Business and Financial
The need for good farm insurance is well known and obvious to everyone in the farm community. However, understanding how farm insurance works is not as universal. Farmers know they need insurance and that the premiums must be paid but they may not be familiar with some of the key concepts of an insurance policy. One such concept is co-insurance.
A farm insurance policy is a contract between the insured and the insurance carrier. For the policy to be fair to both parties, the insured must provide an accurate inventory of the assets to be covered, including values. The insurance carrier then uses the inventory of assets and values to calculate the premiums it must charge to carry the insurance.
A policyholder may be tempted to suppress the values of the assets in an attempt to keep the premiums lower or, perhaps more likely, may not keep up with the replacement value of property. In either case, whether intentional or not, the insurance carrier is put into an unfair arrangement as it calculates premiums based on undervalued assets. Consider the following example:
Farmer bought a tractor five years ago for $80,000. Farmer believes the tractor has declined in value and includes a $60,000 value on his insurance policy. a similar tractor today would cost $100,000. Farmer’s insurance policy pays replacement value in the event of damage or loss. The tractor is lost in a fire. Farmer expects to be paid the replacement value of $100,000.
In this scenario, Farmer may expect to be paid $100,000 to replace the tractor but he paid premiums based on a $60,000 value. It would be unfair to make the insurance carrier pay $100,000 in replacement costs when it based its premiums on a $60,000 tractor.
To avoid the scenario in the above example, farm insurance policies include a co-insurance provision. This concept is an agreement between the insured and the insurance carrier that a minimum amount of insurance must be purchased to replace property in the event of a loss. If the policyholder purchases less than the specified percentage, the insurance carrier is not required to payout the full replacement value – making the policy holder a “co-insurer”. The insurance policy usually requires the insured to purchase insurance on 80% - 100% of the value of property. Co-insurance generally applies to outbuildings, dwellings, and blanket farm personal property. Consider the following example:
Using the same example as above, Farmer’s co-insurance provision requires 80% coverage. The tractor was only valued at 60% of the replacement value so the co-insurance provision in Farmer’s insurance policy is triggered.
The payout calculation for this loss is as follows:
Tractor Replacement Value = $100,000
Co-insurance requirement = 80%
Required amount of insurance = $80,000 ($100,000 x 80%)
Actual amount of insurance purchased = $60,000
Actual insurance/ required insurance = 75% ($60,000/$80,000)
Required payout1 = $75,000 (75% x $100,000)
As this example illustrates, Farmer did not meet his obligation to buy insurance on at least 80% of the value of the tractor. Farmer reported a value of $60,000 or 75% of the value of the tractor. By not meeting the 80% co-insurance requirement, Farmer triggered the co-insurance provision and is therefore partly responsible for the replacement cost. Farmer becomes the co-insured for 25% of the replacement value, the proportion that Farmer undervalued the combine. If Farmer had valued the tractor at $80,000 or higher, the insurance carrier would have been required to payout the full $100,000 for the loss. By inadvertently undervaluing the combine, Farmer forfeited $25,000 of insurance payout.
Co-insurance is an important part of a farm policy insurance that most people have never heard of. The co-insurance provision should be reviewed with the insurance agent along with the value of assets to ensure that full payouts will occur in the event of a loss. It does no good to discover that assets are valued too low after a claim is submitted, any adjustments in value to comply with the co-insurance requirement must be done before there is a loss.
1 Any deductible would also be deducted from the payout.
It's almost as fun as basketball! Join the OSU Extension Farm Office team for the March Madness Edition of Farm Office Live on Friday, March 17 from 10:00 to 11:30 a.m. This monthly webinar delivers the latest on current farm management and agricultural law issues for Ohio farmers and agribusiness professionals.
Here's what we'll be covering:
- Legislative Update (Peggy Hall)
- New Postnuptial Agreement Legislation (Robert Moore)
- Selling Timber--Call Before You Cut (Dave Apsley)
- Update on Crop Input Costs and Crop Budget Outlook for 2023 (Barry Ward)
- Sales Tax Exemption Issues (Jeff Lewis)
- Spring Crop Insurance Update (Eric Richer)
- Emergency Relief Program (David Marrison)
There is no fee to attend Farm Office Live, but attendees need to register at go.osu.edu/farmofficelive. We hope to see you there!
