Recent Blog Posts

By: Evin Bachelor, Tuesday, July 30th, 2019

It’s been a busy July in the ag law world, to say the least.  The Ohio General Assembly officially passed the hemp bill and a budget, RMA adjusted its prevent plant restrictions, and we have seen more activity on LEBOR.  With everything that is going on, it’s time for another ag law harvest.  Here’s our latest gathering of agricultural law news you may want to know:

Ohio Department of Agriculture announces website for future hemp program.  Just days after S.B. 57 took effect, the Ohio Department Agriculture (ODA) launched a new webpage declaring “Hemp Is Now Legal.”  However, the webpage goes on to explain that hemp cultivation, processing, and research licenses, which are required to legally do those activities, are not yet available as the rules and regulations have not been developed.  ODA says the goal is to have farmers licensed and able to start planting hemp by spring 2020.  As for CBD, the webpage says that it is now legal to sell properly inspected CBD products in Ohio.  Note the “properly inspected” caveat.  ODA wants to test CBD products for safety and accurate labeling before the product is sold to Ohio consumers.  If they have not already done so, those wanting to sell CBD products should contact ODA to have their product tested.  You can view the new webpage HERE.

Judge says $2 billion damages award is too much in Roundup case.  A California state judge recently reduced the punitive damages award granted to Alva and Alberta Pilliod from $2 billion to $69 million, and reduced their compensatory damages from $55 million to $17 million.  All combined, the couple would still receive $86.7 million in damages.  As we previously discussed, the couple successfully convinced a jury that the glyphosate in Roundup significantly contributed to causing their non-Hodgkin’s Lymphoma.  In reducing the awards, the judge explained that the punitive damages were excessive and unconstitutional because they exceeded the U.S. Supreme Court’s restrictions.  However, the judge denied Bayer’s request to strike the punitive damages award outright.

U.S. EPA denies petition to ban use of cholrpyrifos pesticide.  Back in 2007, environmental groups petitioned to have the U.S. EPA revoke tolerances and registrations for the insecticide chlorpyrifos, citing harmful effects to people and nature.  Without getting into the merits of the allegations, the timeline and history of the U.S. EPA’s decision is fairly interesting.  The U.S. EPA had not completed its review of the chemical by 2015, so the groups took the agency to court, where they received a court order compelling the U.S. EPA to make a decision.  The agency issued a proposed rule at the end of 2015 that would have revoked the tolerances; however, the federal court said that the U.S. EPA had not completed a full review nor properly responded to the 2007 petition.  Even though it made a decision, the court wanted to see more evidence of a full administrative review.  By the time the agency had a chance to fully review the chemical’s effects, the Obama EPA had turned into the Trump EPA.  In March 2017, the U.S. EPA issued a denial order regarding the petition, which essentially threw out the petition.  The environmental groups submitted an objection shortly after the denial order.  By July 2019, the U.S. EPA had a chance to think some more and issued a final order denying the objections.  As it stands now, the agency has decided not to revoke tolerances or registrations for chlorpyrifos.  To read the agency’s final order denying the objections, click HERE.

Animal Disease Traceability program to require RFID tagging for cattle and bison by 2023.  The USDA’s Animal and Plant Health Inspection Service is looking to fully bring animal disease traceability into the digital world, at least for beef and dairy cattle and bison.  By requiring radio frequency identification (RFID) tags, the service says that animal health officials would be able to locate specific animals within hours of learning about a disease outbreak, significantly less than with paper records.  Starting at the end of 2019, the USDA will stop providing free metal tags, but would allow vendors to produce official metal tags until the end of 2020.  At that time, only RFID tags may be used as official tags.  Starting on January 1, 2023, RFID tags will be required for beef and dairy cattle and bison moving interstate.  Animals previously tagged with metal ear tags will have to be retagged, but feeder cattle and animals moving directly to slaughter will be exempt.  To learn more, view the USDA’s “Advancing Animal Disease Traceability” factsheet HERE.

Senators want to fund more ag and food inspectors at U.S. ports of entry.  Citing the national interest to protect the nation’s food supply, four U.S. Senators have introduced a bill that would provide the U.S. Customs and Border Protection with additional funding over the next three years.  In each of the three fiscal years, the funds would be used to hire, train, and assign 240 additional agriculture specialists, 200 new agriculture technicians who provide support to the agriculture specialists, and 20 new canine teams.  The personnel would work at U.S. ports of entry, including seaports, land ports, and airports across the country.  If passed, S.2107 would require the Comptroller General of the United States to brief congressional committees one year after the bill’s enactment on how well federal agencies are doing at coordinating their border inspection efforts and how the agriculture specialists are being trained.  The bill comes months after U.S. Customs and Border Protection seized nearly a million pounds of Chinese illegally smuggled pork from China, where African swine fever has ravaged the country’s pork industry.  For more information about the bill, click HERE.

Cannabis decriminalization bill introduced in Congress.  Congressman Jerrold Nadler (D-NY) has introduced H.R. 3884 with the aim to do four things: 1) decriminalize cannabis at the federal level, 2) remove cannabis from the federal controlled substances schedules, 3) provide resources and rehabilitation for certain people impacted by the war on drugs, and 4) expunge certain criminal convictions with a cannabis connection.  The bill currently has 30 co-sponsors, including 29 Democrats and 1 Republican.  None of Ohio’s members of Congress have signed on as a co-sponsor at this time.  The bill follows the recent change in status for hemp, which found favor in the 2014 and 2018 Farm Bills.  However, that change in status was largely predicated on the argument that hemp is not marijuana, so it remains to be seen whether the political climate is ready to loosen restrictions on marijuana as well.  For more information about the bill, click HERE.

