Two recent articles caught my attention, one in the New York Times and the other in The Rural Blog.
First, the Times brings us a story about the use of apps, specifically the FarmLogs app, for crop data management. The idea is to store information about planting dates, watering schedules, rainfall, thermal heat, yields, and more to manage the fields more precisely. While the app, or similar ones, may or may not be useful to your operation, there is no doubt that information and data management is aggregating more and more information while also moving to the cloud.
The Rural Blog also posted an interesting story about self-driving tractors currently in use on America’s farms. I don’t have much to add to the post but it is interesting to see the technological change happening before our eyes.
Courtesy of The Rural Blog, I came across this story that researchers at the University of California – Merced have mapped the potential of every American city to obtain local food.
The study’s authors found that up to 90 percent of Americans could be fed entirely by food grown or raised within 100 of their homes. Obviously, local food production is not at the same level as in the past, due to limited land resources, population growth, and suburbanization. However, the possibility and potential remains for local food production.
The study suggests most of the United States could feed between 80 and 100 percent of their population with food raised or grown within a 50 mile radius. This was calculated by looking at the farms within the radius, then estimating how many calories the farms could produce. The study compared the potential calories grown or raised with the population of each city, thereby deriving the percentage of the population that could be fed.
This study could be of interest to those readers interested in local food and urban agriculture. Check it out if you have a minute!
The USDA has announced that eligible producers may now officially enroll in Agricultural Price Coverage (ARC) or Price Loss Coverage (PLC) programs for the 2014 and 2015 crop years. Enrollment officially begins tomorrow, June 17, 2015 and runs through September 31, 2015.
Nationally, 96% of soybean farms, 91% of corn farms, and 66% of wheat farms elected ARC-County coverage. In Nebraska:
- 53% of barley farms elected PLC, whereas 47% elected ARC-County;
- 5% of corn farms elected PLC, whereas 95% elected ARC-County;
- 31% of grain sorghum farms elected PLC, whereas 69% elected ARC-County;
- 16% of oat farms elected PLC, whereas 84% elected ARC-County;
- 3% of soybean farms elected PLC, whereas 97% elected ARC-County; and
- 34% of wheat farms elected PLC, whereas 65% elected ARC-County.
The link also contains information about canola, dry peas, flax, lentils, large chickpeas, mustard, peanuts, safflower, small chickpeas, and sunflowers if those crops of are interest to you.
For those in partnerships and closely-held corporations, the incapacitation, death, or retirement of an owner can cause much angst. So to can the possibilities of bankruptcy, divorce, or an attempted sale to a person or entity unknown to the owners. The role of Buy Sell Agreements to address such situations is critical to ensure the business continues without disruption by the business falling into the hands of an unknown third party.
A buy-sell agreement is a legally binding contract, usually found within the operating agreement of a business entity. A buy-sell agreement represent a restriction on ownership; restrictions which are agreed upon or imposed as a condition of ownership. Three basic types of buy-sell agreements exist: (1) a Redemption Agreement, in which the company itself purchases the departing owner’s ownership interest; (2) a Cross-Purchase Agreement, in which the other owners purchase the departing owner’s ownership interest; and (3) a hybrid of the first two approaches, in which the company and the owners each may buy the department owner’s ownership interest, but with one having the first right to buy and the other the second right to buy.
How does the buy-sell agreement work in practice? It typically works as a right of first refusal. For example, if the departing owner receives a bona fide offer to purchase her interest in the company, the departing owner typically must first establish through a written document that the offer is valid and binding. This may require both a written offer and down payment. The buy-sell agreement would then provide that the company has the first right to buy the ownership interest for the same terms, or for other terms as directed in the buy-sell agreement. If the company does not exercise its right of first refusal, the buy-sell agreement may then provide that the other owners have a right of second refusal to buy the ownership interests on the same terms as offered to the departing owner, or for other terms as directed in the buy-sell agreement. Detailed examples of the above are in the linked article — check it out if you are interested in more information.
Another critical concern with buy-sell agreement is the purchase price of the shares. There are three basic approaches to determining price: (1) fixed price method, or an agreement among the owners are to the value of an ownership interest in the company; (2) a formula method, wherein the buy-sell agreement sets forth a formulaic method, such as net book value or capitalization of earnings, for determining the purchase price; or (3) appraisal. Also worth considering when determining how to calculate price is also how the company can fund the re-purchase of shares.
Buy-sell agreements can also address possible tax consequences and allocation of taxes. Again, detailed examples are in the linked article — it is worth reviewing if a buy-sell agreement is of interest to you.
A buy-sell agreement is not the only estate and succession planning tool but it is one worth considering as part of your estate and succession plan. A good buy-sell agreement not only protects the family operation but also the family relationships that are necessary for the family operation to continue.
The USDA recently announced that farmers, ranchers, and private forest landowners can now work with the National Resources Conservation Service (NRCS) online. The new Conservation Client Gateway permits producers to work with conservation planners online to access Farm Bill programs, request assistance, and track payments for conservation activities. Now, instead of a trip to your local USDA service center, you can fire up your computer and log on to the Gateway.
The Gateway can be used to:
- Request NRCS technical and financial assistance;
- Review and sign conservation plans and practice schedules;
- Complete and sign an application for a conservation program;
- Review, sign and submit contracts and appendices for conservation programs;
- Document completed practices and request certification of completed practices;
- Request and track payments for conservation programs; and
- Store and retrieve technical and financial files, including documents and photographs.
Currently, the Gateway is limited to individuals but will soon be expanded to included business entities, such as limited liability companies.
To get started with the Gateway, you will need to have:
- An individual Service Center Information Management System (SCIMS) record with a primary email address that is linked to your Level 2 eAuth account.
- A USDA Level 2 eAuthentication (eAuth) account that is linked to your SCIMS record.
More information about getting started is at the link.
If you have any questions, feel free to contact us — we’re happy to help!