Cell tower leases can be a great source of income for landowners. The towers have a relatively small footprint on the land and can provide monthly income of $1,000 or more. Additionally, and in some cases most importantly, having a cell tower can increase cell service quality and dependability.
Many landowners are eventually contacted by the cell tower company or another third-party company to purchase the lease rights. The purchasing company offers a large, one-time payment to buy out the lease rather than continuing to receive monthly payments. This buyout presents the landowner with an opportunity to generate a large, one-time payment rather than waiting on the monthly payments. The issue for the landowner is whether the one-time payment is large enough to give up the future stream of payments.
When deciding if the one-time payment is enough to relinquish the monthly payments, the first course of action is to determine the Present Value of the lease. Present Value calculates the current value of a future stream of income. There are calculators available online to easily calculate the Present Value. The offered payment should be something close to the Present Value.
Another factor to consider when analyzing the payment structure is the number of carriers on the tower. Some cell tower leases pay additional rent when carriers are added to the tower. Thus, the value of the lease many not be limited to just the Future Value of the current income stream but also the potential for increased revenue due to additional carriers added to the cell tower. For leases with the opportunity to increase revenue with the addition of new carriers, this additional value should be factored into the one-time payment analysis.
Like most business transactions, taxes are an important factor in analyzing the favorability of the deal. Cell lease buyouts are no different. The buyout payment will likely be considered a capital gain. Therefore, the gain will likely be taxed as capital gains rate rather than ordinary income. Capital gains tax rates tend to be lower than ordinary income tax rates.
Taking the one-time payment has advantages. The first, and most obvious advantage, is it creates a much larger and immediate payment than the monthly payments. Additionally, the buy-out payment can usually be used in a like-kind exchange. That is, if the sale proceeds are invested into other business real estate, the capital gains tax is deferred. Lastly, the one-time payment is a guaranteed payment for a certain amount. There is not the same certainty with the lease payments. Cell leases typically allow the cell company to terminate the lease at any time.
The obvious disadvantage of taking the one-time payment is the loss of the monthly payments. The payments are a nice supplemental income and are a dependable source of income. Additionally, taking the one-time payment could cause the landowner to be pushed into the higher, 20% capital gains tax rate.
For those landowners who have cell leases and receive an offer to buy out the lease, seeking tax and legal advice is a good idea. An accountant and/or attorney can provide valuable guidance and insight into analyzing the advantages and disadvantages of having the lease bought out. Working with an attorney who has experience with cell tower leases can have significant benefits. The attorney can help advise as to how much the buyout payment should be, help negotiate better terms and, also help reinvest those funds into other real estate to defer capital gains.
In the event of a property loss or a liability incident, the insured and the insurance carrier cooperate to determine the type of coverage and the extent of coverage required by the insurance policy. As a practical matter, an insured is well-advised to thoroughly document the loss event. This may include written notes, pictures and/or retained documents.
Notification
The insured should notify law enforcement if any laws were broken in causing the loss event. This notification should be promptly followed by notice to the insurance company and include a general description of the events and the property that is damaged. This notice does not usually need to be in great detail, but a simple explanation of how the damage occurred, when the damage occurred, and what property was damaged. Additionally, it is important for the insured to take reasonable steps to protect the property from further diminishing in value. Essentially, the insured should not allow the property to be completely destroyed if the insured party can salvage any of the value.
Accounting
After notification is provided, the duties and responsibilities of the insured are not over. For a property loss, the insured party should complete an accounting of the damaged property. The accounting may include quantities, costs, values, and the specific amount of loss claimed. An accounting serves multiple purposes. First, it causes the insured to identify all property subject to loss and the extent of the loss in an organized manner. An accounting also provides a summary to the insurance carrier so that the carrier may begin the claim process more expeditiously. The insurance provider will likely conduct an investigation into the claimed loss and an accounting will assist the carrier in its investigation. Last, in the event the insured disputes the insurance carrier’s determination related to the loss, the accounting will make the process of challenging the insurance carrier’s payout easier.