Written by Barry Ward, Production Business Management Leader and OSU Income Tax Schools Director

Soon after the Tax Cuts and Jobs Act became law in December of 2017 it became evident that cooperatives had been granted a significant advantage under the new tax law. Sales to cooperatives would be allowed a Qualified Business Income Deduction (QBID) of 20% of gross income and not of net income. Sales to businesses other than cooperatives would be eligible only for the QBID of net income which was a significant disadvantage. Suddenly cooperatives had an advantage that non-cooperative businesses couldn’t match and most of the farm sector scrambled to position themselves to take advantage of this tax advantage. Some farmers directed larger portions of their sales or prospective sales toward cooperatives. Non-cooperative businesses lobbied for a change to this piece of the new tax law while looking for ways to add a cooperative model to their own businesses to stay competitive.

Congress passed the Consolidated Appropriations Act of 2018 in March of 2018 which eliminated this advantage to cooperatives and replaced it with a new hybrid QBID for sales to cooperatives which offered more tax neutrality between sales to cooperatives and non-cooperatives. While this new legislation leveled the playing field between cooperatives and non-cooperatives, it left many questions unanswered; chief among them was how taxpayers should allocate expenses between sales to cooperatives and non-cooperatives.

One area that was clarified for calculating the QBID for all businesses including cooperatives was how certain deductions should be handled with respect to the Qualified Business Income Deduction (QBID).

For purposes of the QBID (IRC §199A), deductions such as the deductible portion of the tax on self-employment income under § 164(f), the self-employed health insurance deduction under § 162(l), and the deduction for contributions to qualified retirement plans under § 404 are considered attributable to a trade or business (including farm businesses) to the extent that the individual’s gross income from the trade or business is taken into account in calculating the allowable deduction, on a proportionate basis.

Under the final regulations, expenses for half the self-employment (SE) tax, self-employed health insurance, and pension contributions must be subtracted from preliminary QBI figure, before any cooperative reductions are made (if applicable).

While final regulations on the new QBID were published on Jan. 18, 2019, there were still many questions left unanswered as to how the deduction would be handled in relation to cooperatives. As the QBID is calculated differently between the income from sales to cooperatives and non-cooperatives, taxpayers and tax practitioners were left with uncertainty.

A simplified explanation of the steps used to calculate the QBID under Internal Revenue Code (IRC) §199A for income attributable to sales to cooperatives is listed here:

Step 1: First, patrons calculate the 20 percent §199A QBID that would apply if they had sold the commodity to a non-cooperative.

Step 2: The patron must then subtract from that initial §199A deduction amount whichever of the following is smaller:

  • 9 percent of the QBI allocable to cooperative sale(s) OR
  • 50 percent of W2 wages paid allocable to income from sales to cooperatives

Step 3: Add the “Domestic Production Activities Deduction (DPAD)-like” deduction (if any) passed through to them by the cooperative pursuant to IRC §199A(g)(2)(A). The determination of the amount of this new “DPAD-like” deduction will generally range from 0 to 9 percent of the cooperative's qualified production activities income (QPAI) attributable to that patron's sales.

Parts of the new tax law do offer some simplification. Calculating the QBID isn’t necessarily one of those parts.

The result of all of these calculations is that income attributable to sales to cooperatives may result in an effective net QBID that is:

  • Possibly greater than 20% if the farmer taxpayer pays no or few W2 wages and coop passes through all or a large portion of the allocable “DPADlike” deduction
  • Approximately equal to 20% if the farmer taxpayer pays enough W2 wages to fully limit their coop sales QBID to 11% and the coop passes through all allocable “DPADlike” deduction
  • Possibly less than 20% if farmer taxpayer pays enough W2 wages to fully limit their coop sales QBID to 11% and the coop passes through less than the allocable “DPADlike” deduction

On June 18th, the IRS released proposed regulations under IRC §199A on the patron deduction and the IRC §199A calculations for cooperatives. The proposed regulations provide that when a taxpayer receives both qualified payments from cooperatives and other income from non-cooperatives, the taxpayer must allocate deductions using a “reasonable method based on all the facts and circumstances.” Different reasonable methods may be used for the different items and related deductions. The chosen reasonable method, however, must be consistently applied from one tax year to another and must clearly reflect the income and expenses of the business.

So what “reasonable methods” might be accepted by the IRS? The final regulations (when they are provided) may give us further guidance or we may be left to choose some “reasonable” method in allocating expenses between the two types of income. Acceptable methods may include allocating expenses on a prorated basis by bushel/cwt or by gross sales attributable to cooperatives and non-cooperatives. Producers may also consider tracing costs on a per field basis and tracking sales of those bushels/cwt to either a cooperative or non-cooperative.

Included in the proposed regulations released in June was a set of rules for “safe harbor”. A taxpayer with taxable income under the QBID threshold ($157,500 Single Filer / $315,000 Joint Filer) may ratably apportion business expenses based on the amount of payments from sales to cooperative and non-cooperatives as they relate to total gross receipts. In other words, expenses may be allocated between cooperative and non-cooperative income based on the respective proportions of gross sales that fall to cooperatives and non-cooperatives.

