Business and Financial

Pesticide drift is a risk many farmers face.  Pesticides in the wrong place can injure unintended targets such as crops, trees and other vegetation, animals, and people, and can raise questions of liability for the misapplication. What should you do if you suspect pesticide drift?  Whether you’re on the sending or the receiving side of it, here’s a summary of what could happen after an incident of pesticide drift.

Documentation.  Many pieces of information are necessary to analyzing whether and why pesticide drift occurred and can be helpful to determining liability.  Documentation of an incident should include: 

• Date, time, and location of the potential drift occurrence.
• Weather conditions at the time of the occurrence, including temperature, wind speed, and wind direction.
• Photographs of the site at the time of the possible drift.
• Date, time, and description of any damages that become noticeable after the pesticide application.  Note that damage symptoms may not be visible for at least 7 days. 
• Photographs of damages.  A series of photographs taken over several weeks can help document damages as they develop, and a phone or time stamp will ascertain the date and time of each photograph.
• Identify of the applicator.
• Notes of conversations between neighbors, investigators, the applicator, and others.

Ohio Department of Agriculture (ODA) investigation.   A person who believes drift occurred can file a pesticide complaint with the Pesticide Regulation Section of ODA, which has the authority to investigate an alleged pesticide drift situation and assess potential risks to human health, damages to crops and vegetation, and whether the applicator violated Ohio pesticide laws. 

If someone files a pesticide complaint, ODA’s investigation could include reviewing maps of the properties, visiting the site, talking with the person who filed the complaint, taking photographs, and collecting samples.  The agency might also seek a written statement from the complaining party and others aware of the occurrence.  The inspector next meets with the pesticide applicator to gather information about the application, such as pesticide applied, pesticide labels, mixing and spraying practices, and weather conditions. 

After reviewing a case, ODA submits an investigation report to the complaining party.  If a violation occurred, the agency takes enforcement action against the applicator in the form of a warning, civil penalty, license restriction, or criminal prosecution.  It could take months for ODA to complete the investigation and make an enforcement decision.  Note that an ODA investigation and decision does not address compensation to any harmed parties—that must come through other mechanisms.

Settlement.  It’s not uncommon for parties to agree between themselves on how to handle harm from a pesticide misapplication, especially if the damages are minor.  Settlement might include a direct payment for estimated losses of crops or other goods, replacement of vegetation, or remediation of the damaged area.  A well written settlement agreement can clarify the terms and prevent future liability issues from arising.

Insurance coverage.  An insurance policy can provide compensation for pesticide drift damages, but it’s important to ascertain whose insurance applies to the situation and whether there is coverage for the particular incident.  Many policies provide coverage for losses resulting from negligence or unintentional behaviors, such as drift resulting from an unexpected gust or an equipment malfunction.  Liability insurance held by the landowner, a tenant operator, or a custom applicator could cover the damages resulting from negligence.  

Some insurance policies will not cover certain intentional actions that could cause pesticide drift.  Failing to follow the label or applicable laws and regulations could lead to a loss of coverage, for example.  Additionally, a policy might contain a “pollution exclusion” that would deem pesticides and herbicides as “pollution” that is not covered by the policy.  Note that federal crop insurance policies typically are not applicable, as they do not cover crop losses resulting from pesticide drift.

Civil litigation.  Sometimes a pesticide drift situation can end in civil litigation between the applicator and those who claim harm from the application.  The most common legal claims for pesticide drift in Ohio are a negligence cause of action claiming that the applicator failed to use the required standard of care when applying the pesticides and a “negligence per se” action claiming that the applicator’s violation of pesticide laws caused the harm.  The harmed party might sue everyone involved with the land where the application took place, including a landowner, tenant operator, and custom applicator, leaving the parties to fight among themselves about who is liable.  Claimed damages might include compensation for lost crops, costs of restoration, differences in property value before and after the harm, and expenses for medical treatment.  If insurance hasn’t already been considered, it could arise in the litigation setting.

Pesticide drift is a risk that we hope won’t become a reality.  Many management strategies can reduce that risk--education, following label instructions, selecting the right nozzle for the job, calibrating spray equipment, spraying in appropriate weather conditions, adapting buffers for sensitive crops and animals on nearby properties, and more.  If the risk does become reality, both the applicator and the harmed party should be aware and prepared for what might happen next.