Payout Determinations
Obviously, insurance is obtained for the financial protection it provides to the insured in the event of a loss event. Thus, the amount one receives from their insurance carrier is likely one of the main considerations when reviewing or shopping for a new policy. Essentially, insurance payouts are calculated based on two different mechanisms, the replacement value or the actual cash value. These two payout methods create the basis for the amount of money an insured party will receive for their loss.
Replacement value, as the name suggests, means that an insured party will be paid the amount it will cost to replace the lost items and/or structures. Essentially, a policy utilizing replacement value will pay the smaller amount of restoring the items to their condition at the time of damage or the cost of replacing them with items of the same condition. This method can provide a more stable and higher amount of payout in certain circumstances.
The other means of determining an insurance payout is by using actual cash value. Generally, because most items depreciate over time, the amount paid under this method is commonly lower than the replacement value method. Under the actual cash value method, the insured will be paid the value of the item’s depreciated value rather than the amount it will cost to replace.
The difference between these two payout methods is an important consideration when analyaing insurance policies, especially with the recent rise of inflation. Consider the following example:
A new tractor was purchased in 2020 for $300,000. The tractor is now worth $200,000 due to depreciation caused by wear and tear. The same model tractor is selling new today for $350,000. In this situation, someone who has a replacement value insurance policy would receive the $350,000 necessary to repurchase the same/similar model. On the other hand, someone covered under the actual cash value method would only receive the $200,000 amount.
The above example is a simple explanation of the difference between replacement value and actual cash value payouts. Many smaller calculations can make the difference more nuanced. Be sure to work with your insurance agent to determine the payout for specific losses.
An insurance policy will typically include a limit on the payout. The insurance carrier includes the limit to protect itself from unusually large claims or unforeseen claims. For example, using the above scenario, the insurance carrier may have included a limit of $300,000 for the payout. In that event, the owner would have only received $300,000 for the payout rather than the $350,000 for the replacement value payout. Limits to payouts are an important term in insurance policies, be sure review the limits carefully to ensure adequate coverage for farm assets.
Appealing Coverage Determinations
After submitting a claim, the insurance carrier will typically send a letter stating the extent of the coverage or a denial of coverage. The letter will also include instructions on how to appeal the determination. If the insured does not believe the coverage or denial determination is correct, they can appeal the determination. The notice of appeal is sent to the insurance carrier and will initiate the appeal process. Be sure to meet all deadlines and follow the instructions for appealing carefully. A missed deadline or a misstep in filing the appeal can extinguish appeal rights. The matter must typically be appealed to the insurance carrier before taking the matter to arbitration or litigation.
If the insurance carrier denies the appeal, then litigation and/or arbitration may be the next step in obtaining the claim. At this point, hiring an attorney is often warranted. An attorney experienced in working with matters related to insurance and insurance carriers can provide valuable insight and counsel in an insurance claim appeal. Some policies may require arbitration to resolve a dispute. Arbitration is a private dispute resolution process where a person or persons hear arguments from both parties then issue a decision. Arbitration can be more expeditious and less costly than litigation. Matters taken to litigation are decided by a court. Litigation may take longer and be more expensive than arbitration but also may provide more appeal rights.
In addition to appeals to the insurance carrier, complaints about the conduct of insurance carriers can be submitted to the Ohio Department of Insurance. The complaint should explain the matter in some detail. Including photos or other supporting evidence with the complaint is often a good idea. The agency will review the complaint and, if warranted, conduct an investigation into the matters provided by the complaint. The agency may reach out to the carrier to encourage a resolution of the matter identified in the complaint. All insurance carriers conducting business in Ohio are subject to the rules and regulations of the Ohio Department of Insurance.
