ND Voted to Lift Corporate Dairy Farming Ban

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Posted March 19, 2015

House lawmakers voted to relax North Dakota’s anti-corporate farming law, which could set the precedent for non-family corporations to own dairy and swine operations for the first time in 83 years, according to a Prairie Business article available here. Inforum also published the article here and Grand Forks Herald here.

North Dakota Farmers Union President Mark Watne condemned the vote and issued a statement that accused legislators of “ignoring the majority of North Dakotans who want farmland ownership and agricultural production to be in the hands of families making a living off the land.”

Rep. Dennis Johnson, R-Devils Lake, chairman of the House Agriculture Committee, stressed that North Dakota is one of nine states with anti-corporate farming laws and the only state without a livestock exemption.

Johnson said the bill would encourage investment in the state’s struggling swine and dairy industries while also benefiting grain farmers by providing fertilizer and additional markets for their crops.

“We could do nothing and watch them fade away. But I think we have an opportunity here to try and help them.”

The House voted 56-37 to approve amended Senate Bill 2351, after the Senate first passed the bill 27-18 last month.

If the Senate agrees to the House amendments, the bill will go to Gov. Jack Dalrymple for his signature.

For more information on corporate farming laws, please visit the National Agricultural Law Center’s website here.

Anti-Corporate Farming Bill Reaches ND Ag Committee

Posted March 4, 2015

The North Dakota House Agriculture Committee will vote on the proposed changes to the state’s anti-corporate farming law, according to a Grand Forks Herald article available here. AgWeek also published an article available here.

House Agriculture Committee Chairman Dennis Johnson, R-Devils Lake, said that SB 2351 is scheduled at 8 a.m. March 5 in the Brynhild Haugland Room. Johnson expects the committee to work toward a vote on March 6 and that it will go to the floor as early as March 9 or 10.

The bill is probably the most contentious of any agriculture bills remaining and both sides are likely to “double down” in the House debate, according to Johnson.

SB 2351 would allow non-family corporations to own and operate dairy and swine farms, and would allow each farm to own or control up to 640 acres of farmland, according to AgWeek.

The North Dakota Farmers Union (NDFU) have released a poll that revealed 75 percent of North Dakotans would vote against the bill, if given a chance.

The NDFU sponsored the poll, and DFM Research of St. Paul conducted phone interviews of 400 North Dakotans.

Approximately 86 percent of respondents said they thought the state’s agriculture economy is best left in the hands of farmers. The poll has a 5 percent margin of error.

Mark Watne, NDFU president, said the poll reflects his organization’s “long-held belief that when it comes to production agriculture, family farmers and ranchers should be the ones who farm and own the land in North Dakota, not corporations.”

The poll also identified respondents by political party with 39 percent Republican, 26 percent Democrat, and 34 percent Independent.

Senate Agriculture Committee Chairman Joe Miller, R-Park River, predicts the bill will pass and will be signed by the governor, according to Grand Forks Herald.

“It’s logical to make this move because it’s the only notable barrier, in the law anyway,” said Miller. “I don’t look at it as discriminatory legally because these two operations are similar in how they care for animals, in enclosed situations, where a (cattle) feedlot is much more open.”

For more information on corporate farming laws, please visit the National Agricultural Law Center’s website here.

Nebraska Legislature Considers Lifting Packer Ban on Swine

Posted February 25, 2014

The Nebraska Legislature’s Agriculture Committee recently heard testimony on a bill which would lift the packer ownership ban on swine in the state, according to an article by WNAX, available here.

LB 942, available here, is sponsored by Nebraska’s Agriculture Committee chair, Senator Ken Schilz.

The current law prohibits packers from owning swine, beef or dairy.

Nebraska Farm Bureau and Pork Producers testified in favor of the bill.  Jay Rempe, Farm Bureau Vice President of Government Affairs, “says lifting the ban would help grow livestock production in the state.

Nebraska Farms Union President, John Hansen, testified in opposition to the bill, saying that “captive supply would accelerate rapidly.”  Hansen also said the ban, in place since 1998, has protected medium and small producers.

