Recent Blog Posts
Peggy Hall, Asst. Professor, Agricultural & Resource Law Program
Bakers who want to produce and sell baked goods such as cheesecakes, cream pies, custard pies or pumpkin pies in Ohio must first obtain a “home bakery” license. These types of baked goods are considered “potentially hazardous” because they create food safety risks if not prepared and stored properly. To safeguard against a food safety incident, the State of Ohio requires the home bakery to be inspected and licensed by the Ohio Department of Agriculture’s Food Safety Division.
What is a “home bakery”? The home bakery license is only available for those who produce potentially hazardous baked goods in kitchens that are in homes ordinarily used by the owner as a primary residence. A home bakery kitchen may contain only one single or double oven, which cannot be a commercial oven. The following situations are not home bakeries, and likely require a “bakery” license rather than a home bakery license: the kitchen is not in a home, the home is not used as a residence, the home is not occupied by its owner, the kitchen is a second kitchen, the kitchen has multiple separate stoves or ovens, or the kitchen has a commercial stove or oven.
What’s required for a home bakery license? The home bakery operator must apply for a license and pay a $10 license fee. The process begins by contacting the Food Safety Division at the Ohio Department of Agriculture at (614) 728-6250. The Division will supply an application and arrange for an inspection. Once licensed, the operator must pay a $10 annual renewal fee.
What happens in a home bakery inspection? An inspector from ODA will visit the home, meet with the applicant and inspect the home kitchen for the following:
- Walls, ceilings and floors are clean, easily cleanable and in good repair;
- Kitchen does not have carpeted floors;
- There are no pets or pests in the home;
- Kitchen, equipment and utensils are maintained in a sanitary condition;
- Kitchen has a mechanical refrigerator capable of maintaining 45 degrees and equipped with a thermometer;
- If the home has a private well, proof of a well test completed within the past year and showing a negative test result for coliform bacteria;
- Food product labels that meet labeling requirements.
What if the baker also produces foods that are not “potentially hazardous”? An operator with a home bakery license may also produce and sell any food defined by Ohio law as a “cottage food.” Cottage foods include non-hazardous baked goods such as cookies, cakes, fruit pies, brownies, breads, candies, jams, jellies, fruit butters, granola, popcorns, unfilled baked donuts, waffle cones, pizzelles, dry cereal, nut snack mixes with seasonings, roasted coffee, dry baking mixes, dry seasoning blends and dry tea blends. Those who produce only cottage foods do not need any type of license from ODA.
What if someone operates without a home bakery license? Failing to obtain the home bakery license can result in prosecution; the operator is subject to criminal misdemeanor charges. Additionally, those without a license may not be able to sell their baked goods in many situations, as it is common for farmer’s markets and others to require that a vendor have the proper license.
A license is one form of food safety insurance. Passing an ODA inspection for a home bakery license is one layer of insurance against the possibility of a food safety incident—those who satisfy ODA’s requirements have assurance that they’re using good practices. But home bakers shouldn’t use the license as the only form of insurance. Careful control of the home kitchen environment, continuous education on food safety practices, food product liability insurance coverage and formation of a business entity such as a Limited Liability Company are additional layers of liability protection. Because selling food products poses a high risk of legal liability, home bakers should consider the license as just one of several requirements for operating a home bakery business.
Tags: home bakery liability, home bakery regulations, Ohio home bakery license
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Catharine Daniels, Attorney, OSU Extension Agricultural and Resource Law Program
Attorneys across Ohio recently came together for the 2013 Ohio Agricultural Law Symposium to learn about current legal issues for Ohio farmers and agribusinesses. In a session about protecting the farm and agribusiness, Cari Rincker, a food and agricultural law attorney in New York City, discussed why farm and agribusinesses might consider using a Non-Disclosure Agreement (NDA) to safeguard confidential business information.
An NDA is not typically a tool that a farm or agribusiness would think of using in a business transaction. According to Rincker, however, NDAs are underutilized in the food and agriculture industry. Many farms and agribusinesses develop their own ideas, concepts, know-how, trade secrets, intellectual property, business plans or financial information. Preventing other parties from disclosing these types of information can be important to the long-term health and viability of the farm or agribusiness.
Rincker highlighted two common situations for using an NDA. One is when a farm or agribusiness is entering into business discussions with another party; confidential information could be disclosed during the course of these discussions. For example, if a farmer approached a website developer about his or her proposed online agribusiness, that farmer may wish to have an NDA with the website developer to keep the business plan confidential. The second situation concerns employees or independent contractors. An NDA binds employees and contractors to confidentiality about private information they acquire from working for the business. An agribusiness may want a bookkeeper to maintain confidentiality about business finances, for example.
What's in a Non-Disclosure Agreement? According to Rincker, an NDA should address at least these questions:
- Who will be exchanging confidential information?
- What is the purpose of the exchange of confidential information?
- What type of information will be considered “confidential” for purposes of protection under the NDA?
