Lamson, Dugan and Murray, LLP, Attorneys at Law

Beginner Farmer Incentive Programs Pt. I: Iowa

Posted in Farm Management, Government Regulations, Tax

incentive

According to the U.S. Dept. of Agriculture Census of Agriculture, the average age of today’s farmer has increased to 58 years of age.  Concerns are increasing over who will step up as the next farming generation considering dramatic increases in land prices and the high cost of equipment and inputs make it difficult for young farmers to get a foothold.  Recognizing the problem, state and federal governments have introduced incentives to get beginning farmers started.  The next three blogs will summarize some of those incentives provided in Iowa, Nebraska and at the federal level.

Iowa Beginning Farmer Tax Credits

The Iowa Agricultural Development Division (“IADD”) has two tax credit programs to assist beginning farmers.

The Agricultural Assets Transfer Tax Credit, commonly referred to as the Beginning Farmer Tax Credit program, allows agricultural asset owners to earn tax credits for leasing their land, equipment, or breeding livestock to beginning farmers. The maximum credit is $50,000. Terms include a 7 percent tax credit for cash rent leases or a 17 percent tax credit for crop share leases. Lease terms and duration are set by the asset owner, but must be a two to five year lease term.  There is additional credit available if the beginning farmer is a veteran.

The new Beginning Famer Custom Farming Tax Credit program offers a tax credit to anyone hiring a beginning farmer to do agricultural contract work for the production of crops or livestock. The Iowa Legislature created the Custom Hire Tax Credit Program in 2013 as an incentive for hiring beginning farmers. The tax credit is 7 percent of the value of the custom work performed by the beginning farmer, with a maximum credit of $50,000. If the beginning farmer is a military veteran, the tax credit increases to 8 percent for the first year he or she participates in the program. Iowa Finance Authority.

Iowa Beginning Farmer Loan Programs

The Iowa Beginning Farmer Loan Program assists new farmers in acquiring agricultural property by offering financing at reduced interest rates. Beginning Farmer Loans are financed by participating lenders with the issuance of federal tax exempt bonds by the Iowa Finance Authority; contract sellers also receive a state tax exemption on the interest income. The tax exempt interest income earned by lenders and contract sellers enables them to charge borrowers a lower interest rate, which will typically result in about a 25 percent rate reduction using the program. For this program, applicants must be below 30 percent of the county median for land ownership. Eligible projects include land, machinery, equipment, breeding livestock, or farm improvements. Iowa Finance Authority.

The Loan Participation Program assists low income farmers to secure loans and make down payments. IADD can supplement the borrower’s down payment, helping a farmer secure a loan more readily. The lender’s risk is also reduced because the IADD provides a “last-in/last-out” loan participation for the financial institution. Eligible projects include land, machinery, equipment, breeding livestock, or farm improvements. Funding is available for up to 30 percent of the project cost, up to $150,000 with interest rate equal to 1 percent above FSA’s Beginning Farmer loan rate, fixed the first five years, then adjusted to 1 percent above the FSA rate at that time, with a 10-year balloon payment. Iowa Finance Authority.

Finally, the Iowa Department of Natural Resources Lease to Beginning Farmers Program gives beginning farmers the first chance to lease DNR owned land. Potential tenants must meet all of the requirements to be certified as a Beginning Farmer by the Agricultural Development Division of the Iowa Finance Authority which reviews residence, net worth, training and experience, and ensures the farmer’s substantial participation in the farming. There are also requirements for the terms of the lease, including: (1) lease must be less than 240 acres, (2) lease cannot be for more than seven years, and (3) farmer must establish a conservation system, crop rotation, and other soil conservation practices. Iowa Finance Authority.

It is important to check with your attorney, accountant and banker to see if you can take advantage of any of these incentives.

