Category: Ag Law

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA). The IRA will provide USDA assistance and support for underserved farmers, ranchers, and foresters by amending section 1005 of the American Rescue Plan Act of 2021. This will provide $125,000,000 for USDA assistance and support for underserved farmers, ranchers, and foresters through technical assistance, $250,000,000 in land loss assistance, $10,000,000 in funding for equity commissions addressing racial equity issues with USDA, $250,000,000 in funding for research education and extension, $2,200,000,000 for discrimination financial assistance, and $3,100,000,000 to provide payments for the cost of loans or loan modifications with respect to distressed borrowers of direct or guaranteed loans administered by FSA. Additionally, the IRA addresses environmental concerns in agriculture and conservation by including $20,000,000,000 for climate-smart agriculture practices, $5,000,000,000 for fire resilient forests and forest conservation, and $2,600,000,000 for coastal habitat conservation and restoration.^[1]

The Inflation Reduction Act repealed section 1005 of the American Rescue Plan, allowing funding originally intended for debt relief (but stuck in litigation) to be reallocated. The ability to receive an individual payment due to discrimination may be better for farmers who would not have benefited from debt relief provided in section 1005 of the American Rescue Plan. 

Research conducted by the Federation of Southern Cooperatives for the Socially Disadvantaged Farmers and Ranchers Policy Research Center (The Policy Center) has found that one of the identified challenges that Heirs’ property participants face was a lack of information or assistance making productive use of their land. In 2014, a research study conducted by Prairie View A&M University, on behalf of The Policy Center, found that SDFRs needed to be further educated on USDA programs to increase their applications. Heirs property continues to be an issue, and Policy Center research conducted by Auburn University conservatively estimated that there are 579k heirs’ properties with a combined total acreage of 6.8m valued at $47.3b across the 14 states they studied. 

Institutions that serve, work with, and educate historically marginalized communities play a vital role in all of these areas that will be impacted by the IRA. These institutions provide the necessary technical support and outreach needed for most farmers to run a successful operation. These institutions also aid in creating the next generation of those who will work with these farmers, and the IRA ensures that there is funding to do that. 

The Inflation Reduction Act is crucial to the survival of Socially Disadvantaged Farmers and Ranchers, and it is clear that change will come with its implementation. The only question is how much change will it truly bring? 

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^[1] For additional information, see previous Southern Ag Today articles on the history of debt relief, the IRA, and heirs property.

As of January 1, 2022, most foods that contain bioengineered ingredients—some of which are grown or processed in the southern United States—are required to carry a disclosure that informs consumers that the food contains bioengineered ingredients. According to USDA’s regulations, food manufacturers and producers can make this disclosure by either (1) including a statement on the package, (2) including USDA’s bioengineered symbol on the package, (3) including an electronic or digital link on the package that allows consumers to read the disclosure online, or (4) including a number on the package that when texted provides consumers with the disclosure via text message. To learn more about the Bioengineered Food Disclosure Standard, click here.

When directing USDA to create these regulations, Congress required USDA to “provide additional and comparable options to access the bioengineering disclosure” if USDA determines “that consumers, while shopping, would not have sufficient access to the bioengineering disclosure through electronic or digital disclosure methods.” 7 U.S.C. § 1639(c)(4). Because of this provision, USDA conducted a study that found that many consumers, while shopping, would have difficulty accessing the internet. Therefore, USDA included the fourth text message disclosure option as the additional and comparable option to the third electronic disclosure option. 

Among other things, the plaintiffs in Natural Grocers v. Vilsack, 3:20-cv-05151-JD (N.D. Cal. 2022), argued that USDA acted arbitrarily and capriciously in deciding to include the fourth text message option as the additional and comparable option. The court agreed and found that the “text message option merely provided a fourth disclosure option that regulated entities can select instead of the electronic disclosure method.” As a result, the court remanded the text message disclosure regulation, but without vacatur. This means that until USDA updates the regulations, food manufacturers and producers can still choose to include the electronic or text message disclosures as a method to disclose bioengineered ingredients. 

Caracciolo, Jana. “USDA’s Text Message Bioengineered Food Disclosure Regulation Determined Unlawful”. Southern Ag Today 2(41.5). October 7, 2022.

Poultry growers may have started to receive settlement forms recently for a broiler grower class action lawsuit settlement.  Defendants involved in the lawsuit include Koch Poultry, Pilgrim’s Pride, Sanderson Farms, Tysons, and Perdue, and several co-conspirators, including Agri Stats, Foster Farms, Mountaire Farms, Wayne Farms, George’s, Inc., Peco Foods, Inc., House of Raeford Farms, Simmons Foods, Keystone Foods, Fieldale Farms Corp., O.K. Industries, Case Foods, Marshall Durbin Companies, Amick Farms, Inc., Mar-Jac Poultry, Inc., Harrison Poultry, Inc., and Claxton Poultry Farms.  At this point, Perdue and Tyson have not agreed to the settlement, but their growers are still included in the settlement process.  Growers might be surprised to receive this form in the mail and may have questions about the case and settlement.  There is a website designed to answer questions about the settlement process (https://www.broilergrowersantitrustsettlement.com/koch-settlement/), which includes many important deadlines for broiler growers.  Answers to many of the important questions growers may have, including how much money each grower will receive and whether additional integrators will, are currently unknown.  

