframes, and so on, there’s a lot to sort out. This can feel overwhelming, but the Farmers’ Guide to Wholesale Agreements (36pgs.) can help! This guide walks you through the process of selling wholesale, including brainstorming and negotiating terms and solidifying the deal in a written agreement. Farm-ready tools include a helpful checklist, a sample Grocery Store Supplier Agreement and a sample Marketing and Distributor Agreement.
Availability sheet, invoices, and other direct-to-consumer sales
Draft documents that protect your interests.
Sales agreements create predictability for direct-to-consumer farmers, and also provides accurate expectations for everyone, which is always important! Many farmers rely on the simple, effective combination of an availability sheet and invoice to lay out their terms and offerings. Our resource, Farmers’ Availability Sheets and Invoices Toolbox(21pgs.) will help you understand how to craft effective and enforceable sales agreements and procedures, and includes a Model Basic Sales Agreement, Model Availability Sheets and Model Invoices. These tools are easy opportunities to boost your legal resilience.
Insurance & Liability Questions:
What types of insurance do I need on my farm or ranch?
Insurance is something we talk about early and often here at Farm Commons, because when it comes to legal resiliency, insurance is a must have. It’s not that we love insurance, or find it all that interesting, it’s just that in our modern world, not having it can lead to financial gloom and doom. But, it’s complex. From health insurance to commercial liability insurance, there are so many different kinds that it can cause such overwhelm for farmers who would rather have their hands in the dirt than on their insurance policy. But, hang tight. We have guides…
How do I find a good insurance agent?
How many times have we at Farm Commons heard this question? With there being less and less farmers out there and more and more city dwellers, it becomes harder and harder to find an insurance agent who understands the insurance needs of farmers. This is especially true for farmers who are operating unique and innovative ventures such as agritourism and value-added products. There’s not always an insurance product that can adequately protect these operations.
We do have some hope for you though! Check out our free resource, Farm Insurance Basics, which provides some helpful tips on finding good insurance agents. Also, turn to page 23 of Managing Farm Risks With Insurance to read our section on Tips for Choosing an Insurance Agent.
How do I insure for damage to farm and ranch property?
You’ve heard the horror stories. High winds rip high tunnels to shreds. Freak snowstorm knocks down pole barn. Wildfire burns all of the structures on the farm including the beautiful, historic barn and all of its contents. The damage to the farm structures and equipment you’ve toiled to build and repair is itself is a tragedy hard to stomach. But then, when you find out there was no insurance to cover the damage, this is a second awful blow.
How do you make sure you’re not left out in the cold? You get educated and get the right insurance. We can help. Our free resource, Farm Property Insurance Basics, provides essential knowledge on property insurance for your farm or ranch. In another free resource, Podcast Episode Seven: Got Coverage?, you can hear directly from an experienced farmer about property damage coverage and how critical it is to the farm business.
How do I insure for food safety liability?
Great question, and we’re glad you asked. Check out our free resource, Managing Food Safety Liability Risk Basics, which answers the question, “What can I be doing now to protect myself if a foodborne illness is ever linked to my enterprise?” Of course, insurance is one of the primary strategies, and this tip sheet discusses the type of insurance that is needed, and also what to do in case you are having trouble getting insurance. Listen to our free 18min. Podcast Episode Eight: Let’s Have Lunch!, which briefly discusses food safety insurance.
For more comprehensive information about the type of insurance you need to cover food safety, review the section “Look into Insurance Options” in our comprehensive Farmers’ Guide to Food Safety Liability.
How do I insure for injury to farm and ranch workers?
The risk of injury to farm and ranch workers is real. Make sure you have a grip on your coverage.
First of all, you may be required to carry workers’ compensation which is the primary way we address the risk of injury to farm workers. See our pathway Do I need workers’ compensation? for more on that. If workers’ compensation is not required for your farm, you’ll still want to insure for injuries to farm workers.
Do I need workers compensation?
Resources to help you understand your legal obligations and options when it comes to worker injuries.
When it comes to injuries to farm employees, you might be required to carry workers’ compensation. And, even if you’re not, you certainly want to make sure you have coverage for those injuries through a liability policy.
Are you new to the idea of workers’ compensation? Our free resource, Farm Insurance Basics, provides a helpful basic overview on workers compensation insurance, which you need to cover farm workers’ injuries. Also, hear directly from a labor law attorney on workers’ compensation insurance and what it’s all about and how it functions in a practical setting in our free 16min. Podcast Episode Seven: Got Coverage?
