October 2013 Agricultural Law Update
October 7, 2013
The first meeting of the State Bar of Michigan Agricultural Law section was yet another indicator of the good health and growing nature of this industry in Michigan.
In keeping with the section’s stated purpose “to provide a forum for the exchange of ideas among members engaged in the practice of law servicing agricultural clients, with a view to: (i) improve the practice of agricultural law, (ii) study the principles, regulations, statutes, and legal developments that affect the agricultural community, and to (iii) improve the quality of legal services provided…” the meeting’s agenda had something for everyone.
After the business portion of the meeting, which included the election of officers, the educational portion of the meeting kicked-off with a video welcome from Senator Debbie Stabenow, chair of the Senate Committee on Agriculture, Nutrition and Forestry. In her video message, Stabenow emphasized you don’t have an economy without agriculture. She applauded the State Bar of Michigan and the organizers of the Ag Law section, including Foster Swift Attorney Liza Moore, for their impassioned efforts in getting the section established.
Covering a substantial amount of ground in a short amount of time, Senator Stabenow provided a synopsis of her priorities for the Farm Bill which included:
- A strong crop insurance program including fruits and vegetables;
- Supporting regional food systems;
- Continuing fresh fruit and vegetables in school;
- Increasing the focus on conservation with programs; and
- Ongoing development of bio-fuels and bio-based manufacturing.
While acknowledging the difficulties in passing the Farm Bill, she emphasized the goal is to make sure the bill provides a safety net for both farmers and families. She closed by saying “this policy needs to work for farmers, consumers, and country.”
Jim Bryum, president of the Michigan Agri-Business Association, spoke next and gave an eye-opening short course on agricultural economics in Michigan. He focused on these concepts:
- Agricultural demand is going to increase. “Everyone wants to eat what we eat and do what we do and live like we live…” He explained the growth of the world population and stated much of the growth of the middle class is going to come from developing companies.
- More acres will be farmed with significant expansion in northern Michigan. This can occur because of a longer growing season, better shorter season varieties and the fact that “technology in ag is amazing!”
- Many pressing issues face Michigan agriculture. Byrum discussed:
- Reliable broadband access throughout the state. If we don’t have broadband, farmers can’t use the latest technological advances in agriculture.
- Transportation infrastructure, including more roads, rails and water transportation. Bryum noted Michigan’s need for more and better maintained roads. He also said Michigan has insufficient rail including some abandoned rail, which will likely be rebuilt. Bryum noted deep water ports may play an important role, saying barges are an opportunity for the west side of the state to meet agricultural needs at a lower cost.
- Utilities. Michigan has the highest electricity rates in the Midwest and has huge access issues. The grid can’t support the demand.
- Talent Needs. Folks aren’t leaving the farm. Agri-businesses have to hire “non-aggies” and train them.
- Immigration Reform. Immigration reform is needed to have workers for specialty crops.
Bryum referred attendees to Project 2025, a publication he authored projecting growth of Michigan agriculture as well as the infrastructure and policy necessary to effectively manage this growth. In his conclusion, Bryum said individuals in ag need to tell people their stories on what this Michigan industry does well. Agriculture in Michigan is going to continue to grow and it’s up to agriculture professionals to make the opportunities outweigh the challenges, Bryum said.
In Depth Look: Government’s Role and Responsibilities – panel presentation
The next two panel sessions focused on available resources to agriculture professionals. The first panel covered the “Government’s Role and Responsibilities.” Brad Deacon, the Emergency Management/Administrative Law Coordinator from Michigan Department of Agriculture and Rural Development (MDARD), led off the first panel with an overview of MDARD explaining it is both a regulatory and promotional agency with the primary goal “to assure food safety.” MDARD is responsible for everything having to do with animal and plant health including inspections and regulation enforcement, as well as oversight of weights and measures. Many in the audience were surprised to learn the department is focused on regulatory reform and ridding the public of out-of-date laws.
Jim Johnson, Director of MDARD’s Environmental Stewardship Division, gave the attorneys a primer on matters he oversees, which includes the Right to Farm Act. He noted they receive about 150 Right to Farm-related complaints annually. His group also oversees the Michigan Agriculture Environmental Assurance Program (MAEAP), Groundwater Stewardship Program, 1,100 inter-county drains, 900-plus migrant labor housing operations, and the Clean Sweep project, which provides farmers and individuals a way to safely dispose of pesticides. Johnson was proud of this project’s record of safely removing 1.4 million pounds of unwanted/unusable pesticides from Michigan farmers and residents. He was quick to point out several emerging issues for attorneys to watch relating to wetlands, tile lines, alternative energy, water withdrawal, and urban agricultures.