Up next: Nebraska

Authored By: Katie French

Katie French

Katie French

Mother May I? Always Get Permission When Deciding Whether or Not to Replant

Posted in Crop Damage Claims, Crop Insurance, Farm Management
Approaching Storm

Approaching Storm

Every spring and early summer, heavy rains, hail, and tornadoes force Midwest farmers into a game of “Crop Insurance Mother May I” regarding whether they will replant damaged crops.  For crop insurance purposes, permission is almost always necessary when deciding whether to destroy and replant the damaged crop or destroy the damaged crop and plant a new crop.

When facing a replant decision remember the following:

“When a crop is damaged and it is “Practical to Replant,” the crop must be replanted in order to maintain insurability.  Acres damaged after the final planting date must not be released for other use UNTIL it is no longer practical to replant.”  2014 Loss Adjustment Manual (LAM) P. 211

If the adjuster determines it is practical to replant, and the insured does not replant or plants to another crop the insurance provider will not pay an indemnity on the acreage and will revise the acreage report to designate such acreage as uninsurable.  LAM 2014 P. 213.

There is no black and white definition for “Practical to Replant”; rather it is a subjective term of art in crop insurance.  In determining whether acres are practical to replant the adjuster will look to “moisture availability, marketing window, condition of the field, and time to crop maturity  It will be considered to be practical to replant regardless of availability of seed or plants or the inputs costs necessary to produce the insured crop”.  LAM 2014 P. 211.

The producer must provide notice to and receive permission from the insurance provider before destroying and replanting the original crop.  While certain crops allow for self-certification for replant, the producer still needs to receive authorization from the adjuster prior to destroying and replanting the crop.  ADM Crop Risk Services 2014 MPCI Replant Guidelines.

Permission is also required where the producer want to plant a different crop.  The adjuster must determine the acres are not practical to replant and must release the acres for planting another crop or other use.  The insurability of the second crop is determined in accordance to the applicable policy provisions. LAM 2014 Pg. 214

The RMA is cracking down on replanting decisions and have warned adjusters to “be cautious about prematurely determining acres are not practical to replant.”  LAM 2014 Pg. 213.

In the end, the producer owns the land and has to choice whether to replant, plant another crop, or leave the field fallow.  However, if the producer wants to maintain crop insurance on the damaged acres, he will first have to ask Mother May I.

 

 

 

 

 

 

 

Nebraska Supreme Court finds Farmers Not Liable for Car Accident Caused by Tall Corn

Posted in Farm Management, Government Regulations, Property Rights

tall corn

On October 6, 2007 Thomas Latzel and Daniel Vanekelenburg were involved in a car accident with Patrick Gaughen at the intersection of County Road T and Count Road 17.  Three years later, Thomas Latzel would die from the injuries he incurred in the accident.  Thomas’ wife, Amanda Latzel, brought a lawsuit against Ronald and Doug Bartek alleging they negligently planted corn too close to the intersection causing the accident.

It was undisputed the Barteks’ 7 foot tall corn partially obstructed the view of the drivers.  However, the district court found the Barteks were never notified the corn created a hazard at the intersection.  Therefore, the Barteks could not be held liable for the accident and dismissed the lawsuit.  On appeal, the Nebraska Supreme Court agreed.

The Court emphasized the Barteks “were not bound to anticipate the drivers would disregard the obvious danger of traversing a visually obstructed unmarked intersection without being able to see what they needed to see to do so safely.”  Put simply; the drivers were negligent, not the farmers.

Judge Kenneth Stephan went further stating “the farmers could not be held liable for “simply making lawful use of their agricultural land to raise crops.”  Latzel v. Ronald Bartek et al. 

Disappointed in the verdict, Latzel’s attorney argued the courts ignored the state statute which requires landowners to restrict their plants from obstructing drivers’ views.  According to Latzel’s counsel, urban landowners are routinely held to the statute while rural landowners are not. Omaha World Herald: Nebraska Supreme Court: Farmers not liable for fatal crash where tall corn obstructed view. 