For more information on corporate farming laws, please visit the National Agricultural Law Center’s website here.

Kansas Corporate Farming Law Will Remain

Posted January 21, 2014

The effort to repeal the Kansas law limiting corporate farming operations has been dropped for the 2014 legislative session, according to an article by the Topeka Capital-Journal available here.

Sen. Larry Powell (R-Garden City), chairman of the Senate Natural Resources Committee, said a report from the “Kansas Judicial Council recommended potential modification of the state’s statute to avoid potential constitutional issues, but the council did not endorse wholesale repeal.”  Powell said, “I have no plan to deal with it unless leadership pushes me.”

During the 2013 legislative session, the Kansas Department of Agriculture and the Kansas Farm Bureau urged the repeal of the corporate farming law, arguing that it hinders investment in Kansas agriculture, according to an article by the Hays Post available here.

The current state law, K.S.A. 2012 Supp. 17-5904, restricts corporations from engaging in production agriculture in the state.  Restricted operations include large swine and dairy facilities, requiring a majority of partners to be related and requiring at least one to live or actively work on the farm.  The law also limits the number of stockholders allowed in a farming operation and requires all corporate farms with land in the state to submit annual reports to the Secretary of State.

The “Kansas Agricultural Growth and Rural Investment Initiative” was introduced last session and sought to allow “any agricultural business entity to operate anywhere in the state.”

Those in favor of the change argue that the current law is “keeping new agribusiness from coming to Kansas.”

Opponents, however, argue that “experience in other states has shown that swine and dairy facilities are not significant job creators.”  They “point to reports that the low-wage, high-turnover jobs that are created can be a net drag on local communities, which can experience increased social service and public safety costs.”

For more information on corporate farming laws, please visit the National Agricultural Law Center’s website here.

Bill Sets Schedule for Farm Equipment Depreciation

The seven-year depreciation schedule for agricultural equipment may soon be changed to a five-year schedule. Four U.S. Senators have introduced legislation that would amend the tax code by making agricultural equipment depreciation the same as that of construction equipment, which is currently a five-year schedule.

Senators Amy Klobuchar (D-MN), Jerry Moran (R-KS), Pat Roberts (R-KS), and Debbie Stabenow (D-MI) introduced the legislation to make the tax code more consistent regarding all equipment and to assist agriculture workers and businesses by increasing income, making it easier to finance their new equipment when their previous machinery has depreciated.

Stabenow, as Chairwoman of the Senate Agriculture Committee, supported the legislation as a way to simplify farm policy and strengthen the economy through encouraging farmers to invest in agribusiness. The bill's other sponsors are also involved with agriculture in the Senate, with Roberts serving as ranking member of the Senate Agriculture Committee and Klobuchar also sitting as a member. One of Moran's committee assignments is the Appropriations Subcommittee on Agriculture and other issues.

Posted: April 3, 2011

Potential antitrust rules have meat and poultry industries' attention

One of the requirements of the 2008 Farm Bill is that the US Department of Agriculture (USDA) update the existing antitrust rules, or develop new rules, that will govern the meat and poultry industries. The rules are supposed to be released this spring for public comment, and then take effect in the summer.

As Christopher Leonard reports for the Associated Press, for many of the stakeholders (activists, farmers, the meat industry) the regulations may be viewed as a "litmus test for the Obama administration and how far it will go in regulating competition in the meat industry." Indeed, as Leonard writes, the balance of power between the industry and farmers may be at stake.

Leonard reports that 80 percent of all US beef comes from four companies. This limits how much competition can exist in the market, which in turn effects the prices ranchers get for their cattle. The new rules will regulate how meatpackers purchase cattle in an open market to bar against discrimination against independent ranchers.

Additionally, poultry contract poultry growers have long complained that the companies they work for require them to constantly update their technology, which in turns leaves the growers with debts that are not offset by the additional income they may earn from the upgrades.