            Originally filed in 2017 in the federal district court for the Eastern District of Oklahoma, the lawsuit alleges that several integrators colluded in the broiler market.  According to the court filings, the plaintiffs alleged that the integrators agreed not to poach growers.  In addition to the no-poaching agreement, the integrators also allegedly used Agri Stats to share detailed data about their operations.  Although this data shared through Agri Stats is anonymous, it is highly detailed, making it possible for companies to distinguish various operations.  This data is also non-public — private data only available to the integrators, according to the court filings.  By sharing this detailed data with Agri Stats, the integrators could collude to lower grower compensation.

            Growers for all these companies will receive settlement forms as potential class members impacted by the lower grower compensation amount due to the alleged collusion.  Growers receiving settlement forms will need to pay attention to certain dates.  The first important date is Sept. 23, 2022, for postmarking requests to be excluded from the settlement. A party always has the right to be excluded from a settlement.  When a party elects, they often have the right to sue for similar claims on their own or do nothing.  To have that opportunity, a grower must opt out by the September 23 deadline.  Second, all claims’ forms must be submitted online or be postmarked by February 6, 2023.  Please check the website at https://www.broilergrowersantitrustsettlement.com/koch-settlement/ for additional information to determine if a grower wants to be part of the settlement or if a grower notice mistakes on the settlement form.  

Goeringer, Paul. “Broiler Grower Settlement Forms Arriving to Growers: Background on the Class Action“. Southern Ag Today 2(38.5). September 16, 2022. Permalink

In June, the Federal Crop Insurance Corporation (“FCIC”) published a final rule amending the basic policy provisions of the federal crop insurance program. See 87 Fed. Reg. 38883 (June 30, 2022). Specifically, the rule brings more flexible production record requirements for producers obtaining crop insurance. Before this rule, producers were generally required to provide production records from disinterested third parties—such as sales receipts, storage records, or settlement sheets—or obtain a pre-harvest appraisal to verify their actual crop production to support their production report. The reports are submitted to an insurance provider to obtain insurance coverage, report annual production, and file loss claims.

However, not all producers have third-party records. For example, producers that are vertically integrated or market their insured crop directly to consumers do not use an intermediate party to store or sell their crop, eliminating access to these types of records.

In response, the rule incorporates new recording procedures, allowing producers to support their production report with farm management records; or records documenting the actual production “at the time of harvest, storing of the crop, or use of the crop for feed.” 7 C.F.R. § 457.8, Section 1. In other words, producers may be permitted to use some of their own records when generating required reports.

Further, the rule adopts a new section addressing situations for producers without either third-party production records or an intention to direct market their crop. These producers must notify their insurance provider or FCIC and complete a marketing certification form. Id. at Section 38(a). The goal of this section is to encourage producers without verifiable records to discuss available records with their insurance provider in advance, with the goal of decreasing pre-harvest appraisals.

This amendment is applicable for the 2023 and subsequent crop years for crop insurance policies with a change date on or after June 30, 2022. For all other crops, the final rule revisions are applicable for the 2024 and subsequent crop years.

Brown, Micah. “Amendments to the Federal Crop Insurance Basic Provisions“. Southern Ag Today 2(37.5). September 9, 2022. Permalink

Heirs property has become an important topic in agriculture. The term “heirs property,” describes a form of ownership where at least some of the owners have acquired the property through inheritance. As the property passes down through the generations, more and more people are co-owners, making the property unmanageable. As time passes, some owners may not be able to be found or may not be known. 

In most states all owners would have to agree to, for example, farm the property. If consensus among heirs is not reached, the on-farm heirs may not be able to obtain a farm number to participate in United States Department of Agriculture programs. When a disaster strikes and landowners seek federal or state government assistance, the inability to prove ownership or have all owners sign can bar any assistance.

If the land is already classified as heirs property, the first task is to identify and locate all persons with an ownership interest, which can be very time-consuming and expensive. Once all owners are identified and located, the farm can be placed in a business entity like a limited liability company, or a co-tenancy agreement can be entered into for easier management. However, all owners need to agree, which can be problematic. 

If all owners cannot be identified or located, title must be “cleared”- the proper owners must be determined. In most cases, this process involves a court case. The process of clearing title can be extremely expensive and take years to accomplish.

Any owner of the property can also file a partition suit to have the land either physically divided among the heirs, or sold and the proceeds, after costs, divided among the heirs. As a practical matter, a partition suit most often results in sale of the property. 

The latest Farm Bill contains two provisions to attempt to address these issues. First, the bill provides alternative ways for owners of heirs property to obtain a farm number. Second, the Farm Bill provides for a relending program where owners of heirs property can borrow money to clear title and develop business entities or other documents to manage the farm. 

Careful estate planning can prevent your property from becoming heirs property. If you own land, consult an attorney to prevent and/or address heirs property issues.

For more information see:

https://www.calt.iastate.edu/article/problem-heirs-property

https://wvleap.wvu.edu/additional-tools/highlight-heirs-property

Richardson, Jesse. “Heirs Property and Agriculture“. Southern Ag Today 2(36.5). September 2, 2022. Permalink