Agricultural and Natural Resources Law
Agricultural laws are the rules and regulations governing seed planting, crop harvesting, gardening, dairying, poultry, ranching, and other related activities. Natural resources laws are the rules and regulations governing the management of land, fish, wildlife, air, water, and other resources. The rules are based on a combination of federal and Illinois laws.
In this section, we'll discuss agricultural production contracts, bankruptcies, and land use laws.
Contract farming. Contract farming is the name given to a system whereby an animal or plant processor purchases the harvests of animal or plant producers by contract, which is called an agricultural production contract. Generally, the processor bears the marketing risks and the producer bears the production risks.
Although the contracts vary widely, they often involve the producer providing the land, the buildings, the labor, and the equipment, while the processor provides the animals, the feed, and the management expertise. Agricultural production contracts first gained popularity in the poultry industry and have spread to the swine industry, beef industry, and some crops.
The contracts are popular with both processors and producers because they reduce uncertainty by guaranteeing a buyer for the producers and by guaranteeing an output for the processor. The basic contract provides the price, the quantity, and the quality of whatever it is that is to be produced.
Over the years, agriculture production contracts have grown in complexity as industry demands have grown. In the fast food industry, for example, a company that sells chickens may want its producers to meet a certain quality standard in the chickens they supply. If so, the contract, in addition to providing price, quantity, and quality, may also dictate how the chickens are to be fed and raised in order to meet the standard. The downside for the producer is that he loses some control over his processes, although most producers will gladly trade it off to get a contract with a national fast food company.
A problem with agricultural production contracts is the unequal bargaining position of the two parties, with the processors enjoying far and away the upper hand. They draft the contracts, and they dictate the terms and conditions. In some cases, for example, a processor has been able to determine completely how the producer is to raise the animal or grow the crop and has retained the right the decline delivery if the product fails to meet quality standards. In other cases, the producer has borne where delivery has become impossible due to bad weather.
As a result of what many perceived as unfair practices on the part of poultry industry processors, legislatures have begun enacting laws granting protections to producers in all industries where agricultural production contracts are in use. The laws allow producers to take certain steps, such as sharing information with one another and seeking legal help, in order to offset the superior bargaining position enjoyed by many producers, who were able to force producers into a "take it or leave it" predicament. The steps allowed by the law were often prohibited in the contracts, which were usually drafted by the processors.
A bill, called the Agriculture Producer Protection Act, has been introduced into the Illinois legislature, but it has not been enacted as of this writing. The bill would allow producers to share information, give producers a three-day window to cancel the contract, and require the contract to disclose certain risks.
Corporate limitations. Illinois law prohibits corporations and other designated entities from operating farms or owning farm property. The law exists to enable family-owned farming by discouraging large corporate ownership of farmlands.
Farm bankruptcies. The bankruptcy code has a special section for family farmers who want to declare bankruptcy, called Chapter 12. It allows farmers to stay in business while debts are repaid, and it recognizes the seasonal nature and the unpredictability of farming.
To be eligible, a farmer must receive at least half of his or her income from farming and have no more than $15 million in debt. Of that $1.5 million, 80% of the debt must be from farming, not counting the farmer's home.
Under Chapter 12, farmers file a bankruptcy petition, which stays any further actions by creditors. The bankrupt farmer has 90 to file a reorganization plan, much the same way individuals do under Chapter 13. A meeting is held with creditors, who have the right to object to the plan. Once the court approves the plan, the farmer begins making payments in accordance with the plan terms. At the end of the plan term, the farmer's remaining debts are discharged.
Natural resources. The Illinois Department of Natural Resources has the responsibility for managing Illinois' natural resources, including air, water, timber, minerals, and parks. Its powers include the right to run the parks, contract with harvesters, grant rights of way, and manage wildlife.
Land use. The Department manages the state parks and determines when to acquire new land where necessary to preserve forests. They also implement rules protecting certain types of trees and preserves historic sites.
A committee that includes representatives from the Department governs Illinois wetlands. They set rules for wetland management. Any project, such as a new golf course, that might adversely affect wetlands cannot proceed without committee approval.
Mining. Mining is not completely prohibited in Illinois, but it is regarded suspiciously because of past mining damage. The Department is given the task of balancing the benefits of mining against the benefits of conservation before issuing permits. The Department is also involved in reclaiming land no longer used for mining.
Water. Illinois has created a series of soil and water conservation districts, which are responsible for regulating the withdrawal of ground water. Under Illinois law, any new project that would withdraw more than 100,000 gallons per day must notify its soil and water conservation district. The district has 30 days to respond with a report indicating whether it approves or disapproves of the new project. In order to prevent soil erosion, flooding, and other water-related problems, the soil and water conservation districts are authorized to provide assistance to landowners, including equipment and financial help.