- How can the confidential information be used and who can use it?
- How will the secrecy of the confidential information be maintained?
- How long will the confidentiality of the information be maintained?
- What are the consequences of a breach or misuse of the confidential information?
Maintenance of confidential information should not be taken lightly, states Rincker. If your farm or agribusiness could be harmed by the disclosure of private information, talk with your attorney about an NDA. For more information on NDAs, visit the Rincker Law website and blog at http://rinckerlaw.com/blog/.
Tags: Cari Rincker, Non-Disclosure Agreement, Ohio Agricultural Law Symposium
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Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law Program
The Ohio Senate concurred with the House of Representatives yesterday to enact changes to Ohio's Agricultural Commodity Handler's law, commonly known as the Grain Indemnity Fund. According to the bill sponsors, the changes will better protect Ohio farmers from grain elevator insolvency by raising the fund cap from $10 to $15 million and increasing the minimum fund balance trigger for the per bushel fee assessment from $8 to $10 million.
The Ohio Legislature originally created the Grain Indemnity Fund in 1983 to reimburse farmers when a grain handler becomes insolvent. The law requires licensing of all grain handlers, who pay a 1/2 cent per bushel fee on grain handled to maintain a minimum balance in the indemnity fund. In the case of a grain handler's financial failure, a farmer is reimbursed 100% for open storage grain in the elevator and 100% of the first $10,000 of a loss for future contracts, delayed price and basis transactions, with 80% reimbursement beyond the first $10,000 of loss. The legislature raised the indemnity fund's required minimum balance to $10 million in 2005.
Ohio Department of Agriculture handles the fund, which paid out $4.1 million to farmers in grain insolvency cases in 2011 and its highest payout of $2.5 million for one elevator in 2004. The fund currently is around $8.2 million, but bill sponsors believe that payouts similar to those of the past could nearly bankrupt the fund under today’s grain prices. Changes to the fund cap and the assessment trigger should prevent depletion of the fund, according to bill sponsor Senator Cliff Hite.
The legislation also changes grain lien priority rules, revises licensing requirements for commodity handlers and increases discretion for the ODA Director to determine the validity of claims. The following summarizes these and other provisions in the legislation:
- Increases the Grain Indemnity Fund's minimum balance from $8 to $10 million and its maximum balance from $10 to $15 million. ODA cannot assess the per bushel assessment on handlers outside of the minimum and maximum balances.
- Gives priority to the automatic lien established and held by ODA in the event of a commodity handler’s failure or insolvency. The lien will now have priority over all competing lien claims asserted against the commodity.
- Requires a commodity handler whose license is revoked to immediately notify all parties storing agricultural commodities in the handler's warehouse and all holders of receipts issued by the handler.
- Directs the ODA Director to determine the validity of claims against the fund with the recommendation of the Commodity Advisory Commission rather than the approval of the Commission.
- Revises the type of financial statements that must be submitted to the Director by an applicant for an agricultural commodity handler's license or renewal. The financial statements must consist of all financial statements and footnotes required by generally accepted accounting principles as promulgated by the Financial Accounting Standards Board together with an independent accountant's report on the statements.
- Establishes the total net worth requirements for a handler's license applicant as 15 cents per bushel handled in the previous year and raises the minimum net worth requirement to $50,000.
- Removes barley, oats, rye, grain sorghum, sunflower and speltz from the list of agricultural commodities addressed by the law.
Revisions to the law will be effective on October 11, 2013. View the agricultural commodity handler's legislation here.
Tags: ohio agricultural commodity handlers law, ohio grain indemnity fund
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Larry Gearhardt, Asst. Professor, OSU Extension
Much of Ohio’s forestland has been plagued by, first, the emerald ash borer, and more recently, the Asian longhorn beetle. Can you deduct the loss on your tax form when a major portion of your forest land is destroyed by these insects? You can if the timber or forest land is held to produce income. If the timber is held merely for personal use, the loss is not deductible. A tax deduction is available to owners who hold timber or forest land to produce income, as opposed to personal use.
Casualty Versus Non-Casualty Loss
Where to deduct a loss on your tax forms depends upon whether the loss is a casualty loss or a non-casualty loss. A “casualty” is defined as the damage, destruction, or loss of property from an identifiable event that is sudden, unexpected, and unusual. Disease, insect infestation, drought, or combinations of factors seldom qualify as a casualty because these types of damage tend to be gradual or progressive rather than sudden. However, Revenue Ruling 79-174 provides that a massive southern pine beetle infestation that killed residential shade trees in 5 to 10 days did qualify as a casualty. Whether or not it is a casualty depends upon the facts of the situation.
A “non-casualty” loss is defined as the damage, destruction beyond use, or loss of property from an identifiable event. Like a casualty, the precipitating event for a non-casualty loss must be unusual and unexpected, but unlike a casualty, it does not have to be sudden. For example, insect attacks have resulted in deductible non-casualty losses of timber according to Revenue Ruling 87-59.
