Starting a farm isn’t the carefree, simple business that many seem to believe it is. There are several legal complexities that come with this sort of business venture, just like with any other business venture! It is, of course, essential that you’re meeting the legal requirements and respecting the regulations that are placed upon the agricultural sector. After all, they will help you protect your profits and keep you and the environment safe.
If you’re interested in starting up this sort of business, then this guide is essential. Here are the most important areas of legal concern you need to think about.
Just like any other business, you need to start off on the right foot by making sure you’re operating under the correct business entity. As a farming business, you can still operate under many of the entity types that other businesses do. These include sole proprietorships, partnerships (and remember that there are several types of partnerships!), corporations (C corporations and S corporations), and limited liability companies.
It might be best to seek professional advice if you’re unsure what sort of entity your farm should operate as. Choosing the wrong one can come with multiple repercussions, including fines and being over-taxed. Switching from one entity to another is definitely not an easy task, so make sure you get it right from the off. If you want to know more about how these business entities work in agricultural contexts, there’s an in-depth guide available here.
You don’t want to be over-taxed - but you don’t exactly want to be paying less tax than you should, either. While the IRS will be in no particularly hurry to correct you if you pay more taxes than you should, they tend to be very quick and harsh when it comes to business owners that don’t pay as much taxes as they should. Making sure you sign up as the right entity is the first step, but you may also want to work with tax and finance professionals in the agricultural sector.
Thankfully, farmers also get a bunch of tax breaks that can help you a lot in your business.You’re exempt from sales tax on the purchase of farming supplies, for example. The buildings on the land may also be exempt from property taxes. And once the agricultural income is least two-thirds of your total income (most farmers don’t make all their income purely from agriculture), you may also be eligible for income tax breaks.
The laws that govern agriculture care very much about the safety of what you produce - and so should you! One of the best ways to keep everything protected is to ensure the soil and other key elements of the land are properly tested. This should really be done before acquiring the land, if possible, so you don’t end up buying land that is contaminated with problem materials.
Working with environmental testing services is often the only way to check the pH levels of your soil, as well as the nutrient content. If there are any poisonous elements in there, this will also be revealed during the testing. Whether you’re producing food for local consumption or keeping the animals on your farm fed, this is an essential part of farming.
Sale of goods
There are actually a lot of farmers out there who never sell produce and get along just fine. But most agricultural businesses will be looking to sell their produce - and that means you’ve got to meet a bunch of legal requirements. The first of which, of course, is that the item itself is actually legal! Some states won’t allow you to sell certain items. There are a few states, for example, that have made it illegal for you to sell unpasteurized apple cider. It may be best to check with the Department of Agriculture in your state before you start trying to send certain items to distributors!
You’ll also have to spend some time thinking about documentation and packaging standards. How you need to go about this is going to depend largely on the distributor you’re working with for any given transaction. The documentation generally has to prove that you’ve used a safe water source to clean the produce. It also has to prove any claims you make about the produce - for example, if you’re selling organic products, then you’ll need a certificate that proves this. The packaging needs to be strong enough to absorb any shock that might otherwise damage the produce it contains. The packaging should also be labeled clearly, so that a distributor or even the end consumer know precisely where it came from, in case there are any further health or safety worries.
And so we come to one of the most concerning, complex, and controversial issues in agricultural law. The fact is that agriculture is extremely damaging to the environment, at least in the way it’s being practiced in most areas of the world. This is especially true if you’re breeding animals as livestock to be sold and consumed. But even ethical farms that don’t engage in this sort of activity may find that what they do can damage the environment in a big way. And there are a lot of regulations out there that will affect the way you have to do things, though many environmentalists, animal rights activists, and health advocates would say that these regulations don’t go quite far enough!
The way you use the natural resources - for example, soil and water - and the synthetic inputs you use in your work, such as pesticides and fertilizers, will have a big impact on the local ecosystem. The nearby wildlife population is certainly going to be the first to feel the negative effects, but in the long-term pretty much all of us are starting to feel the effects. It’s essential that you ensure you’re not breaking any of the regulatory laws that help protect the environment, both for everyone’s safety and for the safety of your farm’s business!
If there’s a more controversial issue in agricultural law than environmental regulations, it’s animal welfare! Of course, in an ideal world, farms would operate as animal sanctuaries instead of places where they are exploited and slaughtered. It could certainly be argued that welfare laws in this country are seriously lacking if any business is legally allowed to kill animals. But even farms that don’t engage in the meat industry may find themselves violating certain welfare laws if they’re not careful.
The way you house the animals on your farm is extremely important. There are laws protecting pretty much all animals when it comes to the way in which you ‘store’ them - although there are actually very few laws protecting chickens, it turns out. The food and water you use to sustain them should also be of a good quality - this is partly why environmental testing is so important even if you’re not selling produce. If you need to find out more about animal welfare laws, as well as news on the subject, keep an eye on the Humane Society of the United States.
A lot of people see agriculture as a very calm, safe, unchaotic way of making a living. Not only does this ignore how much labor goes into good farming - it also ignores that fact that agriculture can be very dangerous if it isn’t done properly! This decade alone has seen hundreds of deaths related to agricultural activities every year. So you need to make sure that your farm meets health and safety regulations for agriculture.
You have to consider the safety of the equipment that you and your workers are going to be using. Farming equipment is usually big, demanding, and with plenty of sharp edges! You’ve also got to remember the fact that you’re going to be working with animals. What happens if you’ve got an animal with a temper problem? Charging, biting, or kicking could be the start of an investigation into your safety practices. Ensure that you’ve got sufficient training on-site when you have new employees that need to work with the animals.
Ag-gag is probably the area of agricultural law that those working outside of agriculture are going to be the least familiar with. Ag-gag is a term that describes a series of anti-whistleblower laws. They’re agricultural laws that actively help protect farmers who are engaging in abuses of agricultural laws. That may sound very strange and nonsensical, and… to be honest, that’s exactly what they are. They’re largely in place to allow unethical business owners a free pass if they wish to flout animal welfare laws. They don’t exist in every state, however.
Our hope is that these laws really won’t concern you very much, because you, presumably, aren’t looking to abuse animals or break any other laws! Still, these laws are worth looking into because they do affect a few areas that might affect other areas of your business. If someone comes onto your property and starts filming, for example, some aspects of these laws protect your rights in that scenario.