I'm worried about auto accidents while working. What do I need to know?
Auto accidents come with significant expenses. Commercial auto insurance can protect you, your vehicles, and your business.
Vehicles are often essential to a farm or ranch business. Vans or trucks might be used to collect the harvest from the field, make CSA and wholesale deliveries, or transport equipment. After an auto accident, your farm vehicle may need seriously expensive repairs– or you may be on the hook to pay for someone else’s repairs. A commercial auto insurance policy is an effective way to make sure those expenses are covered. In our Farm Auto Insurance Optionsguide (15min), you’ll find key distinctions between different types of commercial auto insurance policies and scenarios to help you figure out what type of commercial auto insurance is right for you (if any).
Am I liable if folks are injured while on my farm?
This question looms over the owners of farm or ranch businesses of all shapes and sizes. You can get answers if you know the right questions to ask.
In a word: Maybe. While farmers have a deep understanding of farm safety, the people they invite on to the farm – for events, CSA pickups, shopping in the farm store etc. – may not have the same familiarity. They are staring off into the fields of kale and corn under the setting sun and may not take the time to watch their step. With more and more farmers venturing into on-farm events and the like, it becomes more and more important to make sure that you are adequately prepared in the event that guests and customers on your farm are injured.
What crop and livestock insurance is available for small farm operations?
Your farm animals and crops are precious commodities. So, how can you protect yourself from financial loss if Mother Nature unleashes her fury?
Your farm animals and crops are precious commodities – they are what you toil at feeding and watering and sowing and trimming and weeding, day after day until you can one day, if all goes well, harvest and sell them. That is, after all, the whole point of farming, right? But what would happen if Mother Nature unleashed her fury – in the form of floods, hail, disease, derechos, wildfire, and more? It would be sad enough to potentially lose what’s so precious to you, but then to not be able to recoup financially from these losses is another punch to the gut.
How can I manage climate change risks on my farm, from a legal perspective?
As a farmer or rancher, you have legal tools to mitigate climate change risks and increase peace of mind.
With climate change comes increasing unpredictability. Storm damage, severe flooding, fire, hurricanes, wind and hail storms are increasing in frequency in many areas around the country and world.
What can farmers and ranchers do in the face of a changing climate? From a legal perspective, insurance is a key risk management strategy for protecting essential property, products, equipment, and growing crops and livestock on your farm or ranch. Read our free Farm Property Insurance Basics guide to learn how property coverage can increase your resilience in the case of a devastating weather event. If you’re interested in protecting your crops and livestock, be sure to check out our free Crop and Livestock Insurance Basics guide. If you’d like tailored guidance in preparation for meeting with an insurance agent, read Farm Property Insurance Strategies and Crop and Livestock Insurance Options for Diversified Operations.
Diversification Questions:
Is agritourism allowed on my ranch or farm?
Let’s check our zoning.
Before you jump into any agritourism venture, it is crucial that you make sure that the venture is allowed on your farm. Even if your farm is located in an area with a lot of agricultural activity, that doesn’t mean you can engage in activities that are not really farming (think: Goat yoga!). Check out our free Agritourism Legal Basics, which provides some quick guidance on zoning, and how to research what is allowed on your property.
What legal issues do I need to consider if I do agritourism/on-farm events?
If you are considering an agritourism venture, that’s great and very exciting! But, before you launch your farm pizza series or advertise for goat yoga, check out our free Agritourism Legal Basics, which provides you with some of the basic things you should consider, from a legal angle. The tip sheet provides quick but helpful information on zoning ordinances, employee wages and workers’ compensation requirements, tax reporting and accounting, liability for injuries at farm events, and sales tax and disability accommodation requirements.
What permits do I need to serve food on my farm or ranch?
Permits. I know. Not the fun side of farming. But, if you are having an on-farm event and serving food, you just might need one. If your starting point is, “What can I do without getting any additional permits or licenses?” we have a resource for you. Browse our tip sheet on no-permit-needed activities titled Value-Added and Agritourism Without a License Basics. Although the latter has information specific to Minnesota and Wisconsin, the framework is similar to what farmers in any state may find. You can also check out pages 11-12 of Farmers’ Legal Guide to On-Farm Events, which is the right resource for a thorough understanding of agritourism’s broader legal risks as well.
