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Thanks go to my colleague Robert Moore for submitting our first guest blog and sharing the following expertise on the issue of vomitoxin detection in corn.
by Robert Moore, Attorney, Wright Law Company, LPA
Ohio and other areas of the Corn Belt have seen unusually high levels of vomitoxin in corn. Vomitoxin is a mycotoxin that can cause livestock to reduce feed intake and reduce weight gain. Some elevators and ethanol plants have been rejecting corn that has tested too high for vomitoxin. What legal standing do producers with rejected corn have?
Producers with a Contract
Producers who have a contract with a buyer must look to the contract to determine their rights. All provisions, including any small print on the back of the contract, must be read entirely before assessing legal rights. The language of the contract is what matters; any verbal agreements made outside the contract have very little effect in enforcing legal rights. Even if the producer and buyer agree to certain terms, if the terms do not find their way onto the contract then the parties are probably not bound by the terms.
In regards to Vomitoxin, the key terms are those describing the quality of the corn required to be delivered. Grain contracts will include at least the bare minimum “No.2 Yellow Corn” requirement. No. 2 Yellow corn is a grade established by the USDA and may have up to 5% damaged kernels. The USDA defines damaged kernels as “kernels and pieces of corn kernels that are badly ground-damaged, badly weather-damaged, diseased, frost-damaged, germ-damaged, heat-damaged, insectbored, mold-damaged, sprout-damaged, or otherwise materially damaged.” Therefore, if the only grade standard in the contract is No. 2 Yellow Corn, a producer’s corn should not be rejected or discounted solely for Vomitoxin unless more than 5% of the kernels are diseased. However, corn could likely be rejected if 3% of the kernels were diseased with Vomitoxin and another 3% were damaged in another manner. The 5% threshold is the accumulation of all damaged kernels and not just a single type of damage.
Some contracts will include more restrictive grade terms such as “must be suitable to be fed to livestock” or “must meet all FDA guidelines”. The FDA has established a 5 part per million (ppm) threshold for hogs and 10 ppm threshold for cattle and poultry. Therefore, an elevator that requires corn to meet FDA standards or to be safe for livestock consumption can reject corn if it has more than 5 ppm vomitoxin. It is important to note that corn could have less than 5% damaged kernels but have more than 5 ppm vomitoxin. That is, the USDA No.2 Yellow Corn grade is a completely different standard that the FDA’s ppm standard. Ethanol plants must be extra concerned with vomitoxin becoming concentrated in the distillers grain by-product and may have even more restrictive terms than FDA.
Producers that have corn rejected can have the dual problem of having corn rejected and still being obligated to fulfill the contract. A worse case scenario would see a producer not being able to sell his corn due to high vomitoxin levels while still being required to fulfill his contract obligations for untainted corn with the elevator. Local reports indicate that elevators have been letting producers out of their contracts if their corn has been rejected for vomitoxin but this could change at any time.
Producers without Contracts
A producer who intends to sell a load of corn to the elevator without a contract has very little legal protection from the corn being rejected. The elevator is under no obligation to buy the corn and can simply opt not to buy the corn for any reasonable reason. Without a contract, the elevator is not bound to any predetermined grade standards. Even the smallest amount of vomitoxin in the corn could cause it to be rejected.
Disputed Grain Samples
Producers have the right to appeal the grain grading determination performed by the elevator. The Federal Grain Inspection Service (FGIS) oversees grain grading procedures and methods and also provides inspection and appeal services. A producer who disputes the elevator’s grading can send a sample to FGIS and FGIS’ determination will be binding on both parties. A FGIS office is located in Toledo. For more details and information on grading appeals, contact FGIS at 419- 893-3076.
Some crop insurance policies cover Vomitoxin damage. It is best to have the corn checked by an adjuster while still in the field to avoid tainted corn from being mixed with untainted corn in bins. Many producers have opted to not file a claim due to the significant impact on APH. They would rather maintain a higher APH than to file a marginal crop insurance claim. The deadline for any claims on vomitoxin was December 25, 2009. In the future, a producer’s crop insurance agent should be contacted at the first sign of Vomitoxin to ensure that all claim procedures are property followed.