We’re used to April showers in Ohio, but this year producers can also prepare for a showering of USDA pandemic assistance.  Secretary Vilsack just announced the new “USDA Pandemic Assistance for Producers Initiative,” which will devote $12 billion to deliver financial assistance and programs for agricultural producers affected by COVID-19 market disruptions.  The USDA aims to spread those programs to a wider set of producers than previous COVID-19 programs.

While many program details and rules are still under development and expected later this spring, several types of CFAP assistance are in motion now.  First, the USDA announced the reopening of round two of the Coronavirus Food Assistance Program (CFAP2) on April 5.  Producers who haven’t yet signed up for CFAP2 may do so for at least the next 60 days at https://www.farmers.gov/cfap/apply.   USDA will be distributing $2.5 million in grants to further reach out to socially disadvantaged farmers who have not enrolled in CFAP2.    

Several automatically issued payments are also in the works for eligible producers already enrolled in CFAP1 and 2.  Producers need not submit new applications for these payments, and we’ve heard some producers have already received them.   The payments include:

• Increased CFAP1 payment rates for cattle.  Cattle producers eligible under CFAP1 will automatically receive payments based on inventory of cattle between April 16, 2020 and May 14, 2020.  Rates per head will be $7 for feeder cattle less than 600 pounds, $25.50 for feeder cattle at 600 pounds or more, $63 for slaughter/fed cattle, $14.75 for slaughter/mature cattle and $17.25 for all other cattle.
• CFAP2 crop payments.  Additional payments of $20 per acre for producers of eligible flat-rate or price-trigger crops under CFAP2, which includes Ohio crops of alfalfa, corn, hemp, sorghum, soybeans, sugar beets, wheat and other grains, listed at https://www.farmers.gov/pandemic-assistance/cfap.
• CFAP additional assistance payments.  Formula adjustments and payments for applications filed under the CFAP AA program will include pullets and turfgrass sod, corrections for row-crop producers with non-Actual Production History insurance to use 100% of 2019 ARC-county option benchmark yield in the payment calculation, revisions to sales commodity applications to include insurance indemnities, noninsured Crop Disaster Assistance Program payments, and Wildfire and Hurricane Indemnity Program Plus payments.

The additional payments for swine producers and contract growers included in the CFAP Additional Assistance are not yet are their way.  These payments are on hold as they will require regulatory revisions, but FSA is accepting applications at https://www.farmers.gov/pandemic-assistance/cfap.

Also in the still-under-development category is an additional $6 billion for new and modified programs from the Consolidated Appropriations Act as well as other unspent COVID-19 funds.  The USDA projects that rules for these programs will also begin this Spring and will include funding for:

• Dairy Donation Program purchases and other assistance for dairy farmers
• Euthanized livestock and poultry
• Biofuels
• Specialty crops, beginning farmers and local, urban, and organic farms
• Organic certification costs or to continue or add conservation activities
• Other possible expansion and corrections to the Coronavirus Food Assistance Program such as to support dairy or other livestock producers.
• Timber harvesting and hauling.
• Personal Protective Equipment (PPE) and other protective measures for food and farm workers and specialty crops and seafood processors and distributors.
• Improving the resilience of the food supply chain.
• Developing infrastructure to support donation and distribution of perishable commodities, including food donation and distribution through farm-to-school, restaurants, or other community organizations.
• Reducing food waste.

And that’s not all.  Details for allocating an additional $500 million in new funding are also in development.  That funding will be distributed as follows:

• $100M for Specialty Crop Block Program
• $100M for Local Agricultural Marketing Program
• $80M for Domestic Textile Mills Program
• $75M for Farmers Opportunities Training and Outreach Program.
• $75M for Gus Schumacher Nutrition Incentive Program
• $28M for National Institute of Food and Agriculture
• $20M for Animal and Plant Health Inspection Service (APHIS)
• $20M for Agricultural Research Service (ARS)

The USDA has stated that it will continue to develop program details and regulations through the spring.  We’ll do our best to forecast what's to come, so stay tuned for more information on the Pandemic Assistance for Producers Initiative.

The Ohio General Assembly is off and running in its new session.  Many bills that affect agriculture in Ohio are already on the move.   Here’s a summary of those that are gaining the most momentum or attention.

Tax Conformity Bill – S.B. 18 and H.B. 48.  The Senate has already passed its version of this bill, which conforms our state tax code with recent changes to the Internal Revenue Code made in the latest COVID-19 stimulus provisions of the Consolidated Appropriations Act.  Both the Senate and the House will also exempt forgiven Paycheck Protection Program second-draw loan proceeds from the Commercial Activity Tax.  The Senate version additionally exempts Bureau of Workers Compensation dividend rebates from the Commercial Activity Tax beginning in 2020, but the House bill does not.  Both bills include “emergency” language that would make the provisions effective in time for 2020 tax returns.