Can I do value-added production on my farm or ranch?
So you want to turn your cucumbers into pickles? Or press your apples into cider? What if you want to make hard cider? Hmmm. Before you start picking and pressing, it is best to check a few issues. Our free resource, Value-Added Product Legal Basics, provides a quick overview of zoning and what that may mean for your value-added venture. If your starting point is, “What can I do without getting any additional permits or licenses?” we have a resource for you. Learn about no-permit-needed activities in Value-Added and Agritourism Without a License Basics, which answers the question above. (Be forewarned, we didn’t need much space to answer it!) Although the latter tip sheet is specific to Minnesota and Wisconsin, it gives everyone a good idea of what to expect.
What legal issues do I need to consider if I add value to my products?
Jam, pickles, and dried herbs, oh my!
Venturing into value-added food products can help increase farm business profitability. However, it can also increase the number of rules and regulations you have to comply with. Check out our free resource, Value-added Product Legal Basics, for quick guidance on some of the most commonly asked questions about value-added considerations, from a legal lens. Because value-added good production is not farming (although it is related!), farmers and ranchers will want to research their zoning code to see what the code has to say about building a food processing facility or converting a barn into a kitchen on the farm. For guidance on (a) how to research your zoning code and (b) how to move forward concerning a zoning code challenge, read Strategies for Navigating Zoning Codes and Challenges.
If I diversify my farming operations, how will my tax obigations change?
Diversifying your farm operation can be a great move for farm profitability. However, as soon as you invite folks onto the farm for Harvest Day or sell jars of your homegrown pickles, things can also get a little complicated. One of these complications is taxes. Nobody likes taxes, and this isn’t meant to stress you out. We have a couple resources to make taxes for your diversified operation less painful. Check out our free resource, Diversification and Taxes Basics, for basic information. For more information, you can also check out pages 23-25 for tax information in Farmers’ Legal Guide to Value-Added Products.
Diversifying the farm can mean complying with additional regulations. How can I do this effectively?
Working with regulators is essential to farm diversification.
Diversifying your farm operation by adding farm pizza night or goat yoga can be a great move for your business, financially and otherwise. But, it can also mean the additional headache of having to deal with more regulations, and with those regulations come…You guessed it – regulators. Regulators help determine how local, state, and federal regulations apply to your farm specifically… whether you’re asking for permission or begging for forgiveness.
How do cottage food laws work?
If you’re scratching your head wondering, “What in the world are Cottage Food Laws?” and picturing people in the 1800s rolling out dough and cooking soup in giant cauldrons over a wood burning stove, you’re not alone. Cottage food laws sound quaint and cute but in reality, they refer to the different laws each state has (or doesn’t have) regarding when people can make food in their home kitchens for sale to others without the usual, thorough rules that accompany each state’s food code. This is a changing landscape, with many people pushing for “Food Freedom Laws” and getting up to speed on these laws can be a real challenge.
Land Purchasing Questions:
What legal issues should I be aware of if I buy farmland?
Buying farmland is no joke. It’s expensive, time-consuming and just plain difficult. But if done right, it can maximize your legal resiliency. Here’s how…
Buying farmland is an exciting and nerve-wracking endeavor, and usually involves forking over a significant chunk of change. Before you spend your hard-earned cash, it’s a good idea to make sure you are thinking through the potential legal issues that may arise when purchasing a farm. To help you do this, start by reading the Basics of Due Diligence on an Agricultural Parcel. This short tipsheet will walk you through researching the costs, responsibilities, and opportunities associated with a potential farmland acquisition. If you’re particularly harboring concerns about zoning and would like guidance on (a) how to research your zoning code and (b) how to move forward concerning a zoning code challenge, read Strategies for Navigating Zoning Codes and Challenges.
I need help creating a promissory note
Promissory notes can make the difference between friendships and family relationships thriving or diving. Here’s how to actually make one.
One farmland financing strategy is to borrow money from family, friends, or community funding groups. This can be a great alternative (or addition) to a traditional bank loan. However, don’t skimp on the details if you want to preserve good relationships and build legal resilience. A promissory note is the way to do this! We have a totally helpful resource to help you do this. Check out our Promissory Note Toolbox (37pgs.), which provides the legal tools you need to create your very own promissory note, including a checklist, a model promissory note, and a story to illustrate its utility.