Choosing An Insurance Agent and Carrier
An insurance agent is an important person on a farmer’s management team. Selection of the agent is important to ensure the insurance policy meets the needs of the farm. The insurance agent should have a good understanding of agriculture and experience working with farms. Additionally, the agent should be able and willing to build a policy for each farm, not simply use the same template for every farm. Each farm is unique, and the farm insurance policy should be unique as well. When interviewing prospective agents, be sure to ask for their background and experience with farms and consider asking for referrals from other farms.
The insurance agent can only design an insurance policy to cover the farm activities and farm assets that they know about. It is the farm owner’s responsibility to inform the insurance agent of how the farm operates, who is involved with the farm, and the assets owned by the farm. Consider inviting the insurance agent to visit the farm to be sure they have a good and full understanding of the operations of the farm.
Each insurance agent works with one or more insurance carriers. Several services provide financial ratings of insurance carriers, and it is worthwhile to know the rating of the carrier you work with. The rating indicates the carrier’s ability pay claims, especially in times of large claims like a natural disaster. Understanding your carrier’s rating is important because the carrier has an ongoing financial obligation to you. If the carrier is unable to cover all claims in a natural disaster or otherwise fails to meet is coverage obligations, a farm covered by that carrier can be at risk. Ask the insurance agent for their carrier’s rating. Keep in mind that the same rating can mean different things depending on the service used. For example, an A+ score is the second to highest score for A. M. Best while an A+ is the fifth best rating for Moody’s.
Potential Reasons for Cancellation of Your Policy
Your farm insurance will include several reasons for cancellation. A farm insurance policy likely includes more intricate reasons for cancellation than a typical homeowner’s policy. When cancelling a policy, the insurance carrier will generally mail the notice of cancellation to the insured at least 30 days before the effective termination date. This notice period provides time for the insured to obtain another insurance policy or to correct errors to maintain the current insurance. When a policy is cancelled, a refund is usually issued to the insured for any amount that is already paid for a period that will not be covered under the cancelled policy.
Nonpayment of Premiums. The first reason for cancellation is the most obvious one, nonpayment of premiums. This is as simple as it sounds. The insured must make sure to make timely payments to continue to keep its insurance policy in place and at work. Insurance carriers are required to provide written notice to the insured that premiums are past due and that the policy will be cancelled if payment is not made.
Fraud and Reckless Omission. Other reasons that a policy might be cancelled are connected, (1) the discovery of fraud or material misrepresentations in the information given to obtain the policy and (2) a reckless omission of information given to obtain the insurance policy. These two provisions cover any incorrect information that may have been provided, intentionally or not, to the insurance agency when procuring the policy. An insurance company relies on the accuracy and validity of the information they are provided when deciding the appropriate methods of coverage. It is necessary to ensure that accurate information is transmitted to any insurance provider.
Risk Profile. A policy can be cancelled due to changes in an insured’s risk profile. The insurance carrier issues a policy based on the known risks attributable to the insured. If the insured increases their risk exposure, the insurance carrier may not be willing or able to cover the additional risk exposure and cancel the policy. An example provision in an insurance policy may be something like “a substantial change in the individual risk which increases the hazard potential to the insurer unless the change was reasonably foreseeable.” Similarly, a policy may include language such as “any determination that the insurer determines could create a condition that is hazardous to the public.”
Compliance. If the insured fails to maintain adequate compliance with the safety codes applicable to a building or structure the insured party risks losing their coverage for the building or structure.
Cancellation by Insured. An insured typically has the right to cancel their policy at any time, although some fees might apply. Generally, cancellation by the insured will require the individual to deliver notice to the insurance company.
Farms are subject to more risks than ever before. Whether it’s the liability exposure of driving equipment on roadways or the potential of property loss due to a barn roof collapse, every farm has multiple sources of risk. While farmers can reduce their risk exposure through good business practices and rigorous safety protocols, there is no way to entirely eliminate inherent risks. For this reason, insurance policies that adequately protect against the multiple risks present is a necessity for farm operations.
