Month: March 2014

The Farm Storage and Facility Loan Program Expands

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Happy Ag Day!  In honor of Ag DayThe Farm Bill just keeps bringing changes and more options to the table for farmers and ranchers.  One of those changes, which brings more options, is through the Farm Storage and Facility Loan Program.

What is the Farm Storage and Facility Loan Program?

Traditionally, the Program provides low-interest financing so producers can build or upgrade facilities to store commodities.  Commodities eligible for the Program include grains, oilseeds, peanuts, pulse crops, hay, honey, renewable biomass commodities, fruits and vegetables. Eligible facilities include grain bins, hay barns and facilities for cold storage.

Okay, but what changes have been made?

No changes have been made to the Program as described above.  The Program continues to provide low-interest loans for building or upgrading eligible facilities for eligible commodities.

The changes that have been made expand the Program.  The expansion is for fruit and vegetable producers.  For the first time, the Program will cover the structure and equipment required to get fruits and vegetables washed, treated and packed.  Thus, for fruit and vegetable producers, the following are eligible for Program loans:

  • Boxing
  • Baggers
  • Brush Polishers
  • Bulk Bin Tippers
  • Case Palletizers
  • Cold Dip Tanks
  • Fruit/Vegetable Conveyors
  • Food Safety-Related Equipment
  • Drying Tunnels
  • Dumpers
  • Fruit/Vegetable Hoppers
  • Hydrolifts
  • Hydrocoolers
  • Ice Machine
  • Quality Graders
  • Roller Creepfeeders
  • Roller Spray Units
  • Sealants
  • Sizers
  • Sorting Bins/Tables
  • Washers
  • Waxers
  • Weight Graders

Note that all drying and handling equipment must be permanently affixed.  In other words, drying and handling equipment cannot be mobile or easily moveable.

Do I need collateral or security for the loan?

Changes have also been made to the security requirement for a Program loan.  Program loans up to $100,000 now can be secured via a promissory note only and do not require collateral.  For loans over $100,000, collateral is required.

What is the maximum loan amount, loan term etc.?

The maximum is $500,000 per loan.  The loan can only be 85% of the cost of the eligible facility.  The loan term can be 7, 10, or 12 years dependent upon the amount of the loan.  Also note that the loan will not be distributed until the facility has been built and inspected, with an exception for one qualify partial disbursement.

What about insurance; do I need that?

If you are a fruit and vegetable producer, you may annually request a waiver of the multi-peril crop insurance or the Non-Insured Crop Assistance Program requirement.

The Farm Service Agency recently updated their Fact Sheet about the Program.  Keep in mind that the Program still provides loans for grain bins, hay barns and the like — the Program has merely expanded to include other items that are of particular interest to fruit and vegetable producers.

Want or need further information?  You are welcome to contact us!

Nebraska Cottage Food Laws

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Many beginning farmers, understandably and justifiably, are looking for niche or small markets, rather than running a big crop or livestock operation.  These niche operations may also offer other goods for sale using products from the farm, such as jellies, breads, or pies.

Are there any laws regarding sales of products such as jellies, breads, and pies?  Yes there are.  These laws, known as cottage food laws, address such products.  Cottage foods are those foods which are potentially non-hazardous and therefore do not present the same food safety risks as other processed foods.  In other words, cottage foods may be made at home or in a non-commercial kitchen.  Simply, a licensed, inspected kitchen is not required for the selling of cottage foods.

Nebraska permits cottage food operations via statute.  This post discusses the highlights of the cottage food laws but, as always, contact us if you have questions.

Where can I sell?

Nebraska permits cottage foods to be sold only at farmers’ markets.  Thus, while the foods can be prepared in a private kitchen, the products must be sold at a farmers’ market.  Further, a farmer may set up a produce stand that sells only whole, uncut fruits and vegetables.

What are cottage foods?

The Nebraska Department of Agriculture explains here but to recap:

  • Certain baked goods, limited to those which are potentially non-hazardous baked goods such as breads, fruit pies, and cookies;
  • Popcorn and other seeds;
  • Fresh and/or dried herbs;
  • Jams and jellies; and
  • Prepackaged, commercially prepared snack items.

What are not cottage foods?

If you are not a licensed food establishment preparing food in an inspected, licensed facility, you may not sell:

  • All low acid canned foods, such as pickles and salsa;
  • Unpasteurized milk, cheese, or yogurt;
  • Cream pies; and
  • Food from unauthorized sources.

Okay, but do I have to tell people my cottage food was made at home?

Yes.  When selling at a farmers’ market, you are required to place a sign at the point of sale stating the product was not prepared in an inspected, licensed food preparation area.

However, if your food was made in a licensed, inspected facility, there is no need for a sign.

Does my cottage food need a label?

Yes.  The product must have a label that states:

  • Product name;
  • Business name;
  • Business address;
  • Ingredients; and
  • Net weight.

If you need inspiration for creating a label, here is an sample label.

How much money can I make?

Nebraska law places no limits on the amount of money that can be made from selling cottage foods.

Conclusion?

Nebraska law about cottage food is both expansive and limited.  While cottage foods can only be sold at a farmers’ market, many potential items may be sold as a cottage food at an unlimited profit.  If you are considering selling cottage foods in Nebraska, feel free to contact us with any questions you may have — we’re here to help!

What to keep in mind with flexible lease arrangements

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As you may know, flexible leases are gaining in popularity.  Flexible leases are just that — more flexible than your straightforward cash or share lease.  There are various iterations of the flexible lease, from a bushel rental to bonus provisions based upon price and/or yield but regardless, there are a few more moving parts in these leases.  What does that mean?

First, like all leases, the lease must comply with the statute of frauds.  You also need a meeting of the minds. All the essential elements of a lease must be present.  That means while the rental price is not determined until after the growing season, a formula or method to determine the price must be in the lease contract to satisfy the essential elements.  But what else?

Make sure you understand how the numbers work in the lease.  Run various scenarios to truly understand the implications of the rental price.  Also explore any impact, positive or negative, on the use of government programs.  For example, you’ll want to ensure whether there are any USDA payment limitation implications from the lease.

Specifically from a landowner perspective, other considerations include whether the lease will subject you to income tax complications.  For example, will you be able to defer income for a year?  Will you be subject to self employment tax?  Alternatively, do you need to build a base for Social Security payments?

If you are a beginning farmer in Nebraska, we’re happy to discuss any flexible lease arrangement you may have in mind and the potential issues that may arise.  Feel free to contact us at any time!