I want to create a land sale contract or contract for deed
A land sale contract, also known as just a “land contract” or “contract for deed” is the “rent-to-own” of the real estate world. In a land sale contract, you basically pay rent every month in the same way you would if you were just leasing land, but your rent payments go towards building equity, the way they would if you purchased the land. However, take caution. Legal issues abound, and much of the risk falls to the buyer if we aren’t careful.
Learn about and manage the risks of a land contract with our Land Contract Toolbox (51pgs.). It provides the legal background and tools you need to create an effective agreement that reduces the buyer’s risk, including a checklist and annotated model land contract. A narrative story illustrates how this relationship can work, while helping readers envision their own story.
Family and/or friends are financially supporting my farmland purchase. What legal issues should I be aware of?
In some ways it can be much easier to finance your farmland purchase through support from family and friends. But, it’s not without its risk. Here’s what you need to know to maximize legal resilience and thriving relationships.
Whether it’s a gift, a loan, or a crowdfunding situation, friends, family, and community members supporting your venture is a fabulous way to begin. However, money from family members and friends are not without their issues…Sometimes it’s hard to know if Aunt Suzie meant to give you the money as a loan or…maybe as a gift? This can spell legal trouble and ruined relationships if you get that part wrong. Read our Legal Aspects of Purchasing and Financing Farmland (32pgs.), which explores financing strategies for purchasing land for your farm operation. You will learn the ins and outs of gifts, grants, crowdfunding, loans, mortgages, seller financing, investors, and land contracts, and the various related legal issues to be aware of with each of the strategies.
I want to buy land with other people. How do we do this?
Purchasing land collaboratively can be the solution to affordability while creating stronger social networks and greater resilience.
Purchasing land together with other like-minded folks can be a win-win. By pooling resources, individuals can access a potentially larger or more valuable property. By sharing the ongoing responsibilities of the mortgage payment (assuming the land was financed), the group may be more resilient against issues and obstacles into the future.
FSA denied my application for a loan, grant, or participation in a program, and I'm not sure if it was fair. What are my opinions to move forward?
Whether producers are concerned about a mistake, a policy change, discrimination, or something else, this guide helps folks charting a path forward after receiving an FSA denial or “adverse decision.”
But before we begin, let’s adjust our terminology. FSA calls applicants who are groups of persons that are unrelated and unmarried “entity applicants.” The term entity applicant is used because the individuals involved typically form an LLC, corporation, or other qualifying business entity. The entity is the applicant for the FO loan. In turn, the entity’s owners make binding commitments to FSA in their capacity as owners, just as an individual or married couple might do. However, the distinction is essential to understand how the criteria apply to an entity applicant. We will explain further, but for now, readers should recognize that we are calling groups of persons that are unrelated and unmarried “entity applicants.”
Land Leasing Questions:
Do I need a written lease for my farm?
You know you need a lease but…Why do you need to write it down?
Farmers are known for handshake agreements based on people keeping their word, as well as a sense of trust and respect in the community. But, when it comes to farmland leasing, a little paperwork can prevent troubles further down the road and also enhance the quality of the relationship.
I need help creating a lease
You know you need a lease for your farm or ranch business but… how do you create one?
You already understand the importance of having a written lease for your farm or ranch, but now the big question is: How do you actually create one? With so many options out there – hire a lawyer, go through an online legal service, use a template form on the internet, etc. – it can be overwhelming to make this happen. We’re here to help you minimize the overwhelm and get you started on creating a lease that meets your goals.
What makes for a "good" farm lease from a legal perspective?
Once you realize you need a farm lease, you’ll need to figure out how to make it an effective one. Here’s what you need to know.
Leasing is an increasingly popular vehicle for land access, especially for beginning farmers and ranchers. Leasing can be the best available option for producers to get on the land without significant capital investment. If you are in the process of searching for the right land to lease, read our Basics of Due Diligence on an Agricultural Parcel. If you’ve already identified land to lease, you will be among the majority of established producers who lease at least some land, with just as many acting as landlords to other farmers. With a lot at stake, we want to be sure every lease is a “good” one. But, what does that mean?
My landlord wants to terminate my lease – I need help!
Leasing agricultural land involves more risks than owning it, as you are always at the mercy of the landlord.