Deduction of a Non-Casualty Loss
A non-casualty loss is a business deduction. With one exception, owners who hold their timber as an investment, as opposed to managing timber as a business, cannot deduct a non-casualty loss. The exception is unusual and unexpected drought.
To calculate the amount of a non-casualty loss, the owner must first calculate the basis of the timber lost as you would for a sale. You then divide the adjusted basis in the affected block of timber by the basis of the total volume of timber in the block, updated to immediately before the loss. The result is multiplied by the volume of timber lost.
As an example, assume that the fair market value of the timber lost was $9,000. The basis of the timber lost was $3,500. If you held the timber as part of a trade or business, you could deduct $3,500 allowable basis in the timber lost on IRS Form 4797. Start on IRS Form 4797, Part II, for timber held one year or less, or Part I for timber held more than one year. The loss will be netted with other gains and losses from the disposal of other business property. If you are holding the timber as an investment, you cannot deduct a non-casualty loss unless it was from drought.
In contrast with casualty losses, which are deducted first from ordinary income, non-casualty losses are first deducted from capital gains. This treatment of non-casualty loss is a disadvantage, since capital gains receive more favorable tax treatment.
Expenses
A loss frequently gives rise to related expenses, such as the cost of a cruise or appraisal to determine the extent of the loss, that cannot be included as part of the loss. Such expenses are often deductible, but where you take the deduction differs according to the type of loss.
If you hold your timber or forest land as part of a trade or business, these expenses are deducted on IRS Form 1040, Schedule C, or Schedule F if you qualify as a farmer. If you hold your timber or forest land as an investment, an owner can deduct expenses related to a non-casualty loss to the extent that they qualify as “ordinary and necessary” expenses, even if you cannot deduct the loss itself. However, an owner holding timber as an investment will report expenses on IRS Form 1040, Schedule A, in the “Miscellaneous deductions” section. This deduction will be subject to the 2% of adjusted gross income floor.
What If There Is a Gain?
If timber or forest land is damaged or destroyed and the owner receives payment in the form of a damage claim, salvage proceeds, insurance recovery, or other compensation, the transaction is called an involuntary conversion or involuntary exchange. If the payment that the owner receives is greater than the basis of the timber lost, there will be a gain rather than a deductible loss. Unless the owner elects to defer the gain by replacing the property within specified time limits, the gain must be reported.
For more information, see the USDA Forest Landowners' Guide to the Federal Income Tax here.
Tags: Casualty v. Non-Casualty Loss, Insect Infestation, Timber Tax
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Catharine Daniels, Attorney, OSUE Agricultural & Resource Law Program
The court's decision was not exactly what a group of farmers, seed sellers, and agricultural organizations was hoping for, but they are nevertheless claiming partial victory against Monsanto in a recent lawsuit centered on genetically modified seed. On June 10, 2013, the United States Court of Appeals denied the group's request for a judgment against Monsanto but at the same time declared that Monsanto would be judicially bound to its promise not to pursue future patent infringement suits against the growers, seed sellers or organizations for "inadvertently using or selling 'trace amounts' of genetically modified seeds."
Case History
Several farmers and organizations who grow, use, or sell conventional and organic seeds ("Seed Growers") filed a federal lawsuit against Monsanto in March of 2011. Ohioans in the group include the Ohio Ecological Food and Farm Association. The Seed Growers asked the court to declare some of Monsanto’s patents “invalid, unenforceable, and not infringed.” The Seed Growers claimed they had to forgo planting certain crops and had to take “costly precautions” to avoid contamination by Monsanto's genetically modified "Roundup Ready" seeds. Pointing to Monsanto's history of aggressive patent infringement litigation, the Seed Growers feared they would be sued by Monsanto despite their efforts to prevent unintended contamination. The Seed Growers also alleged adverse health effects and long term environmental impacts from the genetically modified seed. The federal court dismissed the case after determining that no traceable injury existed that the court could address, since none of the Seed Growers had actually been sued by Monsanto.
The Appeal
The Seed Growers appealed the decision to the Court of Appeals for the Federal Circuit. The court of appeals agreed that there was not a current traceable injury to the Seed Growers. But the appeals court also concluded that there was no risk of harm to the Seed Growers because Monsanto had “unequivocally disclaimed any intent to sue appellant growers, seed sellers, or organizations for inadvertently using or selling “trace amounts” of genetically modified seeds.” Even though Monsanto had denied the Seed Growers' request to enter into a written covenant not to sue, the appeals court held that Monsanto's promise to the Seed Growers throughout the lawsuit had the same effect as a written, signed agreement not to bring suit.
How Can the Court Enforce Monsanto's “Promises”?
Monsanto's promise not to sue the Seed Growers came through verbal representations made in the course of the federal court proceedings. How can the court hold Monsanto to such a promise? To do so, the appeals court relied on the unique legal doctrine of "judicial estoppel," which states that under certain circumstances, a party who makes a declaration in a legal proceeding will be bound to that statement and may not contradict the declaration in a future legal proceeding. The appeals court examined three factors that warrant a court's use of judicial estoppel:
- The party’s later position is clearly inconsistent with its prior position.