Will we see grain contracts move away from the USDA No.2 Yellow Corn standard and towards the FDA ppm standard for vomitoxin and other mycotoxins? Elevators relying on the USDA standard could get stuck buying corn that exceeds the FDA’s ppm standards. Unless blended with non-tainted grain, this grain would seemingly be unmarketable as it could not be used for human consumption, livestock consumption, and/or export. Producers should anticipate possible changes to grading standards in contracts offered by elevators and other buyers. A careful reading of all new grain contracts should be a must for producers to make sure they fully understand the quality and grade of grain they are expected to deliver to the buyer.
Representatives Sayre and Bolon introduced the implementation legislation for State Issue 2's Ohio Livestock Care Standards Board on Tuesday, January 19. H.B. 414 does the following:
- Defines "livestock" as equine animals, regardless of the purpose for which the equine are raised; porcine, bovine, caprine and ovine animals; poultry; alpaca and llamas.
- Requires the appointment of the Ohio Livestock Care Standards Board within 45 days of the bill's effective date and establishes board member provisions such as terms of office, vacancies, meetings and compensation.
- Reiterates Issue 2's language regarding the purpose of the board.
- Directs the board to adopt rules regarding civil penalties for violating care standards.
- Establishes duties of the director of the Ohio Department of Agriculture for assisting the board and grants authority to the director and his/her representative to enter property for inspection and investigation.
- Prohibits anyone from providing false information in response to the livestock care standard requirements, or otherwise violating the rules developed by the board.
- Creates an Ohio livestock care standards fund and authorizes the director of the Ohio Department of Agriculture to use the fund for program administration and enforcement.
- Increases the commercial feed and seed inspection fee in ORC 923.44 by 15 cents over the next three years, in five cent increments per year--to 30, 35 and 40 cents per ton--and increases the minimum fee from 25 to 50 dollars.
- Allows the director of ODA to request annual transfers of not less than $500,000 from the commercial feed and seed fund to the Ohio livestock care standards fund.
- States that the law does not affect the authority of county humane societies or officials.
- Clarifies that the law does not apply to food processing production activities regulated under ORC Chapter 1717.
View H.B. 414 here.
Monsanto Company must be thinking that determination sometimes yields intended results. The U.S. Supreme Court announced on January 15 that it will grant Monsanto's request for review of a 2007 federal injunction that halted the planting and sale of Monsanto's Roundup Ready alfalfa seed pending completion of an Environmental Impact Statement. The Court's announcement came as a surprise to many who've followed the case, which Monsanto has repeatedly lost in a protracted series of court decisions. Since the 2007 injunction, the Animal and Plant Health Inspection Service (APHIS) has completed the court ordered draft EIS on the proposed deregulation of the Roundup Ready alfalfa seed, and the EIS comment period still remains open until February 16, 2010.
The following is a compilation of summaries we've written in the past about the earlier decisions in Geertson Seed Farms v. Monsanto.
The 2007 decisions: Geertson Seed Farms v. Johanns, 2007 WL 518624 (N.D. Cal. Feb. 13, 2007), amended by Geertson Farms, Inc. v. Johanns, 2007 U.S. Dist. LEXIS 21491 (N.D. Cal., Mar. 12, 2007).
The federal district court in California issued its opinion on the deregulation of “Roundup Ready” alfalfa pursuant to the Plant Protection Act on February 13, 2007. Upon receiving Monsanto’s petition for deregulation of the alfalfa seed, APHIS conducted an Environmental Assessment and received over 500 comments in opposition to the deregulation. The opposition’s primary concern was the potential of contamination. APHIS, however, made a Finding of No Significant Impact (FONSI) and approved the deregulation petition, thereby allowing the seed to be sold without USDA oversight. Geertson Seed Farms, joined by a number of growers and associations, filed claims under the National Environmental Policy Act (NEPA) as well as the Endangered Species Act and Plant Protection Act. In regards to NEPA, they argued that the agency should have prepared an EIS for the deregulation.