When it comes to terminating a lease, farmers may act quickly to protect their rights. Seek advice from an experienced attorney licensed to practice in your state as soon as possible. Our educational materials are not a substitute for the advice of a qualified attorney on a matter as sensitive and complex as terminating (or not renewing) a lease for agricultural or livestock property, where the stakes are often high.
I'm exploring a long-term lease, such as for agroforestry. Where do I start?
Long-term leases are crucial for agroforestry operations, or other farming methods that take many years to yield profits.
Although the need for a long-term lease arises in many types of farm operations, it’s especially vital for agroforestry. Agroforestry is one branch of regenerative agriculture that focuses on mixing agriculture with forestry. It has significant ecological benefits and can be a profitable venture for farmers. Many other farming models are emerging that depend on being able to make a significant and long-term investment in the land’s capacity to produce. But, these arrangements can take 15, 30 or even 50 years to become profitable. Leases of this length come with a unique set of potential legal issues.
Special lease situations like incubator farms and subletting
Incubator farms and also subletting situations involve sharing resources on the farm. Here’s how to do that effectively.
Farm incubator programs are sprouting up around the country as an innovative way to support beginning farmers. These programs typically involve leasing farmland to farmers in the incubator program, which means that multiple farmers will be leasing the same land. This can stir up some legal issues not found in an ordinary farm leasing situation. The same goes for subletting- farmers sometimes find they want to take a year off or use excess space, facilities, and resources to support other producers. Subletting can be a great solution.
Rent-to-own, aka Land Contracts and Contracts for Deed
If you aren’t looking to buy farmland with a mortgage, but you don’t want to “throw away” your money in your rent check every month, you may want to consider a third option: land sale contract. A land sale contract, also known as just a “land contract” or “contract for deed” is the “rent-to-own” of the real estate world. In a land sale contract, you basically pay rent every month in the same way you would if you were just leasing land, but your rent payments go towards building equity, the way they would if you purchased the land. However, take caution. Legal issues abound, and much of the risk falls to the buyer if we aren’t careful.
Food Safety Questions:
Do I have to comply with FSMA?
When it comes to the Produce Safety Rule and the Preventive Controls Rule, you need answers.
The Food Safety Modernization Act (FSMA) can feel like a giant to contend with and many farmers scratch their heads wondering how to move forward. Many small-scale producers and diversified operations receive special exemptions from the general compliance obligations of FSMA. But, the rules are tricky – it took the FDA four years to finalize its own rules!
What are the GAP standards and do I have to comply with them?
GAP Standards can be no less confusing than FSMA – another food safety rule, another acronym…Many farmers are left wondering what the difference is and what this “GAP” is all about. GAP stands for “Good Agricultural Practices” and it is a voluntary audit program for food safety. (Although it’s technically voluntary, your buyers may require your participation as a term of selling to them.) To learn more, check out our free resource, Checklist for Managing Your Food Safety Liability, which includes information about GAP standards. For more detailed information about GAP standards, see our comprehensive Farmers’ Guide to Food Safety Liability (pgs. 13-15) to learn how GAP (and its relative GHP) fits into food safety overall.
How do I protect myself from the legal ramifications of a food safety crisis on my farm?
No farmer wants their customers to get sick from food they produced. But, even the safest, most food safety conscious farmer can find themselves linked to a food safety incident. Check out our free resource, Managing Food Safety Liability Risk Basics, which answers the most frequently asked questions around food safety issues on the farm.
Also check out another free resource, Checklist for Managing Your Food Safety Liability, which identifies 12 key ways to manage food safety liability on your farm. One key strategy is to adopt and implement a food safety plan and to review it annually. You can also listen to our free 18min. Podcast Episode Eight: Let’s Have Lunch!For some food safety liability prevention tips including tips direct from farmers.
What kind of food safety liability insurance do I need?
You know you need it. Answers to where and how are here.
Insurance, insurance, insurance. Is this all we ever talk about here at Farm Commons? It can feel like that, but it’s just that important that we mention it over and over again. The thing about food safety issues is that you can’t just assume your run-of-the-mill insurance policy covers you for these. Making sure you are property covered requires some focused time and attention.
How do cottage food laws work?