- The party successfully persuaded a court to accept its prior position.
- The party would derive an unfair advantage or impose an unfair detriment on the opposing party if the court didn't step in to enforce the promise.
According to the court, all three of these situations would exist if Monsanto later sued the parties for patent infringement, which requires the application of judicial estoppel to bind Monsanto to its promise.
But the Promise is Limited
Monsanto's promise was not to sue "inadvertent users or sellers of seeds that are inadvertently contaminated with up to one percent of seeds carrying Monsanto's patented traits." But what about growers who inadvertently use or sell seed containing greater than trace amounts; i.e. greater than one percent? Despite the appeals court's effort to clarify whether or not Monsanto would assert its patent rights in those situations, Monsanto would not state its position on the issue. Monsanto did make it clear that their view of an inadvertent infringement is quite narrow, stating that an "inadvertent infringer" would not include “those growers whose crops become accidentally contaminated, and who do not treat their fields with Roundup, but who, knowing of the contamination, harvest and replant or sell the seeds.” Thus in situations where growers inadvertently use or sell seed containing greater than trace amounts of Monsanto's seed, it is possible that Monsanto could bypass judicial estoppel and pursue a patent infringement case.
So Was this Really a Victory for the Organic Seed Growers?
While the Seed Growers did not obtain the declaratory judgments they sought against Monsanto, they did receive some protection from future litigation in the form of judicial estoppel. Because the appeals court concluded that the Seed Growers were not at risk of being sued by Monsanto, the court was able to avoid delving into the deeper issues of whether or not Monsanto's patents are valid, whether avoiding contamination is a burden to conventional farmers and whether Monsanto's seed poses health and environmental harms. The Seed Growers have expressed interest in requesting a review of the decision by the U.S. Supreme Court. Even if the case does not make its way to the Supreme Court, it surely isn't the last lawsuit we'll see that challenges genetically modified seed technology.
View Organic Seed Growers et al v. Monsanto here.
Tags: Monsanto, Organic Seed Growers and Trade Association v. Monsanto
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Peggy Hall and Catharine Daniels, OSUE Agricultural & Resource Law Program
It's hay and straw season in Ohio, which creates both a high need to employ youth on the farm and the challenging task of understanding farm youth labor laws.
For example, imagine Farmer X is getting ready to cut hay and has hired Youth Y to help, who is 14 years old. What exactly can Youth Y help with? Can he drive the tractor? Can he ride on the tractor? Does it make a difference whether Youth Y is the son, daughter or grandchild of Farmer X? Are there implications for allowing Youth X to perform farm work that he or she shouldn’t perform?
These questions are important to consider before hiring minors to work on your farm this summer. In a series of blog posts, we will discuss various aspects of federal and state regulations applying to minors working on farms. First up in this post is the issue of what type of work the law allows you to assign to youth workers on the farm.
Whose child?
The relationship of the minor you are hiring is important because the law treats your own children and grandchildren differently than non-related children working on your farm. If the minor you hire is your own child or grandchild, the law allows you to have the child do any type of job, including agricultural jobs considered "hazardous" under state and federal labor laws. Step children, adopted children, foster children and other children for whom you are the guardian are also exempt from the hazardous jobs regulation.
For other children, age matters
For other youth who are not your own child or grandchild, the type of work you may assign the child depends upon his or her age. "Other children" includes strangers, students, neighborhood children, friends, nieces, nephews and any other relatives. Only the older youth may perform "hazardous" farm work, as follows:
- 16 and 17 year olds – May perform any type of farm job including agricultural jobs considered hazardous.
- 14 and 15 year olds – May not perform any job listed as hazardous unless the child holds a 4-H or vocational agriculture certificate of completion for tractor operation or machine operation and the employer keeps a copy of the certificate on file with the minor employee's record.
- 12 and 13 year olds – May not perform any job listed as hazardous; may only perform non-hazardous jobs if with written consent for employment from a parent or guardian or if the child is working on a farm that also employs the child's parent or guardian.
- 11 year olds and younger – May not perform hazardous jobs. May only perform non-hazardous farm work if a parent or guardian gives written consent and if the child will be working on a farm where employees are exempt from minimum wage requirements. A farm is exempt from minimum wage if the farm had 500 or fewer man-days of agricultural labor in the preceding calendar year; a man-day is any day where a worker performs at least one hour of agricultural labor.
What jobs are "hazardous"?
Ohio has adopted the federal government's determination of "hazardous" activities for youth, which is based upon the risk of harm posed by an activity. Your own child or grandchild may perform hazardous tasks at any age, but other youth working on the farm must be at least 16 years of age to participate in these "hazardous" tasks:
- Operating a tractor with over 20 PTO horsepower, or connecting or disconnecting an implement or any of its parts to or from such tractor.