Beginning farmers tax credits – H.B. 95.  A slightly different version of this bill is returning after not passing in the last legislative session.  The bi-partisan bill aims to assist beginning farmers through several temporary income tax credits:

• Businesses that sell or rent agricultural assets such as land, animals, facilities or equipment to certified beginning farmers can receive a 5% income tax credit for sales, a 10% of gross rental income credit for cash rents, and 15% of gross rental income for share rents.
• Certified beginning farmers can receive an income tax credit equal to the cost of participating in a certified financial management program.

Beginning farmers, among other requirements, are those in or seeking entry into farming in Ohio within the last ten years who are not a partner, member or shareholder with the owner of the agricultural assets and who have a net worth of less than $800,000 in 2021, which adjusts for inflation in subsequent years.  Beginning farmers must be certified by the Ohio Department of Agriculture or a land grant institution.  The House Agriculture and Conservation Committee will discuss the bill at its meeting on February 16.

Wind and solar facilities – S.B. 52.  In addition to revising setback and safety specifications for wind turbines, this proposal would amend Ohio township zoning law to establish a referendum process for large wind and solar facility certificates.  The bill would require a person applying for a certificate for a large wind or solar facility to notify the township trustees and share details of the proposed facility.  That notification sets up opportunities for the township trustees or residents of the township to object to the application and submit the proposed application to a vote of township residents.  A certificate would not take effect unless approved by a majority of the voters.  A first hearing on S.B. 52 will be held on Tuesday, February 16 before the Senate Energy and Public Utilities Committee.

Grants for broadband services – H.B. 2 and S.B. 8.  The Senate passed its version of this bill last week, which sets up a $20 million competitive grant program for broadband providers to extend broadband services throughout the state.  The proposal would also allow broadband providers to use electric cooperative easements and poles, subject to procedures and restrictions.  The bill had its second hearing before the House Finance Committee last week.

Eminent domain – H.B. 63.   Based on a similar bill that didn’t pass last session, this bill changes eminent domain law in regard to property taken for the use of recreational trails, which include public trails used for hiking, bicycling, horseback riding, ski touring, canoeing and other non-motorized recreational travel.  H.B. 63 would allow a landowner to submit a written request asking a municipality or township to veto the use of eminent domain for a recreational trail within its borders.   The bill would also allow a landowner to object to a use of eminent domain for any purpose at any time prior to a court order for the taking, rather than limiting that time period to ten days as in current law.   The bill had its first hearing before the House Civil Justice Committee last week.

Minimum wage increases.  S. B. 51 and H.B. 69.  Bills on each side of the General Assembly propose gradually increasing the state minimum wage to $15, but have different paths for reaching that amount.  S.B. 51 proposes increasing the wage to $12/hour in 2022, followed by $1/hour increases each year and reaching $15 by 2025, which is when a federal bill proposes to establish the $15 minimum wage.  H.B. 69 begins at $10/hour in 2022 with $1/hour increases annually, reaching $15 in 2027.  S.B. 51 was referred last week to the Workforce and Higher Education Committee and H.B. 69 was referred to the Commerce and Labor Committee.

Just in time for Christmas, Congress delivered quite a package this morning by passing new COVID-19 relief legislation.  President Trump is expected to sign the bill soon.  Buried in the 5,593 pages of the legislation is an allocation of nearly $11.2 billion dollars to the USDA.   A large portion of the USDA funds will provide additional payments for agricultural producers under the Coronavirus Food Assistance Program (CFAP).   Benefits for food processors, energy producers and timber harvesters are also in the bill, as well as funding for several other USDA programs and studies.  We’ve categorized, compiled and summarized where the USDA funds are to go below.

Crops

• Supplemental CFAP payments of $20 per eligible acre for the 2020 crop year, for eligible “price trigger crops,” which includes barley, corn, sorghum, soybeans, sunflowers, upland cotton and wheat, and eligible “flat rate crops,” which includes alfalfa, amaranth grain, buckwheat, canola, cotton, crambe, einkorn, emmer, flax, guar, hemp, indigo, industrial rice, kenaf, khorasan, millet, mustard, oats, peanuts, quinoa, rapeseed, rice, rice, sweet, rice, wild, rye, safflower, sesame, speltz, sugar beets, sugarcane, teff, and triticale but excludes hay, except alfalfa, and crops intended for grazing, green manure, or left standing.
• $100 million in additional funding for the Specialty Crop Block Grant Program.