Addressing only the NEPA claims, the court agreed that APHIS should have conducted an EIS because of the significant environmental impact posed by deregulation of the alfalfa seed. A realistic potential for contamination existed, said the court, but the agency had not fully inquired into the extent of this potential. The court also determined that APHIS did not adequately examine the potential effects of Roundup Ready alfalfa on organic farming and the development of glyphosate-resistant weeds and that there were “substantial questions” raised by the deregulation petition that the agency should have addressed in an EIS. Concluding that the question of whether the introduction of the genetically engineered alfalfa and its potential to affect non-genetic alfalfa posed a significant environmental impact necessitated further study, the court found that APHIS’s decision was “arbitrary and capricious” and ordered the agency to prepare an EIS. The court later enjoined the planting of Roundup Ready alfalfa from March 30, 2007, until completion of the EIS and reconsideration of the deregulation petition, except for those farmers who had already purchased the seed. In May of 2007, the court enjoined any future planting of the alfalfa. An order by the court in June, 2007 required disclosure of all Roundup Ready planting sites.
The 2008 appeal: Geertson Seed Farms v. Johanns, 2008 U.S. App. LEXIS 18752 (9th Cir. Sept. 2, 2008)
In continued litigation over the planting of genetically modified alfalfa, the Ninth Circuit Court of Appeals upheld a permanent injunction against further planting pending completion of an Environmental Impact Statement (EIS) by the U.S. Animal and Plant Health Inspection Service (APHIS). In Geertson I, the District Court for the Northern District of California ordered an injunction on a challenge of APHIS’s approval of the “Roundup Ready” seed brought by alfalfa seed farms, farm organizations and environmental groups. The USDA, Monsanto and Forage Genetics appealed, arguing that the injunction was overly broad and the district court failed to hold an evidentiary hearing prior to the injunction order. According to the appeals court, the district court correctly applied the traditional balancing test, and an evidentiary hearing after two earlier hearings was not required because the injunction had a limited purpose and duration—until completion of the EIS. Judge Smith issued a dissent, citing serious concerns with the scope of the injunction and claiming the court created a new exception to the evidentiary hearing requirement.
The 2009 requests: Geertson Seed Farms v. Johanns, 570 F. 3d 1130, 2009 U.S. App. LEXIS 13884 (9th Cir. Cal., 2009).
In the three year old Geertson Seed case, the Ninth Circuit refused a rehearing request on the injunction that halted planting of Monsanto’s Roundy Ready alfalfa. Geertson Seed Farms v. Johanns, --- F.3d ---, 2009 WL 1782972 (9th Cir. 2009). Monsanto had appealed the injunction issued by the trial court, which required completion of an Environmental Impact Statement by the USDA’s Animal and Plant Health Inspection Service (APHIS) before further planting of the alfalfa seed, but the court of appeals upheld the order last September in Geertson Seed Farms v. Johanns, 541 F.3d 938 (9th Cir. 2008). Monsanto then sought panel rehearing and rehearing en banc. In June, the majority denied the rehearing request and prohibited any further rehearing petitions, despite a sharp dissent on the appeal that had criticized the majority for creating a new exception to the need for a full evidentiary hearing prior to issuing an injunction.
A four year battle over the construction of a garden center has ended with an appellate decision affirming that the retail building is exempt from zoning under Ohio's agricultural exemption provision in ORC 519.21. The Second District Court of Appeals decided Siebenthaler Company v. Beavercreek Township on December 11, 2009.
The Siebenthaler Company constructed a building in 2006 on its 435 acre parcel in Beavercreek Township, Greene County. Siebenthaler has grown trees, plants and flowers on the property since the 1950s. The company planned the garden center for the sale and display of its nursery stock along with other products such as garden supplies and garden furniture. The building would also contain a few offices, including one for providing landscaping services to its clients.