- Operating or assisting to operate (including starting, stopping, adjusting, feeding, or any other activity involving physical contact associated with the operation) any of the following machines: corn picker, cotton picker, grain combine, hay mower, forage harvester, hay baler, potato digger, mobile pea viner, feed grinder, crop dryer, forage blower, auger conveyor, unloading mechanism of a nongravity-type self-unloading wagon or trailer, power post-hole digger, power post driver or nonwalking type rotary tiller, trencher or earthmoving equipment, fork lift, potato combine or power-driven circular, band, or chain saw.
- Working on a farm in a yard, pen, or stall occupied by a bull, boar or stud horse maintained for breeding purposes, a sow with suckling pigs, or a cow with a newborn calf with umbilical cord present.
- Felling, bucking, skidding, loading, or unloading timber with a butt diameter of more than 6 inches.
- Working from a ladder or scaffold (painting, repairing, or building structures, pruning trees, picking fruit, etc.) at a height of over 20 feet.
- Driving a bus, truck or automobile when transporting passengers or riding on a tractor as a passenger or helper.
- Working inside a fruit, forage, or grain storage designed to retain an oxygen deficient or toxic atmosphere; an upright silo within 2 weeks after silage has been added or when a top unloading device is in operating position; a manure pit; or a horizontal silo while operating a tractor for packing purposes.
- Handling or applying (including cleaning or decontaminating equipment, disposal or return of empty containers, or serving as a flagman for aircraft applying) agricultural chemicals classified under the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. 135 et seq.) as Category I of toxicity, identified by the word “poison” and the “skull and crossbones” on the label or Category II of toxicity, identified by the word “warning” on the label.
- Handling or using a blasting agent, including but not limited to dynamite, black powder, sensitized ammonium nitrate, blasting caps, and primer cord.
- Transporting, transferring or applying anhydrous ammonia.
Going back to our example of Farmer X and Youth Y, if Youth Y is Farmer X’s child or grandchild, then the child would be permitted to drive the tractor to cut the hay because the hazardous restrictions do not apply. However, if Youth Y is not Farmer’s X’s child or grandchild, then he would not be permitted to drive the tractor because it is considered a hazardous job that 14 year olds may not perform, unless Youth Y holds a 4-H or vocational agriculture certificate of completion for tractor operation.
What if I violate the "hazardous" jobs regulations?
Under Ohio law, you can be found guilty of a third degree misdemeanor for allowing a minor under the age of 16 to perform a hazardous job on your farm; penalties are up to a $500 fine and 60 days in jail for each violation. Additionally, if the child is injured while engaged in an illegal hazardous activity, you could be assessed with an increased workers' compensation premium.
How can I comply with the law? To ensure that you don't violate the labor regulations on hazardous jobs for youth, take a few precautions to protect both you and your child employee:
- Verify the child's age and keep records of your verification.
- Know the list of agricultural work that is considered hazardous.
- Remember that only your children or grandchildren are exempt from the hazardous jobs regulation; consider nieces, nephews, cousins and other relatives as "other children" who are subject to the hazardous jobs rules.
- Ensure that your child employees know which jobs they may do and which jobs they may not perform.
- Review safety practices with your youth employees.
- For 14 and 15 year olds who have completed a 4-H or vocational agriculture tractor or machinery operation certificate, maintain a copy of the certificate with the employee's records.
Tags: employing minors on farms, farm youth labor, hazardous jobs for youth
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Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law Program
Spring brings an increase in agricultural land use activity and with it comes a surge of inquiries about Ohio's agricultural zoning laws. Here at OSU, we repeatedly hear a common question from agricultural landowners and local zoning officials: can zoning regulate this agricultural situation? That's a question without a short and simple answer. A review of Ohio Revised Code sections 303 and 519, which contain the "agricultural exemption" from county and township zoning authority, is the first step toward understanding whether a county or township can regulate an agricultural land use (note that different laws apply for cities and villages). Here's a summary of Ohio's agricultural zoning laws:
Agriculture is exempt from rural zoning authority in many, but not all, situations. While Ohio law grants counties and townships the authority to utilize zoning, the law limits how much authority these local governments have over agricultural land uses. Generally, a county or township may not prohibit the use of any land for agricultural purposes in any unincorporated area, with a few exceptions that are noted below. This exemption applies in any zoning district, whether residential, industrial, commercial, agricultural or otherwise.
An exempt activity must be in the definition "agriculture." Ohio agricultural zoning laws apply to "agriculture," which the law defines to include: farming; ranching; algaculture; 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 and pasturage. "Agriculture" also includes activities involving the processing, drying, storage, and marketing of agricultural products if those activities are conducted in conjunction with but secondary to actual production of those products.