Some questions that haven’t been answered clearly is how certain other income should be allocated between income from cooperatives and non-cooperatives. Tax reform now requires farmers to report gain on traded-in farm equipment.  In many cases, farm income will be negative and all of the income for the business will be from trading-in farm equipment.  The question is how do we allocate this income (IRC §1245 Gain)?  Some commentators contend that none of these gains should be allocated to cooperative income which would eliminate the issue, however, the depreciation deduction taken on the equipment was likely allocated to cooperative income, thus reducing the effect of the 9% of AGI patron reduction. This would suggest that these gains may have to be allocated between cooperative and non-cooperative income.

How should government payments be allocated?  If a farmer sells all of their commodities to a cooperative and receive a government payment (i.e. ARC or PLC), should that be treated as cooperative income or not. Hopefully, the final regulations will provide some further clarity on these issues.

The information in this article is the opinion of the author and is intended for educational purposes only. You are encouraged to consult professional tax or legal advice in regards to your facts and circumstances regarding the application of the general tax principles cited in this article.

Posted In: Tax
Tags: agricultural tax law, farm tax law, tax, 199A, cooperatives
Comments: 0
By: Peggy Kirk Hall, Thursday, July 25th, 2019

The funny thing about a "budget bill" is that it’s not all about the budget.  Many laws that are not related to the budget are created or revised within a budget bill.  That’s the case with Ohio’s HB 166, the "budget bill" signed on August 18 by Governor Dewine.  In the midst of the bill’s 2,602 pages are revisions to an important law for agricultural landowners—the “Right to Farm” Law.

Ohio’s Right to Farm Law, also referred to as the "Agricultural District Program," provides immunity from a civil nuisance claim made by those who move near an existing farm.  To receive the immunity under the old law, the land must be enrolled as an “agricultural district” with the county auditor, agricultural activities have to be in place first, i.e., before the complaining party obtained its property interest, and the agricultural activities must not be in conflict with laws that apply to them or must be conducted according to generally accepted agricultural practices.  The immunity comes in the form of an affirmative defense that a farmer can raise if sued for nuisance due to agricultural activities such as noise, odors, dust, and other potential interferences with neighbors.  If the landowner can prove that the activities are covered by the Right to Farm law, the law requires dismissal of the nuisance lawsuit.  For years, we’ve been encouraging farmers to enroll land in this program to protect themselves from those who move out near a farm and then complain that the farming activities are a nuisance.

The new revisions to the law in the budget bill change the requirements for the land and agricultural activities that can receive Right to Farm immunity.  In addition to protecting agricultural activities on land that is enrolled with the county auditor as agricultural district land, the law will now also protect the following from nuisance claims:

  • Agricultural activities on land devoted exclusively to agricultural use in accordance with section 5713.30 of the Revised Code, which is Ohio’s Current Agricultural Use Valuation Program (CAUV), and
  • Agricultural activities conducted by a person pursuant to a lease agreement, written or otherwise.

These two provisions significantly expand the geographic scope of the Right to Farm law.   A landowner may not have to take the step to actively enroll and re-enroll land in the agricultural district program in order to obtain Right to Farm immunity.  Instead, the agricultural activities are automatically covered by the Right to Farm law if the land is enrolled in Ohio’s CAUV property tax reduction program or is under a lease agreement, presumably a farmland lease, whether that lease is in writing or is verbal.  This means that any land in Ohio that is actively being used for commercial agricultural production will likely qualify for the Right to Farm law’s nuisance protection.

The budget bill also added new language to the Right to Farm law that clarifies that “agricultural activities” means “common agricultural practices.”  The law specifically includes the following as “common agricultural practices:”

  • The cultivation of crops or changing crop rotation;
  • Raising of livestock or changing the species of livestock raised;
  • Entering into and operating under a livestock contract;
  • The storage and application of commercial fertilizer;
  • The storage and application of manure;
  • The storage and application of pesticides and other chemicals commonly used in agriculture;
  • A change in corporate structure or ownership;
  • An expansion, contraction, or change in operations;
  • Any agricultural practice that is acceptable by local custom.

This new language answers a question that we’ve long heard from farmers:  if I expand my farming operation or change it from the farming activities that I, my parents or grandparents have always done, will I still have Right to Farm protection?  We couldn’t answer this question with assurance because the law is unclear about whether it would also protect such changes.  Under the new law, the answer is clear:  transitions to new or expanded agricultural activities will also receive Right to Farm immunity.  The law also states that certain practices, such as storing and applying fertilizers, pesticides, chemicals and manure, are “common agricultural practices.”

The final change to the Right to Farm law concerns a provision that addresses farmers suing other farmers for nuisance.  Under the old law, Right to Farm immunity does not apply if the plaintiff who brings the nuisance law suit is also involved in agricultural production.  That is, farmers don’t receive Right to Farm protection from nuisance claims by other farmers.  The new law removes this provision.  Under the revised law, farmers will be able to raise the Right to Farm law as an affirmative defense if sued for nuisance by another agricultural producer.

Many lawmakers who were focused on understanding and negotiating the financial provisions in Ohio’s recent budget bill may have missed the inclusion of changes to our Right to Farm law in the bill.  Even so, with the passage of the budget bill, the legislature significantly expanded the reach of the Right to Farm Law and agricultural activities in Ohio now have broad protections from nuisance lawsuits.