The industry maintains that the upgrades benefit both the farmers and the companies, and that the industry is already regulated enough. Leonard quotes Tyson Foods spokesman Gary Mickelson as stating in an e-mail, "We're already in one of the most heavily regulated industries in the nation and take compliance with the law very seriously . . . we don't believe additional rules are needed to control the relationship between livestock and poultry producers and food companies like ours."

The rules are being developed by the USDA's Packers and Stockyards Administration, an agency that was found in a 2006 government report to be slow to "bring cases and understaffed." However, as Leonard points out in his article, new administrator Dudley Butler is a lawyer who "specialized in suing poultry companies," so the administration may be more proactive than in the past.

The new rules may shine a clear light on which story the administration believes more--the producers or the industry. Currently the administration has launched a series of workshops about competition in the agriculture industry. The workshops are being conducted jointly by the USDA and the Department of Justice. The administration hopes to hear from all stakeholders on the issues involving competition in agriculture.

At this point the USDA will not say when the new rules will be released.

To learn more about the joint USDA/DOJ workshops, click here.
To read a previous US Agricultural & Food Law and Policy Blog post on the workshops, click here.
To read the Leonard article for the AP, click here.
To learn more about the Packers and Stockyards Act and other laws and rules affecting the industry, click here to visit the National Agricultural Law Center's Reading Room on the law.

Posted: 04/14/10

Recent Legal Developments

Scotusblog.com is reporting that this Friday’s conference of the Supreme Court Justices will include the review of granting a petition of certiorari for the Rose Acre Farms case. The case involves USDA regulations that restricted eggs sales on a farm that had a laying hen test positive for salmonella. The Court of Claims ruled that a compensable takings had happened, but the Federal Circuit reversed finding that only 43% of the eggs were diverted to the breaker egg market. Scotusblog.com believes that this case has a reasonable chance of being granted cert. To see a copy of the issues presented on appeal, click here.

Back in December of 2009, the Audubon Society filed a complaint in the North Dakota federal district court challenging the constitutionality of North Dakota’s corporate farming law. The Audubon Society claims that the law violates the Commerce Clause of the U.S. Constitution and the Fourteenth Amendment’s Equal Protection Clause. This suit is in response to a state court action that North Dakota brought against the Audubon Society to have it divest itself of land holdings in North Dakota in compliance with the state’s corporate farming law. For those with Westlaw access a copy of the Audubon’s federal complaint can be viewed here at 2009 WL 5547554. A copy of North Dakota’s petition against the Audubon Society can be viewed at 2009 WL 4486930.

Posted: 2/16/10

North Dakota Appeals Anti-Corporate Farm Case Ruling

The state of North Dakota is appealing a June ruling by Southeastern District Court Judge James Bekker that allowed the non-profit corporation Crosslands, Inc. to keep roughly 848 acres of the 1700 acres the non-profit owns.

The state of North Dakota has a statute on the books that effectively prevents the corporate ownership of farmland. However, there can be corporate ownership of farmland as long as the land is controlled by a family farm operation. Corporations can also own farmland for conservation and wildlife habitat protection as long as the deal to own the land for these purposes is approved by the governor. Crosslands, Inc. did not obtain such approval. So, the state of North Dakota brought this lawsuit to prevent Crosslands, Inc. from allegedly violating the state anti-corporate farming law.

While the June ruling only lets Crosslands, Inc. keep 848 acres of the 1,700 the nonprofit owns in three North Dakota counties, Assistant Attorney General Charles Carvell maintains that the corporation should only be allowed to keep the 320 acres that was donated to Crosslands, and in fact, the state is not appealing the ruling with regards to those acres.

According to the Associated Press Article by Dale Wetzel, which is published on the Newsday.com website, the state is appealing the ruling because the state argues that highly erodible land and property that is considered “necessary for wetlands management” should still be subject to the statute. Bekken ruled that the nonprofit corporation could keep such land.