All farmers probably know the importance of insurance to protect their livelihood and their farm assets. However, few farmers take the time to read and understand their insurance policy. The failure to read policies is not a result of apathy but more likely due to the almost unreadable nature of an insurance policy. Reading and understanding an insurance policy is difficult for anyone other than those in the insurance industry.
While each policy is unique, most farm policies do share some common terms or characteristics. The following is a discussion explaining the more general parts of a farm insurance policy. Understanding the different parts of a policy and the concepts of the policy can help to better evaluate a policy to determine if it provides adequate coverage for a farm.
An Insurance Policy Is a Contract
An insurance policy is a legal contract between an insurance company (the “insurer”) and the person or business entity being insured (the “insured”). The policy holds the insurer responsible for paying the insured for eligible claims. Furthermore, the contract requires the insured to meet certain obligations such as the timely reporting of claims. Once the policy becomes active, both the insurer and the insured are legally bound to the terms of the policy. This legal obligation is present even if the insured is unaware of some or all of the terms of the policy. It is the obligation of the insured to understand the policy.
Structure of an Insurance Policy
Most insurance policies contain the following sections:
- Declaration Page - identifies the person/entity insured and details about the policy
- Insuring Agreement – summary of terms and conditions of the policy
- Exclusions - specifically identifies what the insurance policy does not cover
- Conditions - provisions that can limit an insurance company’s obligation to pay or perform
- Endorsements and Riders - provisions that add, subtract, or modify the original insurance policy
What Does a Typical Farm Insurance Policy Cover?
Areas of Protection. A typical farm policy includes the following areas of protection:
- Liability
- Home and contents
- Farm personal property
- Farm structures
- Other additional coverages
A farm insurance policy typically covers both farm assets and household personal property. Having all assets covered under one policy is usually less expensive than having one policy for the farm assets and another policy for non-farm coverage. Noticeably absent from the above list are vehicles. A separate policy may be issued for the coverage of vehicles for both liability and property loss.
Liability Coverage. Liability coverage protects against most risks associated with the farm operation such as bodily injury, medical expenses and property damages caused by accidents associated with the farming operation. Also, and sometimes just as importantly, the policy will cover attorney’s fees associated with defending the liability incidents.
Property Loss Coverage. A farm policy will provide coverage for the loss of farm assets due to a covered peril. Farm assets are typically divided into two categories within the policy: personal farm property (machinery, grain, livestock) and farm structures. In the event of damage or destruction of a farm asset due to a covered peril, the insurance company will pay at least some, but necessarily all, of the value of the covered asset to the farm operation.
Types Of Coverage
Basic Coverage. A policy that provides basic coverage is only going to cover the insured for named perils. If an event that is not named in the policy occurs, no coverage is provided. Common perils that are often included in basiccoverage are:
- Fire
- Lightning
- Windstorm or Hail
- Explosion
- Smoke
- Vandalism
- Aircraft or Vehicle Collision
- Riot or Civil Commotion
- Sinkhole Collapse
Each of these perils will also include exceptions to coverage. For example, the Vandalism coverage usually excludes any buildings that have been vacant for more than 30 days. Again, any perils that are not expressly provided for are not covered under a basic coverage policy.
Broad Coverage. Broad coverage is more expansive than basic coverage but is still limited to only the named perils. This type of coverage will include the perils identified in the basic coverage plus additional named perils. The additional perils covered by broad coverage often include the following:
- Burglary/Break-in damage
- Falling Objects (like tree limbs)
- Weight of Ice and Snow
- Freezing of Plumbing
- Accidental Water Damage
- Artificially Generated Electricity
- Accidental Tearing Apart
- Loading/Unloading Accidents
Like basic coverage, the broad coverage perils often include exceptions. An example of a broad coverage exception is freezing of plumbing may not be covered in a building which does not maintain heat.
Special Coverage. Special coverage is the most comprehensive coverage available. Unlike basic and broad coverage, special coverage includes everything except the identified exceptions. Instead of identifying the perils covered, special coverage applies coverage to everything except what is specifically identified as an exception. Special coverage provides more comprehensive coverage because everything is included unless excepted. Remember, basic and broad coverage only applies to those perils expressly identified.