Find the changes to Ohio’s Right to Farm Law--Ohio Revised Code 929.04, on pages 308 and 309 of HB 177, which is available on this page.

 

By: Ellen Essman, Friday, July 19th, 2019

It’s been a busy week in Columbus, with the Ohio General Assembly sending multiple bills to Governor Mike DeWine for his signature.  One of the bills is one we have been following very closely—Substitute Senate Bill 57, or the “hemp bill.”

Bill history

Ohio’s hemp bill was originally introduced in the Senate in February.  The bill was written in response to the 2018 federal Farm Bill, which gave states the option to create hemp programs so that citizens within the state could cultivate and sell hemp products.  For a breakdown of the Farm Bill, see our post here.  Ohio’s hemp bill passed the Senate in March, and was sent to the House, where numerous amendments were made. 

House amendments

The Ohio House made many changes to the Senate’s original hemp bill.  In June, we highlighted those changes in a post you can find here.  Most importantly, the House version, in addition to requiring a license to cultivate hemp, also requires a license to process hemp into different products. Additionally, the House’s substitute version of the bill created a Hemp Marketing Program, which would be similar to other grain and soybean marketing programs, added legally cultivated hemp to the list of agricultural uses permitted under CAUV, required setbacks between hemp and medical marijuana cultivation, and banned people from obtaining both hemp licenses and medical marijuana licenses, among other changes. 

This week’s developments

We were not expecting the hemp bill to pass the General Assembly this week, as House Speaker Larry Householder indicated in June that the House would not vote on the bill until September 2019.  However, on July 17, 2019, the bill passed in the House with emergency language, and the changes were quickly accepted by the Senate. During the July 17 afternoon legislative session, we were given some possible insight into why the bill passed so quickly and unexpectedly; State Representative Koehler spoke about the need to help Ohio’s farmers given all the struggles they currently face.  Representative Koehler viewed quick passage of the bill as an opportunity for Ohio farmers to potentially have a new commodity crop in the ground next spring.

 The emergency language in the final version of the bill means that once signed by the Governor, the law will go into immediate effect.  In other words, once the bill passes, hemp and hemp products will be decriminalized in Ohio and the Ohio Department of Agriculture (ODA) will be able to immediately begin the process of writing regulations to carry out the new hemp cultivation and processing programs. 

Great! Can I plant hemp right now?

No. Even with the emergency language in the bill, a few things still need to happen before farmers can plant hemp.  First and most obviously, Governor DeWine still needs to sign the bill into law.  Then, ODA must begin its hemp program rulemaking.  The rules will not become effective until the United States Department of Agriculture (USDA) approves of Ohio’s hemp program.  After USDA approves the program, then ODA will be able to approve licenses for those who want to cultivate and process hemp. The Ag Law Blog will keep you updated on the hemp rules and USDA’s decision—stay tuned!

Posted In: Crop Issues, Uncategorized
Tags: hemp, industrial hemp
Comments: 0

Written by Barry Ward, Leader, Production Business Management & Director, OSU Income Tax Schools

Prevented Planting Crop Insurance Indemnity Payments

With unprecedented amounts of prevented planting insurance claims this year in Ohio and other parts of the Midwest, many producers will be considering different tax management strategies in dealing with this unusual income stream. In a normal year, producers have flexibility in how they generate and report income. In a year such as this when they will have a large amount of income from insurance indemnity payments the flexibility is greatly reduced. In a normal year a producer may sell a part of grain produced in the year of production and store the remainder until the following year to potentially take advantage of higher prices and/or stronger basis. For example, a producer harvests 200,000 bushels of corn in 2019, sells 100,000 bushels this year and the remainder in 2020. As most producers use the cash method of accounting and file taxes as a cash based filer, the production sold in the following year is reported as income in that year and not in the year of production. This allows for flexibility when dealing with the ups and downs of farm revenue.

Generally, crop insurance proceeds should be included in gross income in the year the payments are received, however Internal Revenue Code Section (IRC §) 451(f) provides a special provision that allows insurance proceeds to be deferred if they are received as a result of “destruction or damage to crops.”

As prevented planting insurance proceeds qualify under this definition, they can qualify for a 1 year deferral for inclusion in taxable income. These proceeds can qualify if the producer meets the following criteria:

  1. Taxpayer uses the cash method of accounting.
  2. Taxpayer receives the crop insurance proceeds in the same tax year the crops are damaged.
  3. Taxpayer shows that under their normal business practice they would have included income from the damaged crops in any tax year following the year the damage occurred.

The third criteria is the sometimes the problem. Most can meet the criteria, although if producers want reasonable audit protection, they should have records showing the normal practice of deferring sales of grain produced and harvested in year 1 subsequently stored and sold in the following year. To safely “show that under their normal business practice they would have included income from the damaged crops in any tax year following the year the damage occurred” the taxpayer should follow IRS Revenue Ruling 75-145 that requires that he or she would have reported more than 50 percent of the income from the damaged or destroyed crops in the year following the loss. A reasonable interpretation in meeting the 50% test is that a farmer may aggregate the historical sales for crops receiving insurance proceeds but tax practitioners differ on the interpretation of how this test may be met.

One big problem with these crop insurance proceeds is that a producer can’t divide it between years. It is either claimed in the year the damage occurred and the crop insurance proceeds were received or it is all deferred until the following year. The election to defer recognition of crop insurance proceeds that qualify is an all or nothing election for each trade or business IRS Revenue Ruling 74-145, 1971-1.