Next on the panel to speak was Jeff Haarer, the Producer Security and Ag Products Manager of MDARD’s Pesticide and Plant Pest Management Division. Jeff’s division has a broad range of responsibilities. This division provides oversight to the Grain Dealers Act and oversees the state’s 228 grain dealers with the goal of providing farmers confidence that what they put into the elevator is what they get out. They also administer 6.2 million dollars of crop insurance funds, work with the Ag Marketing Board, and manage numerous other programs. Looking toward the future, Haarer noted they see the pressing need for a new feed law and hope to have a bill introduced in the Michigan legislature soon.
Wrapping up the panel was Christine White, State Executive Director of the United States Department of Agriculture, Michigan Farm Service Agency (FSA). Noting that FSA was established through the 1933 Farm Bill, she explained the role of the FSA changes and is dependent upon congress. White provided the attorneys some very useful facts:
- Farmers with adjusted gross income excess of 500,000 dollars are not eligible for any FSA payment;
- Farmers participating in any FSA program cannot convert a wetland;
- FSA is often considered to be the lender of last resort – approximately 80 percent of loans are with young and disadvantaged producers.
In Depth Look: How Experts can help your clients – panel presentation
The final educational session of the day was titled “what an expert can do for you and your clients.” This session provided the attorneys a well-rounded perspective of the roles and resources available from other professionals serving the agricultural industry.
Dennis Stein, Saginaw Valley District Farm Management Educator shared he “specializes in systems.” He helps farmers put business processes in place, assists with vetting HR consultants, accountants, lawyers and other professionals, and helps clients with organizing and formatting information so they can optimize the value they receive from other professionals. Stein helps his ag producers with everything from business plans to entity formation, operating agreements, and identifying governmental programs. He coaches them throughout the implementation process.
Barb Dartt, DVM, MS of GROW: The Family Business Advisors shared that their responsibilities are to talk about the people issues that go with the organizational development of the farm. As family farm businesses grow and become more sophisticated, they often discover in addition to assistance with the financial component, they need assistance with the organizational structure as well as the succession plan, which often results in both management and ownership transition.
“Farmers have old fashioned values” says E. Lynn Pohl, CPA with Boge, Wybenga & Bradley, P.C. She shared that it’s important for any professional advisor to recognize the courtesy rules farmers expect. When it comes to accounting and taxes, it’s important the CPA serving the agri-business or producer understand farming as well as the family business so they can help plan and manage finances and minimize tax exposure.
Rounding out the panel of non-legal professionals was William Knudson, the Product Marketing Economist from Michigan State University’s Product Center for Agriculture and Natural Resources. The Product Center helps Michigan entrepreneurs develop products and services in the agriculture and natural resources industries. Knudson explained the center offers broad venture development services where clients work with innovation counselors on everything from business planning, feasibility studies, market research, regulatory requirements to packaging, label requirements and product launch.
All members of the second panel communicated a common message: It’s through teamwork that the CPAs, business succession planners, organization developers and other professionals help farm businesses face unique opportunities and challenges of the industry and help each client make decisions for the organization’s long term growth and successful transition.
The first meeting of the State Bar of Michigan Agricultural Law section was a balance of both business and education. Attorneys were able to better understand both the state resources available and the availability of outside experts specializing in the agricultural industry. Attendees found the program very useful and took advantage of the opportunity to speak with the panelists informally after the presentation. Please see the side bar below to reference the online resources discussed.
Resources Mentioned throughout the Ag Program
- Project 2025: http://aghost.net/images/e0186601/Project_2025_91112_FINAL.pdf
- MSU Product Center: http://productcenter.msu.edu/
- MDARD Environmental Programs: http://www.michigan.gov/mdard/0,4610,7-125-1599---,00.html
- MDARD Animal Health: http://www.michigan.gov/mdard/0,4610,7-125-48096---,00.html
- MDARD Plant, Pest and Pesticides: http://www.michigan.gov/mdard/0,4610,7-125-2390---,00.html
- State Bar of Michigan Agricultural Law Section: http://connect.michbar.org/aglaw/home/
- USDA Farm Service Agency: https://www.fsa.usda.gov/