If you’re scratching your head wondering, “What in the world are Cottage Food Laws?” and picturing people in the 1800s rolling out dough and cooking soup in giant cauldrons over a wood burning stove, you’re not alone. Cottage food laws sound quaint and cute but in reality, they refer to the different laws each state has (or doesn’t have) regarding when people can make food in their home kitchens for sale to others without the usual, thorough rules that accompany each state’s food code. This is a changing landscape, with many people pushing for “Food Freedom Laws” and getting up to speed on these laws can be a real challenge.
What types of food safety permits and licenses do I need?
The answer to this question really depends what type of food you have on offer, whether it is in raw form or processed, and where and under what circumstances you will be selling it.
Generally speaking, the sale of agricultural products in their raw and unprocessed form does not require any food safety permits or licenses, per se. However, the regulations of the Food Safety Modernization Act may apply, so we recommend exploring our pathway Do I have to comply with FSMA?
Fences, Boundaries, and Neighbor Questions:
I have a fence/boundary issue with my neighbor
Discrepancies between new property surveys and longstanding boundary lines can create tension and conflict for landowners. Perhaps the neighbor had a survey done and is informing you that the boundary line isn’t where you thought? Did the neighboring landowner approach you about paying for fence maintenance or repair?
If you are experiencing such an issue, you can consult our free Fence Law Basics, which shares options available to you for resolving boundary disputes with farm neighbors. This tip sheet shares general principles on fence law and specific information on fence laws in Minnesota and Wisconsin, but they represent common ways that most states address fence matters. Be sure to check with an attorney familiar with fence law in your state before taking action.
How do I prevent contamination from neighboring chemicals?
“Chemical drift” occurs when the droplets, particles, or vapor of sprayed agricultural chemicals migrate off-site or away from the intended target. In addition to harming people’s health and the environment, chemical drift can damage crops. It can be particularly problematic for farmers who value their crops as certified organic or chemical-free. What can be done to prevent it? Well, check out free resource, Chemical Drift Prevention Basics, to find out. This tip sheet identifies proactive ways you can safeguard your farm from the threats of chemical drift. Although it discusses Wisconsin and Minnesota specifically, the insurance and state handling of issues are commonly followed across states. Farmers who have experienced chemical drift already should check out our Chemical Drift Response Basics. (2 pages)
I think my crops have been contaminated by chemical drift. What do I do?
For the organic farmer, the threat of chemical drift is a scary prospect. If you think that this has happened to you, you may be feeling very scared and upset and wonder what, if anything, you can do. We have a resource to help you. Check out our free Chemical Drift Response Basics, which equips you with basic legal knowledge you need to respond effectively to a threat on your farm. Although it discusses Wisconsin and Minnesota specifically, the insurance and state handling of issues are commonly followed across states. For farmers who haven’t been impacted by chemical drift yet but want to be proactive in preventing damages, check out our Chemical Drift Prevention Basics.
Worker & Employee Questions:
I'm thinking about hiring help. What should I know during the planning stages?
Getting help on the farm requires a hefty helping of employment law knowledge. Read on for the employment law basics you need.
You know you need help getting the work done. But if you don’t know about all of the legal requirements that come along with workers, then Farm Commons is here to help!
Start with our Farm Employment Law Basics (1pg), a handy list of the top ten things farmers need to know about employment law.This resource is available to everyone, and will direct you to more detailed resources on the issues relevant to your farm, which are available to members.
Does my farm or ranch have to pay overtime to workers?
Find your way to the best resource to answer your questions about overtime obligations.
Great question, we’re so glad you asked!
If a farm assigns exclusively agricultural labor, the answer depends on the state in which you are located. Most states do not require farms to provide overtime pay for all hours worked over 40 in a week, which is the federal rule. For the answer in your state, check the Overtime section of our Selected Essentials in Farm Employment Law (10pgs) resource for your state.
Can my farm or ranch host volunteers?
The use of free labor through volunteers is a go-to solution for many farm businesses on a tight budget. But, it’s a solution that only works in limited circumstances. Find out what those are here.
Volunteers are a hallmark of many community-focused farms. Having a cadre of locals who are eager to help out on the farm shows just how important farms are to communities. But, the law is clear on this subject: For-profit businesses may not have volunteers. Anyone who does the work of a for-profit farm is an employee, and employment laws apply (unless, of course, another classification like independent contractor or intern fits the situation).
When is an employee manual important and how do I create one?
The employee manual is an often overlooked tool to create successful working relationships on the farm.