Special coverage may include many exceptions. For example, special coverage will likely include an exception for vandalism in buildings that have been vacant for 30 days. It is important to know what exceptions are included with special coverage.
Incorporation of Basic, Broad, and Special Coverage in The Insurance Policy
A policy may include one or more of the different types of coverages. For example, a policy may include specialcoverage on all farm machinery but broad coverage on all other personal property. It is important to know what assets are covered under which type of coverage. Special coverage is best for the most comprehensive coverage, but specialcoverage is also more expensive than basic and broad coverage. Weighing the additional cost of special coverage versus the benefit of comprehensive coverage provided is an important analysis to be done for each insurance policy.
In Part #2, we will discuss obtaining, managing and maintaining a farm insurance policy.
As farm machinery has become more complex and reliant on computer software, the right-to-repair issue has become a prominent issue in the farm community. Farmers are sometimes prevented from repairing their own equipment because they do not have access to needed diagnostic tools or are otherwise barred due to embedded software. Farmers have voiced their criticism of manufacturers as right-to-repair has become a prominent issue in the agricultural community.
In an effort to address the right-to-repair issue, the American Farm Bureau Federation (AFBF) and John Deere recently entered into a memorandum of understanding (MOU) in which Deere agrees to provide access to documentation, data and diagnostic tools used by the company’s authorized dealers. This development was likely a response to pressure that Deere and other manufactures were under to allow right-to-repair. New York recently passed a right-to-repair law and Senator Tester introduced right-to-repair legislation in the U.S. Senate earlier this year.
Software User License
The issue of right-to-repair is related to a user’s license. The term “license” has a specific meaning under the law. Someone who holds a license for a product is allowed to use the product but does not own the product. In 2016, Deere began using a user’s license for the software in its machines. Essentially, when a customer would buy a machine from Deere, the buyer had ownership of the steel but did not own the software that makes the machine operate.
Software licensing has its roots in 1980’s software. The burgeoning consumer software industry initially sold its software to customers and retained no rights to the software. These software developers began to see purchasers of their software reverse engineer the software and development slightly different software that resulted in the same functionality. In essence, a person could buy the software, make a change to the software to potentially avoid copyright infringement, but end up with software that did the same thing as the originally purchased software. This process essentially allowed for the stealing of intellectual property from the software developer, but the developers had little legal recourse.
To overcome this loss of intellectual property, software developers began selling a license to use the software. The software license allowed the purchaser to use the software, but the software developer retained ownership. The license agreement expressly prohibited reverse engineering or using the software in other ways that jeopardized the software developer’s intellectual property. By keeping ownership, software developers could take legal action against people who tried to copy and resell the software.
The software license worked reasonably well for many years. The vast majority of software users were oblivious to the license agreement and continued using the software as they always had. The licensing arrangement help protect the software developers’ intellectual property. However, in the last twenty years or so, software began to be embedded in electronic devices blurring the lines between the software and the hardware. A new tractor seems to be as much a computer running software as it does a power unit pulling implements.
Right-to-Repair
The integration of software into farm machines came to light in 2016 when John Deere implemented a software user license agreement to presumably protect its intellectual property. Its licensing agreement clearly stated that reverse engineering or copying of the software is prohibited. However, Deere seems to have taken it one step further. Farmers and independent repair shops were prohibited from having the diagnostic tools and manuals required to make repairs. This denial of diagnostic tools effectively made it impossible for farmers and independent mechanics to make repairs on some John Deere equipment. Many people in the farm community expressed their concern about the license agreement and saw it as scheme to keep the repairs, and the fees from those repairs, all within the John Deere dealer network. Farmers wanted to be able to repair their own equipment, or use other independent third parties, to potentially save money and to have more timely service, especially during busy times like planting and harvest.