Livestock, poultry and dairy

• Supplemental CFAP payments to livestock or poultry producers (excluding packers and live poultry dealers) for losses from depopulation that occurred due to insufficient processing access, based on 80% of the fair market value of depopulated livestock and poultry and including depopulation costs not already compensated under EQIP or state programs.
• Supplemental CFAP payments to cattle producers for cattle in inventory from April 16 to May 14, 2020 according to different payment formulas for slaughter cattle, feeder cattle and all other cattle.
• Supplemental Dairy Margin Coverage payments for eligible operations with a production history of less than 5 million pounds whenever the average actual dairy production margin for a month is less than the selected coverage level threshold, according to a specified formula.
• $1 billion for payments to contract growers of livestock and poultry to cover not more than 80% of revenue losses from January 1 to December 22, 2020.
• $20 million for the USDA to improve animal disease prevention and response capacity.
• Establishment of a statutory trust via the Packers and Stockyards Act that requires a dealer with average annual purchases above $100,000 to hold cash purchases of livestock by the dealer in trust until full payment has been received by the cash seller of the livestock.

General payment provisions

• In determining the amount of eligible sales for CFAP, USDA must include a producer’s crop insurance indemnities, non-insured crop disaster assistance payment and WHIP payments, and may allow a producer to substitute 2018 sales for 2019 sales.
• USDA shall make additional payments under CFAP 1 and CFAP 2 to ensure that payments closely align with the calculated gross payment or revenue loses, but not to exceed the calculated gross payment or 80% of the loss.  For income determination, USDA shall consider income from agricultural sales, including gains, agricultural services, the sale of agricultural real estate, and prior year net operating loss carryforward.
• USDA may take into account when making direct support payments price differentiation factors based on specialized varieties, local markets and farm practices such as certified organic production.

Marketing and processing

• $100 million for grants under the Local Agriculture Market Program for COVID-19 impacts on local agriculture markets.  USDA may reduce and allow in-kind contributions for grant matching requirements.USDA may provide support to processors for losses of crops due to insufficient processing access.
• $60 million for a grant program for meat and poultry slaughter and processing facilities seeking federal inspection status or eligibility for the Cooperative Interstate Shipment program to modernize facilities or equipment, comply with packaging, labeling, and safety requirements and develop food safety processes.
• USDA must deliver a report on possible improvements to the Cooperative Interstate Shipment program that allows interstate shipments of meat and poultry products and on the availability and effectiveness of federal loan and grant programs for meat and poultry processing facilities and support for increasing processing capacity.
• USDA may make recourse loans available to dairy product processors, packagers or merchandisers impacted by COVID-19.
• Until September 30, 2021, USDA may extend the term of marketing assistance loans to 12 months.

Food purchases

• $1.5 billion to purchase and distribute food and agricultural products to individuals in need, and for grants and loans to small and midsized food processors or distributors, seafood processing facilities, farmers’ markets, producers or other organizations for the purpose of responding to COVID, including for worker protections.  USDA must conduct a preliminary review to improve COVID-19 food purchasing, including the fairness of purchases and distribution.
• $400 million for a Dairy Donation Program to reimburse dairy processors for purchasing and processing milk and partnering with non-profit organizations to develop donation and distribution plans for the processed dairy products. 

Timber and energy

• $200 million for relief to timber harvesting and hauling businesses that experienced a loss of 10 percent or more in gross revenue from January 1 to December 1, 2020, as compared to the same period in 2019.
• USDA may make payments for producers of advanced biofuel, biomass-based diesel, cellulosic biofuel, conventional biofuel or renewable fuel produced in the U.S. for unexpected market losses resulting from COVID-19.

Training and outreach

• $75 million for the Farming Opportunities Training and Outreach Program for grants for beginning, socially disadvantaged and veteran farmers and ranchers impacted by COVID-19.  USDA may reduce and allow in-kind contributions for grant matching requirements and waive maximum grant amounts.

Farm stress

• $28 million for grants to State departments of agriculture to expand or support stress assistance programs for agriculture-related occupations, not to exceed $500,000 per state.

Nutrition

• $75 million for the Gus Schumacher Nutrition Incentive Program, and USDA may reduce matching grant requirements.

We’ll keep digging through the legislation to report on other agricultural provisions. Or readers may take a look at H.R. 133 here.  The USDA allocations we summarized are in Subtitle B, beginning on page 2,352.