Tax planning options for producers depend a great deal on past income and future income prospects. Producers that have lower taxable income in the last 3 years (or tax brackets that weren’t completely filled) may want to consider claiming the prevented planting insurance proceeds this year and using Income Averaging to spread some of this year’s income into the prior 3 years. Producers that have had high income in the past 3 years and will experience high net income in 2019 may consider deferring these insurance proceeds to 2020 if they feel that this year may have lower farm net income.

Market Facilitation Payments

When the next round(s) of Market Facilitation Payments (MFPs) are issued, they will be treated the same as the previous rounds for income tax purposes. These payments must be taken as taxable income in the year they are received. As these payments are intended to replace income due to low prices stemming from trade disputes, these payments should be included in gross income in the year received. As these payments constitute earnings from the farmers’ trade or business they are subject to federal income tax and self-employment tax. Producers will almost certainly not have the option to defer these taxes until next year. Some producers waited until early 2019 to report production from 2018 and therefore will report this income from the first round of Market Facilitation Payments as taxable income in 2019.

Producers will likely not have the option of delaying their reporting and subsequent MFP payments due to the fact they are contingent upon planted acreage reporting of eligible crops and not yield reporting as the first round of MFP payments were.

Cost Share Payments

Increased prevented planting acres this year have many producers considering cover crops to better manage weeds and erosion and possibly qualify for a reduced MFP. There is also the possibility that producers will be eligible for cost-share payments via the Natural Resources Conservation Service for planting cover crops. Producers should be aware that these cost-share payments will be included on Form 1099-G that they will receive and the cost-share payments will need to be included as income.

You are advised to consult a tax professional for clarification of these issues as they relate to your circumstances.

This article is being reposted with the author's permission from the Ohio Ag Manager blog.

By: Peggy Kirk Hall, Friday, July 05th, 2019

With many farmers in Ohio unable to plant before the Final Planting Date for crop insurance, questions are arising about planting and harvesting cover crops on those prevented planting acres.  USDA Risk Management Agency (RMA) rules allow operators to plant cover crops on prevented planting acres and to hay, graze, or cut the cover crops for silage after the posted “harvest date.”  In previous years, the harvest date for cover crops was November 1.   If an operator harvested the cover crop before that date, the prevented plant payment would be reduced from 100% to 35%. 

The RMA has changed the harvest date for 2019, however.  In response to reduced livestock feed supplies that will result from the loss of planted acres this year, the RMA has moved up the cover crop harvest date to September 1.  An operator who plants a cover crop after the Final Planting Date and then cuts the crop for forage on or after September 1 can still receive 100% of the prevented plant payment, even if the operator sells the forage and regardless of whether the operator planted the cover crop during or after the Late Planting Period.  The Final Planting Date in Ohio was June 5 for corn and June 20 for soybeans; the Late Planting Period ended on June 20 for corn and runs until July 15 for soybeans.  Note, too, that a cover crop that was in the ground before the Final Planting Date but was not terminated because the operator couldn’t plant the intended corn or soybean crop can also be harvested for forage on or after September 1.

The RMA’s chart below illustrates payment scenarios for cover crops planted and harvested on prevented planting acres.

Cover Crop Planted

Disposition

Pay 100%

Pay 35%

Pay 0%

Before Final Planting Date (FPD) of the Prevented Crop**

Hayed/Grazed/Cut for silage during or before the end of the LPP

X

 

 

Hayed/Grazed/Cut for silage after the LPP, but before Sept 1

 

X*

 

Hayed/Grazed/Cut for silage on or after Sept 1

X

 

 

Harvested for grain or seed at any time

 

 

X

 

During Late Planting Period (LPP) of the Prevented Crop

Hayed/Grazed/Cut for Silage before Sept 1

 

 

X

Hayed/Grazed/Cut for silage on or after Sept 1

X

 

 

Harvested for grain or seed at any time

 

 

X

 

After Late Planting Period of the Prevented Crop

Hayed/Grazed/Cut for silage before Sept 1

 

X

 

Hayed/Grazed/Cut for silage on or after Sept 1

X

 

 

Harvested for grain or seed at any time

 

X*

 

*Provided the crop claimed as a cover crop is not the prevented crop and all other policy provisions are met.

**Example: Fall-Planted Cover Crop; Spring PP Crop

Other requirements for cover crops

While the cover crop harvest date seems pretty straightforward, don’t be fooled--crop insurance provisions can be tricky.  Farmers planning to put out cover crops on prevented plant acres should work closely with their crop insurance agents to ensure that all policy provisions and documentation requirements are met. 

An initial requirement is that the cover crop planted must meet the definition of an “acceptable cover crop” for crop insurance purposes.   The RMA considers an acceptable cover crop as one that is recognized by agricultural experts as agronomically sound for the area for erosion control or other purposes related to conservation or soil improvement and planted at the recommended seeding rate.  OSU agricultural experts can help provide guidance on acceptable cover crops.   

Operators should also be aware that many seed licenses, particularly for bio-engineered seeds, restrict the use of the seed to grain production only.  In those situations, planting the seed for a cover crop or harvesting it for silage would violate the seed licensing contract and create a liability situation for the operator.

Additionally, note that crop insurance provisions prohibit harvesting the cover crop for grain or seed, and an operator who does so will lose all of the prevented plant payment.  The cover crop harvest can also impact other provisions, such as the farm’s Actual Production History (APH) yields.  These and other provisions highlight the importance of a close working arrangement with the crop insurance agent in order to comply with RMA’s cover crop provisions.