Due to pressure from a combination of the new legislation in New York, the right-to-repair legislation introduced in the Senate and dissatisfaction expressed by farmers, John Deere likely felt it was best to make some concessions with farmers while keeping ownership of the software. This speculation is supported by the fact that AFBF agreed to “refrain from introducing, promoting, or supporting federal or state "Right to Repair" legislation that imposes obligations beyond the commitments in this MOU.” So, it seems AFBF agreed not to pursue right-to-repair legislation in exchange for Deere loosening its prohibitions of right-to-repair.
While it is impossible to foresee all the future implications for an agreement like the one between AFBF and Deere, it does seem that it is a reasonable compromise. Farmers can now have access to diagnostic tools to allow for self-repairs while Deere keeps ownership of its software. Critics argue the agreement does not go far enough and Deere still has too much control over self-repairs. We will see over the next few years if the agreement is, in fact, a reasonable compromise.
Memorandum of Understanding
It is noteworthy that the agreement between AFBF and John Deere is memorialized within a Memorandum of Understanding. For those not familiar with an MOU, there may be some curiosity as to its legal context. MOUs are most often used at the beginning of a negotiation to ensure that both parties are starting with the same understanding of their current positions, to make clear what each party is seeking from the negotiation and that it is worthwhile for both parties to move forward. Unlike a contract, an MOU is generally not legally enforceable. Because the agreement is an MOU, neither AFBF nor Deere is legally bound to its terms. Neither party has legal recourse if the other party does not honor its commitments as outlined in the MOU. If either party reneges on its commitments, the party at fault will likely receive criticism in the public opinion realm but will likely have no legal liability.
Conclusion
The John Deere software licensing issue is a good example of how new technology can require new strategies and concepts in the law. Prior to the 1980’s, copyright law had worked just fine for books and movies but it did not work well for the new medium of software. So, the concept of software licenses was developed to address the threats to the software industry. Twenty years later when the line between software and hardware began to blur, software licenses were again modified to protect the developer of the software. In the case of John Deere, perhaps they went a bit too far in enforcing their licenses. The threat of unfavorable legislation and criticism from customers probably caused John Deere to walk back their stance on prohibition of diagnostic tools to allow self-repairs. Hopefully, the agreement between John Deere and AFBF has found a reasonable middle ground that benefits all parties.
We're happy to announce our popular “Planning for the Future of Your Farm” webinar series for 2023. The four-part online series will be on January 23 and 30 and February 6 and 13 from 6:30 to 8:00 p.m. This workshop will help farm families learn strategies and tools for transferring farm ownership, management, and assets to the next generation.
Workshop topics
Here's what the webinar will cover:
- Developing goals
- Planning for the transition of management
- Planning for the unexpected
- Communication and conflict management during farm transfer
- Legal tools and strategies
- Developing your team
- Getting your affairs in order
- Selecting an attorney
Workshop faculty
You and your family will learn from two of Ohio's top farm transition experts:
- Robert Moore, Attorney with our Agricultural & Resource Law Program. If you didn't already know, Robert was in private practice for 18 years before joining our program. He provided legal counsel to farmers and landowners across Ohio on business, farm transition, and estate planning.
- David Marrison, OSU Extension Field Specialist in Farm Management. David has been with OSU Extension for 25 years and is nationally known for his teaching in farm succession. He has a unique ability to intertwine humor when speaking about the difficulties of passing the farm on to the next generation.
Registration
Because of its virtual nature, you can invite your parents, children, and grandchildren to the webinar, regardless of where they live in Ohio or across the United States. The webinar offers an easy way to include all family members in learning about how to develop a plan for the future of your family farm.
Families must pre-register for the workshop by January 16, 2023 at go.osu.edu/farmsuccession. We appreciate the support of the Ohio Corn & Wheat Growers Association in sponsoring the workshop and helping us keep the cost at $75 per farm family. The registration includes one printed set of materials that we'll mail to a family member, and other members will have access to electronic copies of the materials.
In-person workshops planned also
Several of our OSU Extension county educators are also hosting day-long in-person versions of the workshop on these dates:
- December 15, 2022 in Auglaize County at The Palazzo in Botkins. Find more information here.