Agricultural buildings and structures can also be exempt from zoning authority. If a building or structure is directly related to an agricultural activity on the same parcel of land, then Ohio zoning law does not allow a county or township to require a zoning certificate or prohibit the construction or use of the building. For example, local zoning cannot require a zoning permit or prevent the construction of a barn being built for housing cattle or storing farm machinery that is used for farming on the same property. Also, zoning may not regulate or prohibit any building or structure that is used primarily for vinting and selling wine that is located on land where grapes are grown.
Special rules for farm markets. Ohio law also says that local zoning cannot prohibit the use of land for a farm market in any industrial, residential, commercial or agricultural zoning district if 50% or more of the market's gross income is from produce raised on farms owned or managed by the farm market operator. But where necessary to protect public health and safety, local zoning may regulate the size of the farm market building, parking area size, set back lines and access to the market. This provision is commonly known as the "farm market 50% test."
Special rules for on-farm energy production. Several energy production activities are not subject to local zoning if they occur on land qualified for CAUV (Current Agricultural Use Valuation). These activities include biodiesel, biomass energy, electric and heat energy production, as well as biologically derived methane gas production of less than five megawatts.
Some agricultural activities can be regulated by local zoning. There are a few exceptions to the agricultural exemption. Local zoning may regulate agriculture in the following situations if the parcel of land is five acres or less and is located in a platted subdivision containing 15 or more lots:
- On a lot that is one acre or smaller, zoning may prohibit or regulate all agricultural activities.
- On a lot between one and five acres, zoning may regulate set back lines, height and size of buildings used for agriculture and may prohibit or regulate dairying and animal/poultry husbandry if 35% or more of the lots in the platted subdivision are developed.
Unfortunately, a summary of the zoning statute doesn't answer all questions about agriculture and zoning. Look for our future articles for continued analysis of Ohio's agricultural zoning laws. For additional zoning information, also see our zoning library, here.
Tags: agricultural zoning, agricultural zoning exemption, ohio agricultural exemption from zoning
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Catharine Daniels, Attorney, OSU Extension Agricultural & Resource Law Program
Soon, farmer’s markets all over Ohio will be full of vendors selling a variety of products--from fresh fruits and vegetables to home baked goods. For vendors selling home baked goods, it can be tricky to understand the legal landscape at a farmer's market. What laws apply? What type of license is required? What do you need to do to be in compliance with the law?
The first step to answering these questions is to determine how your baked items are classified under state law. Ohio law has two categories of regulation that include baked goods: cottage food regulations and home bakery regulations. Knowing which category your baked goods fall under will determine which laws apply to you. The major difference between the two is whether or not the baked good is considered "potentially hazardous" for consumption if not prepared and managed properly.
Cottage Foods
A "cottage food operation" is an operation in a person’s home (i.e., in the cottage) where food items that are not potentially hazardous are produced for sale. Ohio Revised Code section 3715.01(A)(19). Ohio law provides a list of baked goods that are cottage foods because they are not potentially hazardous: cookies, breads, brownies, fruit pies, cakes, unfilled baked donuts, granola and pizelles. (There are other types of food products included as cottage foods, but we will discuss those further in future posts.) Because these cottage foods do not pose high food safety risks, they are not highly regulated. A few important questions illustrate Ohio's cottage food laws:
- If I want to produce and sell a cottage food, do I need a license from ODA?
No; the Ohio Department of Agriculture does not require a license if you plan to sell non-potentially hazardous "cottage foods" such as cakes, brownies, breads, fruit pies and cookies. No additional license is needed from the local health department where the farmer’s market is located.
- Will my home kitchen where I produce the cottage food need to be inspected?
No inspection is required for a home kitchen producing "cottage foods."
- What do I need to do to sell my cottage food at a registered farmer’s market?
You must properly label the baked good (see specific labeling requirements here). The label must contain the statement: “This Product is Home Produced.” This alerts potential buyers that the food was produced in a private home that is not subject to inspection.
- Can I sell my cottage food at any farmer’s market?
Under the Ohio cottage food law, you may only sell cottage foods within the state of Ohio. Home Bakeries If you plan to produce "potentially hazardous" baked goods, then you must abide by Ohio's regulations for "home bakeries." The food safety risks posed by potentially hazardous foods lead to a higher level of regulation over Ohio's home bakeries.
- What foods are "potentially hazardous" foods?
Potentially hazardous foods are those that are in a form capable of supporting rapid and progressive growth of infectious or toxigenic microorganisms--these are food products that require temperature control because they create risks for sickness if not prepared and handled property. Examples of potentially hazardous baked goods are cheesecakes, custard pies, filled donuts and cream pies – think of baked goods that typically need to be refrigerated.
- Do I need a license to operate a "home bakery"?
Yes, you are required to obtain a license from the Ohio Department of Agriculture to operate as a "home bakery." There is an annual license fee of $10. Also, a local license will be required. Contact the local health department where the farmer’s market in which you will sell is located to obtain a license from them for selling the "home bakery" goods in their market. If you are selling cheesecake for example, not only do you need a home bakery license from ODA to produce the cheesecake in your home, but you will also need a license from the local health department to sell the product at the farmer’s market.