The appeal argues that Crosslands, Inc should be forced to give up all the 949 acres the nonprofit corporation owns in Griggs County, North Dakota. Wetzel quotes Crosslands, Inc founder James Cook as stating:

We had a partial victory there, and they don't even want us to have that . . . Our motivation is to try to secure some areas for wildlife, and restore wetlands. It's a real kick in the teeth when you're trying to do something good, and you get such enormous rejection.

The North Dakota Supreme Court will consider the case at a later date.
To read Wetzel’s article on the Newsday.com website click here.

Posted: 08/10/09

North Dakota Corporate Farming Law Upheld

On Tuesday June 16, 2009, a district judge in North Dakota upheld a state law prohibiting corporations from owning and leasing farmland in the state. For Associated Press story, click here. The case involved a nonprofit foundation Crosslands, Inc. that

acquired 320 acres in Ward County in 1985, court records show. The organization subsequently bought 949 acres in Griggs County and 480 acres in Cavalier County, with the intent of managing the property as private wildlife preserves.

The N.D.’s corporate farming law, N.D. Cent. Code §§ 10-06.1 - 10-06.1-27, allows for a review process for nonprofits to purchase agricultural land to preserve natural land and wildlife areas.

Acquisitions go through a review process that include the local county commission and a state review board. Any purchases must be approved by the governor.

Crosslands never went through the process. Southeast District Judge James Bekken upheld the law and rejected arguments that the law violated interstate commerce.

Bekken rejected those arguments, concluding the law has significant differences when compared to laws against corporate farming in South Dakota and Nebraska that have been declared unconstitutional by a federal appeals court. "The court agrees with the state's analysis that North Dakota's prohibition on corporate land ownership is essentially all-encompassing, not selective, and not discriminatory," Bekken wrote in his 35-page decision.”

The ruling concluded that

Crosslands could keep its 320 Ward County acres and 528 of its 949 acres in Griggs County. The remaining 901 acres must be sold by Feb. 1, the judge's order says.

For a statement released by the North Dakota's Attorney General Wayne Stenehjem, click here.

For more on this decision and a copy of the decision, click here to view the Agricultural Law Blog on the Jurisdynamics Network.

Posted: 06/24/09

Where Policy Grows

The sustainable agriculture community continues to advocate for modifications in the nation's food system, a trend recognized in the recent Washington Post story "Where Policy Grows: Iowan Dave Murphy is Challenging the Corporate Farming of America."

The story focuses on the efforts of Iowan Dave Murphy, who was propelled into his role as leader of Food Democracy Now following his successful efforts to prevent establishment of a hog operation near his sister's family farm. Addressing the impact of Dave Murphy and his organization, the Washington Post article states that:

The first campaign by Murphy's nonprofit group, Food Democracy Now, was a petition calling for more sustainable food policies and suggesting six progressive
candidates for secretary of agriculture last November. After the secretary was appointed, he added a list of 12 candidates for key deputy and undersecretary
positions. To date, two of the so-called sustainable dozen have received key appointments. Kathleen Merrigan, a professor at Tufts University who helped develop national organic standards, was appointed deputy secretary. Doug O'Brien, an assistant director at the Ohio Department of Agriculture, will be Merrigan's chief of staff. . . .

Within four days, 14,000 people had signed the petition. More than 70,000 had signed when Murphy requested a meeting with new secretary Vilsack, who, despite Murphy's early reservations, had surprised him with his openness and candor. After the meeting, Murphy called Vilsack the "right individual to meet the challenges of the 21st century." Without the petition, he added, "we never would have got in the door."

Corporate Farming Laws

Subject Description: Several states have statutes or constitutional provisions that restrict the power of certain corporations to engage in farming or agriculture, or to acquire, purchase, or otherwise obtain land that is used or usable for agricultural production. Such legal provisions are commonly referred to as corporate farming laws, or anti-corporate farming laws. This has been an active area of law and policy debate, with an emphasis in recent years on the application of the Dormant Commerce Clause of the Constitution. This subject area will focus on litigation and other developments pertinent to states’ corporate farming laws.