Despite the statute, the Court may have been considering the potential impacts on statewide farming practices if they found the Barteks liable under the statute.

Follow-Up On Australian Genetically Modified Crop Contamination Lawsuit

Posted in Biotechnology, Crop Damage Claims, Organic and All Natural

The landmark case has been decided in favor of genetically modified (“GM”)crop production.  As described in It Was Bound to Happen, Steve Marsh sued his neighbor, Michael Baxter, for alleging his organic fields were decertified because of contamination from Baxter’s Roundup Ready canola.

canola field

canola field

Marsh never grew canola, and the scientific evidence presented at trial proved “none of the Marshes crops or sheep…could acquire any genetic traits of Roundup Ready canola.”  The judge also determined Baxter could not “be held responsible, in law” for the unjustifiable decertification of Marsh’s crops on the basis of eight Roundup Ready canola plants found on Marsh’s property.

In sum, the judge ruled “Mr. Baxter was not to be held responsible…merely for growing a lawful GM crop and choosing to adopt a harvest methodology, which was entirely orthodox in its implementation.”  WAtoday.com: WA organic farmer loses genetically modified canola fight in court.

No doubt, the verdict is a win for producers of Roundup Ready crops.  However, it’s important to remember the decision doesn’t foreclose all cases regarding GM crop contamination of organic production.  It is apparent the ruling may have been different if Marsh had produced organic canola which was substantially contaminated, or if Baxter’s production was outside the norm.

The judge’s comments regarding the “unjustified” decertification may have the most impact on organic farming in Australia.  The decision may invoke a change in Australia’s organic certification requirements from a zero-GM standard to a standard that can accommodate neighboring GM and organic producers.

 

 

Hot Water Topics II: Farmers Join In Suit v. Corps of Engineers for Missouri River Flooding

Posted in Government Regulations, Property Rights, Water Law

Over 200 Landowners, farmers and small-business owners have joined the lawsuit Ideker Farms, Inc. et al v. United States of America alleging they incurred property damage as a result of the U.S. Army Corps of Engineers’ management of the Missouri River from 2006 to 2013. Reuters May 5, 2014.

The lawsuit alleges the Army Corps of Engineers changed their priorities from flood management to environmental management; resulting in increased frequency and severity of flooding along the length of the river.  According to the lawsuit website www.missouririverflooding.com, the action is not based on “mismanagment of the river” since the Corps’ was acting in conformance with new environmental laws and regulations.  Rather, the Corps’ shift in managment has resulted in a taking of land from the landowners, farmers and business owners in violation of the Fifth Amendment.  Consequently, the landowners, farmers, and business owners are entitled to compensation.

Missouri River near Ft. Calhoun, Nebraska

Missouri River near Ft. Calhoun, Nebraska 2011

Obviously, mother nature has something to say regarding when a river floods and outside experts found the Corps managed the 2011 flood as well as possible given the conditions.  Furthermore, one must have some expectation of flooding when owning and maintaining river-front property.  However, property owners in Nebraska, Iowa and Missouri are still dealing with the effects of nutrient depleted soil caused by the 2011 flooding and have been hit with floods in five of the past seven years; something they say never occurred prior to the shift in priority to environmental managment.

The Ideker Farms case will be an interesting test case in the ongoing struggle between protecting the public from the environment and protecting the environment from the public.

Hot Water Topics Pt. I: EPA Proposes New Definition of “Waters of The United States”

Posted in Government Regulations

On March 24, the Environmental Protection Agency (EPA) proposed a new definition of “waters of the United States” as applied in the Clean Water Act (CWA).