- Will my "home bakery" need to be inspected?
Yes. You will be subject to inspections by the Ohio Department of Agriculture. A few requirements a home bakery kitchen must meet include: being in good repair, being clean and easily cleanable, having no carpeted floors, being pest free, having no pets in the home, and having a mechanical refrigerator equipped with a thermometer.
- What foods may I produce in my "home bakery"?
In addition to being able to produce the potentially hazardous baked goods such as cheesecakes, custard pies and cream pies , you may also produce those baked goods that fall under the "cottage foods" definition--cakes, cookies, brownies, etc.
- What do I need to do to sell goods from my "home bakery" at a registered farmer’s market?
Just as with cottage foods, you must properly label all baked goods from a "home bakery" (see specific labeling requirements here).
- Can I sell my "home bakery" goods at any farmer’s market?
Maybe. Unlike cottage food products, a baked good produced under a home bakery license may be sold and distributed outside of Ohio. You may be able to sell your baked good at a farmer’s market outside of Ohio, but it is highly likely there would be additional requirements, such as obtaining a license from the local health department where the market is located.
The importance of good management practices
To make sure you're in compliance with the law, it is best to check with the Ohio Department of Agriculture and your local health department when you are unsure about how your baked good is classified. It is also a good idea to check with the farmer’s market where you wish to sell your baked good for any additional rules or regulations they may impose for the venue. Also keep in mind the importance of using good production practices when creating your baked goods--a home bakery inspection helps ensure this. But if you're not required to be inspected and licensed, utilize all information available to you to institute good management practices that will yield a safe food product.
For additional information on cottage food and home bakery regulation, visit the Ohio Department of Agriculture, Division of Food Safety.
Court rules that farmer's replanting of Roundup Ready beans violates federal patent law
Peggy Kirk Hall, Asst. Professor, OSU Extension Agricultural & Resource Law Program
The U.S. Supreme Court today ruled that a farmer's replanting of harvested Roundup Ready© soybeans violates Monsanto Company's patent rights. The ruling leaves in place a former court award of $84,456 against farmer Vernon Bowman for planting and harvesting the soybeans, which he had purchased as commodity beans from a local grain elevator or saved from his prior harvests.
Relying on the theory of "patent exhaustion," Bowman argued that Monsanto's patent rights exhausted after the first sale of the seed and did not apply to later uses or sales. This exception to patent protection allows a purchaser of a patented good to resell the "used" good without violating patent rights. The Court unanimously disagreed that patent exhaustion was applicable in Bowman's case, explaining that the patent exhaustion theory applies to later uses of a good but not to the creation of new and additional goods from a patented good. While Bowman could sell harvested Roundup Ready beans or use them as feed, he could not plant those beans, produce new beans and sell the new beans without violating Monsanto's patent rights. "That is how "to ‘make’ a new product," said the Court, or to "reproduce Monsanto’s patented invention" without compensation to Monsanto. "A patentee retains an undiminished right to prohibit others from making the thing his patent protects," said the Court.
Bowman tried to distinguish the application of patent exhaustion to his case based on the "self-replicating" nature of seed, arguing that the seed, rather than Bowman, controlled the seed's actual reproduction. Monsanto should not be allowed to interfere with natural reproduction, claimed Bowman. The Court again disagreed, rejecting what it referred to as Bowman's "blame the bean" and "seeds are special" arguments and pointing out that Bowman played an active role in the seed reproduction process. But the Court carefully noted that its ruling does not automatically apply to every self-replicating product, as there could be situations where a self-replication might occur outside a purchaser’s control or be a necessary but incidental step in using the item for another purpose.
Many expected the Court to rule in favor of Monsanto based solely on the argument that ruling otherwise would negate the incentive for innovation that Congress intended upon passing the federal Patent Act. The Court was mindful of this argument when clarifying the parameters of the patent exhaustion doctrine, referring several times to the importance of not depriving Monsanto of its monopoly and the rewards of innovation.
What does the case mean for farmers? The Monsanto ruling is not a big surprise but it does send a strong message to farmers, some of whom have likely grumbled over seed patents and limitations on the age-old practice of saving seed. With the Supreme Court's decision, it's clear that the current legal system simply won't tolerate replantings of patented seeds. Instead, the law will support continued efforts by patent holders to monitor what farmers do with patented seed. Replanting of patented seed, whether intentional or accidental, is more than ever a high risk activity.
Read the Supreme Court's decision in Bowman v. Monsanto Co. here.
Tags: Monsanto patent case; Bowman v Monsanto; Monsanto Roundup Ready patent
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Catharine Daniels, Attorney, OSU Extension Agricultural & Resource Law Program
As the temperatures start to climb, many producers are gearing up for planting season. If you are a farmer who grows, harvests, packs, or holds fruits and vegetables intended for human consumption, you should be aware of the proposed produce safety standards that were released by FDA on January 16, 2013, as part of the Food Safety Modernization Act. The proposed rule could impact your business later this year. The comment period has been extended: originally all comments were due by May 16, 2013, but now with the extension, you have until September 16, 2013 to submit comments. So if you have not had a chance to review and comment on the proposed rule, there is still time.