- January 19, 2023 in Fairfield County at the Fairfield County Agricultural Center in Lancaster. Find more information here.
Don't miss out
We hope you'll join us for this important series! Even if you already have an estate plan or have begun one, this workshop should help you learn more and ensure that you're effectively addressing your goals for the future of your farm and farm family.
For additional information David Marrison at marrison.2@osu.edu or 740-722-6073.
Tags: transition planning, Estate Planning, succession planning, planning for the future of your farm
Comments: 0
Direct food marketing in Ohio is hot. The latest USDA survey identified 7,107 Ohio farms with direct food sales--third highest in the nation. That might be why our program receives more legal inquiries about food sales than any other area of law. And that is also why we’re hosting a three-part webinar series on “Starting a Food Business,” providing an introduction to what a producer needs to know about selling home-based and farm-raised foods directly to consumers and retailers.
The free webinar series will be from 7—9 p.m. on January 24, February 28, and March 28 in 2023, with these different topics each night:
- January 24: Start-Up Basics. What do you want to sell? We’ll review initial considerations for selling your food product. We’ll cover food safety, licensing, legal, and economic considerations for starting up a food business.
- February 28: Selling Home-Based Foods. Learn about food product development, Ohio’s Cottage Food and Home Bakery laws, and requirements for selling canned foods.
- March 28: Selling Meat and Poultry. A look at the economics, processing options, and labeling and licensing requirements for selling meat and poultry.
Our teaching team for the webinar series includes:
- Nicole Arnold, Asst. Professor and Food Safety Field Specialist for OSU Extension. Nicole supports food handlers, consumers, and educators with food safety education and risk communication efforts.
- Peggy Kirk Hall, Assoc. Professor and Agricultural Law Field Specialist for OSU Extension. Peggy directs OSU Extension’s Agricultural & Resource Law Program and regularly teaches and writes on food laws.
- Emily Marrison, OSU Extension Educator in Family and Consumer Sciences. Emily’s food science background provides expertise and insight on food safety, product development, and selling home-based foods.
- Garth Ruff, Beef Cattle Field Specialist for OSU Extension. Garth has a background in animal science and specializes in livestock production and marketing, farm management, and meat science.
The webinar series is free, but registration is necessary. Find details and the registration link at go.osu.edu/foodbusiness.
Tags: starting a food business, food law, cottage foods, Beef, Food Safety, home bakery
Comments: 0
Long-term care costs are a threat to family farms. In fact, we predict that long-term care costs are the biggest financial threat to farm families, even more so than federal estate taxes. That’s because long-term care can affect every farm--and when cash or insurance runs out, farm assets may have to be sold to pay for long-term care. With an increasing elderly population and rising health care costs, the financial pressure of long-term care on family farm succession will probably grow in future years.
What can farm families do to protect farm assets from the risk of long-term care? Our latest publication by attorney Robert Moore, Long-Term Care and the Farm, addresses this question. The publication begins with an important first step: understanding long-term care risk. What is the chance that a farmer will require long-term care, what kind of care is most common, and what how much will it cost? Robert presents data and statistics that help us predict the expected type, length, and costs of long-term care services a farmer might require.
Once we assess long-term care risk, the next important question is how to pay for long-term care while keeping farm assets secure. Robert explains how Medicare and Medicaid programs can apply to long-term care costs. He then presents several legal strategies to mitigate long-term care risk and protect farm assets. The guide wraps up with a process a farm family can follow to assess long-term care risk for their individual situation.
It's possible to keep family farmland and the family farm businesses safe from the risk of long-term care. If long-term care is a concern for your farm family, be sure to read this important new publication and talk with an agricultural attorney about protection strategies. The publication is available at no cost through our funding partnership with the National Agricultural Law Center and the USDA National Agricultural Library. Read Long-Term Care and the Farm here.
Tags: Long-term care planning, Estate Planning, transition planning, planning for the future of your farm
Comments: 0
Pages