For RMA’s guidance on Prevented Planting Flooding, go to this page.  The site contains a comprehensive list of questions and answers on prevented planting, along with information about the 2019 cover crop provisions.   

By: Peggy Kirk Hall, Tuesday, July 02nd, 2019

With summer in full swing, Ohio’s poor planting season won’t dampen the desires of those who want to use farmland for recreational activities like fishing or riding ATVs.  And while we worry over the washouts in so many farm fields, an archaeological buff recently explained that those wash outs provide a good opportunity to find arrowheads and other relics.  The fact that a field wasn’t planted didn’t stop a hot air balloon operator from asking a farmer if he could land in the unplanted field recently.   Even when the land is not highly productive, Ohio farmland is always appealing to recreational enthusiasts for these and other types of recreational activities.

But what if a farmer doesn’t want recreational enthusiasts on the property or doesn’t want the risk of potential liability for a recreational user?  A few of our resources provide guidance for these situations, which we can address in two important questions:

  1. Do you not want people engaging in recreational activities on your farm?  If so, then take a look at our law bulletin on The Do’s and Don’ts of Dealing with Trespassers on the Farm.  If you don’t give a person permission to come onto the farm for recreational purposes, the person is trespassing if he or she chooses to enter the property without your permission.  But be aware that a landowner can’t intentionally put a trespasser in harm’s way and in certain situations, can be liable for a trespasser who suffers harm on the property.  Know the legal rules for dealing with trespassers so that you can protect your property without risking liability.  We explain these rules and situations in the law bulletin.
  2. Are you okay with letting a person use your farm for recreational activities?  If so, you’ll want to read our law bulletin on Okay to Play:  Ohio Recreational User Statute Limits Liability for Hunters, Snowmobilers, and More.  Ohio’s Recreational User Statute offers immunity to landowners who allow recreational uses, but only if the landowner meets the four conditions of the law.  A landowner of nonresidential premises who gives permission to a person to engage in recreational activities without charging a fee doesn’t have the traditional legal duty to keep the recreational user safe from harm.  Our law bulletin explains each of the statute’s important conditions in detail so that a landowner can qualify for its liability protection.

Like the weather, managing the risk of recreational users and trespassers on the farm is a constant challenge for farmers.  But unlike the weather, a landowner can effectively control this type of risk.  When someone shows up to fish, ride ATVs, hunt arrowheads or land a balloon on the farm, be ready by having a good understanding of the laws that apply to recreational activities on the farm.

By: Evin Bachelor, Thursday, June 27th, 2019

Many landowners across the state have been contacted by solar energy developers interested in leasing farmland for utility-scale solar energy production.  The combination of improved technology, reduced production costs, the phase-out of federal tax credits, and the willingness of landowners to enter into long-term leases have made 2019 a sunny year for entering into solar leases.

The sudden surge of solar leasing has led to new questions about what this type of lease mean for a landowner, a community, and the future.  As these leases may last for 30 years or more, it is important to understand what a utility-scale solar energy development looks like, along with the terms in a solar lease and the implications of signing.

Join OSU Extension Field Specialists Peggy Kirk Hall and Eric Romich on Monday, July 15th for a conversation on solar leasing.  Together, the presenters will address solar development trends, converting farmland to solar production, and key considerations to weigh before signing a solar lease.  Those interested may choose between one of two sessions:

  • Morning session: Madison County from 9:00am to noon at the Red Brick Tavern (1700 Cumberland Road/Route 40, London, Ohio).  Breakfast will be provided!
  • Afternoon session: Greene County from 2:00pm to 5:00pm at the Greene County Extension office (100 Fairground Road, Xenia, Ohio).

Each meeting will cover the same information.  Registration is required, but there is no cost to attend.  To register for the morning session in Madison County, email Griffith.483@osu.edu or call 740-852-0975.  To register for the afternoon session in Greene County, email Corboy.3@osu.edu or call 937-372-9971.

Click HERE to view the official flier.  In the meantime, if you want to learn more about some of the documents and major considerations that will be discussed at the meeting, click HERE.  If you want to learn more about some common solar lease terms, click HERE.

By: Ellen Essman, Wednesday, June 26th, 2019

Since the passage of the 2018 Farm Bill, the world of agriculture has been all abuzz about the potential for adding a new crop to the rotation—industrial hemp. (Our post on the hemp provisions in the Farm Bill is available here.) The passage of the bill caused states like Ohio, which did not previously implement hemp pilot projects in 2014, to scramble to introduce state legislation allowing hemp to be grown within their boundaries.  What is more, questions have arisen about how hemp and products derived from the plant should be regulated under the federal law. 

Ohio continues to tinker with its hemp bill

Ohio’s bill to legalize hemp is currently stalled in the Ohio House of Representatives. Speaker Larry Householder indicated that the House will not vote on the bill until September 2019.  The hemp bill was first introduced in the Ohio Senate in February, passed the Senate in March, and advanced to the House floor on June 4. The bill still contains a lot of the same language and provisions from when it was introduced in February, which you can read about in our post here.  However, since it was first introduced, numerous additions have been inserted into the language of the bill.