A farm employee manual is rarely, if ever, required – in other words, you won’t get into any legal trouble if you don’t have one– however, it can set you up for success in employee management. It can also help prevent legal trouble down the line. An employee manual is an incredibly useful tool for improving workplace communication and day-to-day operations. If you have farm employees, take a big step towards legal resilience with a good employee manual.
Can I pay my workers in broccoli, bacon, housing, or other non-cash goods?
Cash isn’t always flowing on the farm, especially when the business is brand new. But, there’s so much work to get done! Here’s some guidance for paying wages in non-cash or “in kind” forms.
Farms and ranches are often tight on cash but long on good food, scenic housing, and other non-cash resources. Non-cash wages are often called “in-kind” wages under the law. Although non-cash wages are often allowed, they are heavily regulated. Farmers need to be sure they know their legal obligations before creating an in-kind wage program.
Employees, independent contractors, interns or something else... How do I classify workers?
Before you navigate your way through the maze of employment law, first you need to figure out if your workers are employees…or something else. We help you do that here.
If you’re asking this question, you’re off to a great start. The law has very detailed opinions on what makes a worker an employee versus an independent contractor, and we call this legal subject “classification.” Running afoul of the law can leave a farmer responsible for back taxes, penalties, and more.
I want to avoid discrimination in hiring, managing and dismissing workers. How?
Avoiding discrimination when employing workers on your farm or ranch means tuning into the details of employment law. Here’s what you need to know.
It isn’t always easy to understand our anti-discrimination legal obligations or how they influence the way we hire and fire. From writing a good job description to conducting the interview, training employees, and (the worst part) having to dismiss workers, we all benefit when the process is clear, objective, and consistently implemented.
Help me understand my payroll and tax obligations to farm workers.
You’ve found great workers for your farm! Now what? Taxes and paperwork of course…we help you get a handle on tax and payroll obligations for new employees.
This issue can get complicated in a hurry. We’ll keep it simple while pointing out the key thresholds.
If the farm assigns non-agricultural labor, federal income tax withholding, federal unemployment insurance (FUTA) tax, and social security/Medicare tax (FICA) apply right away.
I want to work with other businesses to hire collaboratively. Are there any creative options for me?
Hiring collaboratively with other farm businesses can address labor shortages, costs, and retention, and create a better standard of living for workers.
Sustainable farmers often seek more flexible options for meeting their diverse and fluctuating farm labor needs. At the same time, farm workers struggle to piece together stable and rewarding employment opportunities. If this sounds familiar, we have a helpful resource for you. Check out our Farmers’ Guide to Shared Labor Arrangements(23pgs), which explores one potential solution: coordinating farm labor across farms. Is such a solution feasible for your community? This guide explores such feasibility of this model through operations, ownership, business structure and financial viability. This resource was created in partnership with the University of Wisconsin Center for Cooperatives.
I want to offer benefits to employees on my farm. What are my options for health care, retirement, and pay raises?
There are options available for all types and scales of operations.
As a farm or ranch employer, employee retention, longevity on the team, and shared commitment to the business’ success are in everyone’s best interest. Offering employees benefits can help to support all of this, and benefits like bonuses and pay raises, health benefits, and retirement benefits can also help to attract new hires in competitive markets.
What does the law say about interns and apprentices on my farm/ranch?
The legal definition of an intern is very different from a business owner’s definition of an intern. Get clarity and confidence with the below resources.
In the last decade or so, internships have been called into the legal limelight with a number of lawsuits establishing that interns and apprentices need to be treated as employees in most cases. This is true on farms as well- interns are generally employees and all employment laws apply. Of course, every general rule has its exceptions and there is an opportunity to create an internship program that does not follow all employment laws. Non-profit organizations have wide latitude to create internships and volunteer positions. For-profit farms will have a harder time but can be successful if they show that the position benefits the intern more than the farm, among other factors.
What is the minimum wage rate and do I have to pay it?
We all know about the minimum wage, but did you know that it doesn’t apply to farm labor in some states? Check out the resources below to learn more.
The honest answer is that some farms are not legally required to pay at least the minimum wage. However, most farms offer well above the minimum wage in order to attract a qualified workforce. Still, it’s helpful to know what the rules are– especially for farms that are crafting unique internship and apprenticeship opportunities where the obligation to provide the minimum wage influences how those farms can offer wages in the form of food and housing.