What does the proposed produce safety rule do? The focus of the proposed rule is foodborne illness prevention. The goal is to now focus on preventing a foodborne illness outbreak rather than reacting to one. Foodborne illness outbreaks are a major concern and produce is often associated with such outbreaks. As a producer, you are responsible for ensuring your product is safe. If you fail to do so, you could face liability.
The proposed rule establishes “science-based standards for growing, harvesting, packing and holding produce on domestic and foreign farms.” To address foodborne illness prevention, the proposed rule identifies seven routes of microbial contamination where prevention is key and sets standards for each:
- Agricultural Water – The rule proposes requiring all agricultural water to be safe and of adequate sanitary quality for its intended use and to be inspected at the beginning of the growing season to identify conditions that are reasonably likely to introduce pathogens. An alternative to the water requirements may be permitted if the alternative is scientifically established to provide the same amount of protection as the proposed requirement.
- Biological Soil Amendments of Animal Origin – Types of treatment, methods of application, and time intervals between the application of a biological soil amendment of animal origin and crop harvest are three proposed measures to reduce risk. An alternative to these requirements is also permitted as long as the alternative is scientifically established to provide the same amount of protection as the proposed requirement.
- Health and Hygiene – The rule proposes farm personnel be required to use hygienic practices, including hand washing and maintaining adequate personal cleanliness.
- Domesticated and Wild Animals – For domesticated animals, the rule proposes waiting an adequate period between grazing of the animals and harvesting produce from that growing area. If working animals are being used where produce has been planted, the rule requires farms to take measures to prevent pathogens from being introduced onto the produce. For wild animals, the rule requires farms to monitor for significant wild animal intrusion immediately before harvest and as needed during the growing season.
- Equipment, Tools, and Buildings – Some of the key requirements proposed for equipment and tools includes: using equipment and tools that are of adequate design, construction, and workmanship, inspecting, maintaining, and cleaning all food-contact surfaces of equipment and tools, and storing and maintaining equipment and tools to prevent contamination. Some of the key requirements proposed for buildings includes: requiring buildings to be a suitable size, construction, and design to facilitate maintenance and sanitary operations, buildings must provide sufficient space for placement of equipment and storage of materials, and requiring the plumbing system be properly designed, installed, and maintained.
- Sprouts – Requirements include: treating seeds before sprouting, testing spent sprout irrigation water for pathogens, and monitoring the growing environment for Listeria species or Listeria monocytogenes.
- Training – Training would be required for farm personnel would handle produce or food-contact surfaces, and for supervisors.
Who is exempt from the proposed rule? The standards and requirements of the proposed rule will apply to farms that grow, harvest, pack, or hold fruits and vegetables intended for human consumption in its raw or natural state. The rule however, does exempt certain farms. Total exemptions include:
- Produce that is rarely consumed raw, such as potatoes.
- Produce that is destined for further processing, such as green beans destined for a canning operation.
- Produce intended for personal or on-farm consumption.
- Farms that sell $25,000 or less of food per year.
A farm could also be partially exempt from the rule if the farm meets two requirements:
- Food sales average less than $500,000 per year during the last 3 years.
- Sales to qualified end-users exceed sales to others during the same period.
For purposes of the second requirement, a qualified end-user is a consumer, restaurant, or retail food establishment. The consumer may be located anywhere, but the restaurant or retail food establishment must be located in the same state as the farm or not more than 275 miles away from the farm.
If your farm does qualify for a partial exemption, then you must comply with certain labeling requirements. If a label is already required on the produce, then the name and business address of the farm where the produce was grown must be included on that label. If a label is not already required, then the name and business address must be displayed at the point of purchase.
Could I lose my exemption status? Yes. FDA may withdraw an exemption if:
- There is an investigation of a foodborne illness outbreak directly linked to your farm, or
- FDA determines it is necessary to protect the public health and prevent or mitigate a foodborne illness outbreak based on conduct or conditions associated with your farm.
How soon do I have to start complying with the rule? After the final rule is published, it will become effective within 60 days. Farms would have between two and four years to comply with the rule depending on the value of food their operation sells during the previous three-year period:
- Businesses selling less than $250,000 per year would have 4 years after the effective date to comply and 6 years to comply with some of the water requirements
- Businesses selling between $250,000 and $500,000 per year would have 3 years after the effective date to comply and 5 years for some of the water requirements
- Businesses selling more than $500,00 per year would have 2 years after the effective date to comply and 4 years to comply with some of the water requirements.
The proposed rule is currently open for comments. Comments must be submitted by September 16, 2013 to be considered. For more information on the proposed rule and to submit a comment, visit: http://www.fda.gov/Food/FoodSafety/FSMA/ucm334114.htm.