First, the original version of the hemp bill only required a license to cultivate hemp.  The version currently on the House floor also requires a license to process hemp into different products.  Moreover, the current version of the bill would make licenses for both cultivating and processing hemp valid for three years instead of five years.  The new language in the bill also creates a Hemp Marketing Program, which would fall under the same laws and regulations as the grain and soybean marketing programs.  Legally cultivated hemp would also be added to the list of agricultural uses permitted under the current agricultural use value (CAUV) for land, which would mean land used to grow hemp would qualify for a lower tax assessment. 

The most recent version of the bill also adds many more topics to the list for the Ohio Department of Agriculture (ODA) to promulgate via regulation.  The new version tasks ODA with adding conditions for acquiring hemp cultivation licenses, such as experience, and procurement of equipment, facilities, a sufficient amount of land, and financial responsibility requirements.  ODA is charged with establishing a compulsory setback distance between hemp cultivation and medical marijuana cultivation, and with including regulatory language banning hemp cultivation or processing licensees from also cultivating or processing marijuana.  ODA must also establish requirements for recordkeeping and reporting for licensees.  These are just a few of the new regulations ODA is authorized to enact. 

The most recent bill, much like the first version, includes overarching prohibitions.  The current list of actions banned under the law is as follows:

  • No person shall cultivate hemp without a hemp cultivation license issued by ODA;
  • No person shall process hemp without a hemp processing license issued by ODA;
  • A person who is licensed to cultivate or process hemp shall not violate any provision of the hemp law or regulations;
  • A person subject to a corrective action plan issued by ODA shall not fail to comply with the plan;
  • No person may transport hemp in violation of the hemp law or rules; and
  • Any other requirements or procedures necessary to enforce the law. 

The most recent rendition of Ohio’s hemp bill would keep the provisions of the first version of the bill relating to negligent and reckless violations of the law, but new enforcement tools have been added.  Finally, the new and improved hemp bill includes an emergency clause, which would make the legislation immediately effective upon its passage in both houses and signature by the governor. 

FDA holds a hearing on the safety of CBD products

On May 31, the Food and Drug Administration (FDA) held public hearing to gather information and scientific data about cannabis products, so that such information can be used for future regulatory oversight by the agency.  Industrial hemp is a type of cannabis plant, so the hearing included discussion of hemp and hemp-derived compounds, such as cannabidoil (CBD).  In particular, FDA was interested in whether different amounts of cannabis in a product would affect people differently, or cause safety concerns, whether there is any data to show that cannabis is safe in food and dietary supplements, whether there are, or if there need to be, industry standards in the manufacturing of cannabis products to ensure safety and quality, and how marketing and labeling should be used to address potential risks connected to using cannabis products.   The hearing did not result in any FDA decisions on cannabis products and their regulation, although it is an indicator that regulations will probably be coming soon.  This means that sales of CBD oil and other products made from hemp will have to follow FDA regulations in order to be manufactured and sold.  Information on the hearing is available here.  As we reported in one of our Ag Law Harvest posts, those people still interested in submitting their comments about cannabis and cannabis compounds to the FDA can do so until July 2. 

USDA releases its interpretation on transportation of hemp

In another federal development, on May 28, the United States Department of Agriculture (USDA) released a memo addressing the transportation of hemp.  The 2018 Farm Bill specified that states can ban hemp production and sales within their boundaries, but states cannot bar legally grown hemp from being transported through their state.  Since hemp regulations under the 2018 Farm Bill have not yet been promulgated, technically, there is no hemp that has been legally produced under the new law yet.  As a result, law enforcement in several states has continued to arrest people transporting hemp.  Furthermore, in at least one decision in Idaho, a court determined that it was illegal to transport hemp.  USDA released the memo to explain its disagreement with such interpretations.

In its memo, USDA says that the language decriminalizing hemp in the 2018 Farm Bill was “self-executing,” so it is no longer illegal to possess hemp or THC from hemp. USDA further asserts that hemp grown under pilot programs allowed under the 2014 Farm Bill can be legally transported across state lines because the 2018 Farm Bill did not immediately repeal the pilot programs.  USDA argues that this means that the hemp grown under 2014 pilot programs is legally produced, can be legally possessed, and therefore can be legally transported across state lines under the new Farm Bill.  

It is important to note that USDA’s memo is meant as guidance to the states, and is legally persuasive, but not legally binding.  This means a person could theoretically still be arrested for transporting hemp through a state, and the courts may or may not uphold the state’s decision.  After the federal regulations under the 2018 Farm Bill are in place, however, there will be less wiggle room for states to carry out their own interpretations, which will likely but an end to this controversy. 

What does it all mean?

While the regulation of hemp products, the transportation of hemp, and the legality of hemp in certain states may still be in question, all of this activity means that the state and federal governments are attempting to work all the kinks out.  Over time, the rules regarding how to produce, process, sell, and transport hemp, will likely become more defined and clear.  In the meantime, those interested in legally growing and processing hemp will have to play a waiting game. 

Posted In: Crop Issues
Tags: hemp, industrial hemp, farm bill
Comments: 0
By: Evin Bachelor, Thursday, June 20th, 2019

The OSU Extension Farm Office team has returned from the National Farm Business Conference in Wisconsin.  We gained some fresh perspective on events beyond Ohio’s borders, but are happy to be back in slightly warmer weather.  Our colleagues from across the nation presented on a variety of farm management topics, and we had a chance to discuss some of our recent projects.  We also toured a number of dairy and agritourism farms, and of course ate lots of cheese curds.  The fresh perspective means that it is time for a fresh Ag Law Harvest.

