First Posted: 1/17/2015
There are more opportunities than ever for farmers to specialize in their crop production. Advances in communication, technology and transportation give every farmer the chance to carve out a niche. Those niches are almost limitless, but each niche usually requires some contractual obligation by the farmer for purity in the product produced.
Some farmers produce non-genetically modified corn and soybeans. Some of the same farmers are raising crops that are genetically modified, but that produce particularly high concentrations of that crop’s oil (corn oil, soybean oil, etc.). Some of those same farmers also produce some organic commodities.
New technology makes it possible to use our region’s soil to produce crops that would not otherwise grow here. That technology allows us to prepare seedbeds that accommodate new crops and facilitate application of inputs such as herbicide and fertilizer at perfect times in perfect amounts, per square inch in some instances. Some of those new commodities are designed to produce trendy, new products like “essential oils” that health-focused consumers use on and in the body to attempt to address a large variety of diseases.
The aforementioned diversification of crops results in an urgent need to retain the pure identity of each crop and each variation of each crop. Those unique needs also introduce a myriad of new legal issues.
Traditionally, cross-contamination of crops and crop variations were not a big issue because processors could easily separate corn from soybeans from wheat from weed seed. In fact, the United States Department of Agriculture still defines “regular No. 2 yellow corn” to be composed of up to several percent of other commodities and foreign material (including some stones). However, now a farmer could be producing 20 types of corn that each have unique qualities that make them impossible to visibly separate from each other once commingled. Being “off” by 5 percent is no longer acceptable.
The failure to keep each product completely separate from each other product now leads to breach of contract litigation against farmers.
Technology now allows many food producers to trace non-conforming crop products to the literal 40-acre field from which the non-conforming products came. Some new products such as essential oils are only minimally processed (and checked for quality) before being sold to litigious city dwellers around the world, many of whom love to find “rich farmers” to sue.
Traditionally, understandable imprecision in farming might have resulted in a small financial penalty for a farmer. Now, farmers can face liability for breach of contract and potential liability for sickness or death resulting from the unintentional inclusion of even a small amount of the wrong type of commodity (or commodity component) in an otherwise consistent load of grain.
Most standard farm insurance policies do not include coverage for mistakes like these. Limited liability companies and other business structures can decrease (but not eliminate) some of this liability and should be used. However, the best way for farmers to protect themselves in this context is for farmers to be relentlessly precise in the production, harvest, storage, and transportation of all commodities.