The definition of “waters of the United States” currently means:

(a) All waters which are currently used, were used in the   past, or may be susceptible to use in interstate or foreign commerce,   including all waters which are subject to the ebb and flow of the tide;

(b) All interstate waters, including interstate “wetlands”;

(c) All other waters such as interstate lakes, rivers, streams   (including intermittent streams), mudflats, sandflats, wetlands, sloughs,   prairie potholes, wet meadows, playa lakes, or natural ponds the use,   degradation, or destruction of which would affect or could affect interstate   or foreign commerce including any such waters:

(1) Which are or could be used by interstate or foreign travelers for recreational or other purposes;

(2) From which fish or shellfish are or could be taken and sold in interstate or foreign commerce; or

(3) Which are used or could be used for industrial purposes by industries in interstate commerce;

(d) All impoundments of waters otherwise defined as waters   of the United States under this definition;

(e) Tributaries of waters identified in paragraphs (a) through   (d) of this definition;

(f) The territorial sea; and

(g) Wetlands adjacent to waters (other than waters that   are themselves wetlands) identified in paragraphs (a) through (f) of this   definition.

40 CFR 122.2

Under the EPA’s proposed new definition, “waters of the United States” includes:

• All waters which are currently used, were used in the past, or may be susceptible to use in interstate or foreign commerce, including all waters which are subject to the ebb and flow of the tide;

• All interstate waters, including interstate wetlands;

• The territorial seas;

• All impoundments of a traditional navigable water, interstate water, the territorial seas or a tributary;

• All tributaries of a traditional navigable water, interstate water, the territorial seas or impoundment;

• All waters, including wetlands, adjacent to a traditional navigable water, interstate water, the territorial seas, impoundment or tributary; and

• On a case-specific basis, other waters, including wetlands, provided that those waters alone, or in combination with other similarly situated waters, including wetlands, located in the same region, have a significant nexus to a traditional navigable water, interstate water or the territorial seas.

Summary of EPA’s Proposed Rule. 

Several years ago, Supreme Court Rulings in U.S. v. Riverside Bayview, Rapanos v. United States, and Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, which effectively muddied the waters on what is and what is not “waters of the United States”.  The EPA has proposed the above change in response to those decision, which the EPA believes will “enhance protection for the nation’s public health and aquatic resources, and increase CWA program predictability and consistency by increasing clarity as to the scope of “waters of the United States” protected under the Act.” Summary of EPA’s Proposed Rule. 

Critics of the proposed rule have been expecting the change and fear the new definition will greatly expand the government’s jurisdiction over private land including seasonal ponds, streams and ditches.  EPA land grab? Agency claims authority over more streams, wetlands. 

Jurisdictional clarification or jurisdictional expansion?  The EPA is looking for comments which you can make at http://www.regulations.gov or via email at ow-docket@epa.gov

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State Senator Proposes One Board To Rule All Water Issues In Nebraska

Posted in Government Regulations, Water Law

On January 21, 2014, Nebraska State Senator Bill Avery, introduced a bill (LB1005), which would create a board to govern the use of surface and groundwater.  Currently, surface water is controlled by the State’s Department of Natural Resources while groundwater is regulated by 23 Natural Resource Districts (NRDs).

Recognizing a direct connection between surface water and ground water, Avery believes one board would provide a consistent regulation over the state’s water resources.  The bill would create the Surface Water and Ground Water Review Board to review and approve all ground and surface water uses, water well permits and water management activities.

The various NRDs are skeptical that one board of 10 volunteers can handle all of Nebraska’s water issues including “summarizing yearly water usage on more than 8.5 million irrigated acres and assessing consumptive use, water supply and regional and local aquifer trends.”  Nate Jenkins of the Upper Republican NRD, questioned ”whether a board of 10 volunteers, presumably people who also have busy careers, would have the time to adequately address all of these tasks.”  Via Lincoln Journal Star.

Sen. Avery is confident one board to rule all water issues will be more efficient and consistent.  Sitting on top of the nation’s largest aquifer, Nebraska’s regulation of its water resources is important for the entire country.

water drop

Crop Insurance Agents: No Rebates Allowed

Posted in Crop Insurance, Government Regulations

No entry glossy stickerIncentives work.  Trust me, I use incentives all the time to get my three year old to sit still, eat his dinner, and stop asking me “why?”  So why don’t you ever see crop insurance agents incentivizing clients with bargains on premiums?