Here’s our latest gathering of agricultural law news that you may want to know:

OSU Extension Ag Law Team featured on Agronomy and Farm Management Podcast.  Recently we had a chance to talk with OSU Extension Educators Amanda Douridas and Elizabeth Hawkins, who together moderate the bi-weekly Agronomy and Farm Management Podcast for OSU Extension.  We discussed the status of Ohio’s hemp bill and what we expect to happen in the near future with hemp regulation and production.  Then we provided an update on the Drewes Farm Partnership v. City of Toledo lawsuit, which grapples with the legality of the Lake Erie Bill of Rights.  Click HERE to listen to the podcast, and look for episode 28.

Minnesota focuses new commercial nitrogen fertilizer regulations on drinking water quality.  In an effort to protect public drinking water sources, the Minnesota Department of Agriculture has chosen to regulate the commercial application of fertilizer.  The state has long regulated the application of manure, but not commercial nitrogen.  The regulations focus on two types of geographic areas: regions with vulnerable soil (coarse soils, karst geology, or shallow bedrock) and farms located in Drinking Water Supply Management Areas.  These management areas are designated based upon nitrate levels found in the drinking water.  Starting in 2020, the state will ban the application of commercial nitrogen in these areas during the fall months and on frozen ground.  Farms in any of the 30 Drinking Water Supply Management Areas would have to follow best management practices to start, but if nitrate levels continue to exceed state limits, then the state may impose additional restrictions in an area to reduce nitrogen pollution.  For more information on Minnesota’s Groundwater Protection Rule, click HERE.

Federal court puts a hold on Bud Light’s “100 percent less corn syrup” ads.  If they missed seeing it live during the Super Bowl, most people in the agricultural industry have at least seen the recent Bud Light advertising campaign that claims the beer uses no corn syrup while its competitors do.  Shortly after the initial release of the ad, MillerCoors sued Anheuser-Busch, which makes Bud Light.  MillerCoors wants a permanent injunction that would stop Bud Light from continuing its corn syrup advertising campaign, arguing that the advertisements are false and misleading to consumers.  The first step to a permanent injunction is often a preliminary injunction, which makes a party act or not act in a certain way only while the case is pending.  The judge presiding over the lawsuit granted MillerCoors’ motion for a preliminary injunction in part.  The judge ordered Anheuser-Busch to temporarily stop using ads mentioning corn syrup if those ads do not contain language explaining that Bud Light does not use corn syrup in the brewing process.  The judge’s act does not ban the ad that premiered during the Super Bowl.  Rather it only blocks ads released later that claim Bud Light uses 100 percent less corn syrup than competitors like MillerCoors.  Click HERE to view the complaint, and HERE to view the judge’s order.

It’s (mostly) official: USDA’s ERS and NIFA are headed to Kansas City.  U.S. Secretary of Agriculture Sonny Perdue announced the USDA’s selection of the Kansas City, Missouri region as the new headquarters for the Economic Research Service and National Institute of Food and Agriculture.  The location changed caused a great deal of controversy as some viewed it as a political move.  However, the USDA has maintained that relocation will save millions of dollars over the next few years and put the agencies closer to a number of other USDA offices in Kansas City, such as the Farm Service Agency’s Commodity Operations Office.  The Secretary reduced some of the controversy by scrapping plans to place the agencies under the USDA’s Chief Economist, who is a political appointee.  Before we call the move a done deal, we must note that Congress could stop the plans.  The U.S. House of Representatives might block the move via a Department of Agriculture-FDA spending bill currently under consideration.  Click HERE to read Secretary Perdue’s press release.

Bayer announces multi-billion dollar hunt for glyphosate replacement.  Somewhat buried in a press release titled “Bayer raises the bar in transparency, sustainability and engagement,” Bayer recently announced a substantial investment in its weed management research.  Over the next ten years, the company plans to spend 5 billion euros, or roughly 5.6 billion U.S. dollars, to develop weed control products as alternatives to glyphosate.  The announcement comes at a time with thousands of plaintiffs across the United States have claimed that the widely-used glyphosate caused their cancer.  As we have previously discussed in the Ag Law Blog, the first three juries have in total awarded plaintiffs billions of dollars in damages.  Bayer continues to fight the allegations and defend its product, but the press release marks the first time that Bayer has publically announced a search for an alternative to glyphosate.  It remains to be seen whether the press release could have an impact in the lawsuits, but Bayer will likely try to keep the press release out of the trials by using court rules of evidence.

Ohio House passes amusement ride safety bill.  County fair season has officially kicked off in Ohio, and some state lawmakers want to make sure that amusement rides at those fairs are safe.  House Bill 189 seeks to heighten Ohio’s amusement ride safety inspection standards and impose additional duties on amusement ride owners.  The bill would require the Ohio Department of Agriculture to adopt ride classification rules that identify types of rides needing more comprehensive inspection, along with the minimum number of inspectors and number of inspections for each ride.  Further, the bill would require amusement ride owners to keep a manual for each amusement ride, and make it available upon request of an inspector.  Amusement ride owners would also have to keep records, including documents and photographs, of all major repairs along with all locations where the owner stored or operated each ride.  The bill includes an emergency clause, which would allow it to take effect as soon as the Governor signs it.  Lawmakers named the bill “Tyler’s Law” after the young man who died following an equipment breakdown at the Ohio State Fair in 2017.  Click HERE for more information about the bill.

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