The issue in this case is whether the garden center is exempt from township zoning authority pursuant to the agricultural zoning exemption in ORC 519. ORC 519.21(A) prevents township zoning officials from using their authority "to prohibit the use of any land for agricultural purposes or the construction or use of buildings or structures incident to the use for agricultural purposes of the land on which such buildings or structures are located, including buildings or structures that are used primarily for vinting and selling wine and that are located on land any part of which is used for viticulture, and no zoning certificate shall be required for any such building or structure." (emphasis added). Chapter 519 defines "agriculture" as "farming; ranching; aquaculture; apiculture; horticulture; viticulture; animal husbandry, including, but not limited to, the care and raising of livestock, equine, and fur-bearing animals; poultry husbandry and the production of poultry and poultry products; dairy production; the production of field crops, tobacco, fruits, vegetables, nursery stock, ornamental shrubs, ornamental trees, flowers, sod, or mushrooms; timber; pasturage; any combination of the foregoing; the processing, drying, storage, and marketing of agricultural products when those activities are conducted in conjunction with, but are secondary to, such husbandry or production" (emphasis added).
It seems apparent that Siebenthaler's production activities fit within the definition of agriculture as the "production of nursery stock, trees anf flowers," that its garden center also fits within that definition as the "marketing of agricultural products" conducted in conjunction with and secondary to such production, and that the building is "incident to an agricultural use of the land." Nevertheless, Beavercreek Township determined that the building did not qualify for the agricultural zoning exemption. After detailing to the township why the agricultural zoning exemption applied, Siebenthaler constructed the garden center. Upon the building's completion, the zoning inspector issued a cease, desist and removal order based on Siebenthaler's failure to obtain permits for the building. Siebenthaler appealed to the township's Board of Zoning Appeals, which upheld the zoning inspector's order. An appeal to the Greene County Court of Common Pleas yielded different results. The court concluded that the garden center is incident to the primary use of the property for agriculture and therefore exempt from zoning regulation. The township appealed the case to the court of appeals.
The court of appeals agreed that the agricultural zoning exemption applied to the garden center. Evidence had indicated that the primary function of the garden center was to serve as an outlet for the agricultural products grown on the property, said the court. To the contrary, the township produced no evidence suggesting that other activities, such as selling other products and offering landscaping services, were the primary activities or occupied a greater amount of time than agricultural production.
In response to the Board of Zoning Appeals' decision that the garden center "was not being used solely for a bonafide agricultural purpose," the court of appeals clarified that Ohio law does not require such. Rather, the law requires that a structure only be "directly and immediately related" and "usually or naturally and inseparably dependent upon" an agricultural use of the property. Marketing activities may occur in conjunction with, and must be of lesser importance than, the agricultural production on the property, the court explained.
As of this date, there is no record of the township seeking review of the decision by the Ohio Supreme Court.
The Siebenthaler case is one example of the tension that often exists between zoning officials and agricultural operations. It's difficult to understand why the Siebenthaler case progessed as far as it did, but many factors likely contributed to the situation: the lack of clarity in ORC 519.21, the need to redefine "agriculture" in ORC 519.01, non-farm growth and development in traditionally agricultural areas, diversification of agricultural businesses, concerns for safety, inadequate resources for zoning officials, property rights expectations, and of course, complete misunderstandings of the law. Agriculture and local zoning authority is a continuing problem Ohio should address, first by identifying when incompatible land uses may occur and public health and safety may be at issue, second by revising our zoning laws to reflect the changes in agriculture and the rural landscape and last, through education.
Watch for a few more agricultural zoning cases currently under consideration by Ohio courts. The Second District's opinion in Siebenthaler v. Beavercreek is available here.
Since 2000, Ohio law has allowed property owners to avoid the probate process with a transfer on death deed, a deed that automatically transfers real property to a designated beneficiary upon the death of the property owner. Under a new Ohio law, such transfers now require the preparation of an affidavit rather than a transfer on death deed. The new law also allows those who hold "survivorship rights" in property to transfer their rights upon death, which the previous law prohibited.
The changes occurred in S.B. 124, which became effective upon the governor's signature on December 28, 2009. The Ohio State Bar Association's Real Property Law Section proposed the changes to simplify the transfer on death process and remove confusion over the rights of those holding survivorship deeds.