Incentives on crop insurance rates, no matter how small, are not allowed.  In the crop insurance world such incentives are called “rebates” and offering rebates is illegal under the Federal Crop Insurance Act and Nebraska statutes.  7 U.S.C. Sec. 1508(a)(9) and Neb.Rev.Stat. 44-361

To most, the term rebate means a refund of a certain portion of the price you paid on a specific item.  However, the federal government and Nebraska define “rebate” more broadly.  For purposes of selling crop insurance the term “rebate” extends to ”any benefit (including money, goods or services for which payment is usually made), discount, abatement, credit, or reduction of the premium named in the insurance policy and any other valuable consideration or inducement not specified in the policy.”  Standard Reinsurance Agreement Pg. 7.

So don’t expect your agent to be offering you any discounts or deals on your crop insurance premiums when you sign up this year.  More importantly, be leery of any agent who does as accepting an incentivie may affect the validity of any subsequent crop insurance claim.

EPA Proposing New Pesticide Safety Measures

Posted in Government Regulations

The Environmental Protection Agency (EPA) is looking to implement new safety measures for handling and applying pesticides on the nation’s farm ground.  The proposed changes come on the heels of an “Agricultural Health Study” of pesticide impacts on human health overseen by the EPA, USDA, National Institute of Health and the National Institute for Occupational Safety and Health.

The proposed changes would include making pesticide protection training for applicators an annual requirement rather than once every five years.  Furthermore, children under 16 would be prohibited from handling pesticides unless they are member of a family farm.  No-entry buffer zones for fields treated with pesticides would be increased from 25 feet to 100 feet to limit exposure to overspray and fumes.  Finally, the EPA would expand requirements for posting warnings on new treated fields.

The study of approximately 90,000 people from Iowa and North Carolina linked pesticides use to health problems of various cancers and Parkinson’s disease.  It is likely the EPA views the proposed measures as a step, rather than a cure, in addressing the problems with handling pesticides.  Additional safety measures may be in the future as the impact of pesticides is further researched.

Public comments will be accepted before finalizing a decision on the proposed safety rules.

It Was Bound to Happen: Farmer Sues Neighbor for GMO Contamination

Posted in Biotechnology, Crop Damage Claims, Farm Management, Government Regulations, Organic and All Natural

canola field

Everybody saw it coming.  Sooner or later an organic farmer was going to sue a neighbor for genetic contamination of an organic crop.  It has happened in Western Australia when Steve Marsh sued his neighbor, Michael Baxter, for allegedly contaminating Marsh’s organic fields.  RT.com  The case will be monitored as groundbreaking for future cases worldwide.

Marsh alleges that wind blew Baxter’s Roundup Ready canola onto Marsh’s farm resulting in a loss of organic certification on approximately 70 percent of Marsh’s land.  Unlike the USDA’s National Organic Program, the National Association for Sustainable Agriculture Australia (NASAA) has a zero tolerance for genetically modified material when certifying land for organic farming.

Marsh’s attorneys allege Baxter recklessly planted his genetically modified canola crop in adjoining fields and failed to contain the GM seeds.  They also claim Baxter knew the canola seeds would naturally escape and contaminate neighboring fields.

Baxter’s attorneys counter the canola was planted within all buffer zone and notice requirements implemented by the Western Australian government since GM canola cultivation was allowed in 2010.

The lawsuit has global implications even though it will have no binding legal precedent outside Australia.  In the event Marsh prevails, organic farmers will have a model in which to build their claims for GM contamination.  However, a win for Marsh may result in Australia ditching the zero-GMO standard for organic certification to accomodate the growing use of genetically modified crops.