What You’ll Learn About Here
- The Relationship between Direct Farm Marketing and the Law
- Introduction to the Common Types of Direct Farm Marketing
- Why the Guide was Written
- How to Use the Guide
- Limitation on What to Expect from the Guide
- What is in the Guide
Direct Farm Marketing and the Law
At the right time of year, signs announcing “Fresh sweet corn for sale 100 yards” and the “Orchard is open” can be found all across America.
These signs are evidence many farmers still raise food for sale directly to the people who eat it. The signs also reveal opportunities for consumers who want to buy food directly from the people who grow it, often people they know and trust. These farmers and consumers are part of a growing segment of America’s food system often referred to as direct farm marketing.
In its simplest form direct farm marketing means any transaction between the person who raises the food and the person who consumes it. In its more complicated forms, direct farm marketing might involve such activities as producers joining together in cooperatives to sell their produce and chefs establishing local sources for fresh ingredients from which to prepare their meals. In all of its forms, direct farm marketing is an effort to establish personal contact between the people who raise the food and the people who eat it.
By doing so the people involved on both sides of the transaction have shortened the chain that brings food to the marketplace. By removing several layers of intermediaries, such as wholesalers and processors, the parties can enjoy food which is usually fresher and better tasting, and they both may gain economic advantages. In most cases direct farm marketing will not increase the price of the food to the consumer and may even lower it. At the same time, in most cases direct farm marketing will probably increase the amount the producer receives. For a discussion of the common types of direct farm marketing see the accompanying box.
Common Types of Direct Farm Marketing
More details on the various types of direct farm marketing are included in “Chapter Three: An Introduction to the Common Forms of Direct Farm Marketing.”
Other forms of direct marketing will be discussed throughout the guide. These include such methods as direct delivery of produce to restaurants and other retail outlets and home delivery routes. One of the newer ideas attracting much attention in farming areas concerns agricultural tourism and various forms of on-farm recreation.
Why the Book was Written
This book was written to serve two main categories of readers involved in the exciting process of direct farm marketing, although hopefully many people can benefit from it. These two groups are:
- farmers involved in direct marketing of produce, livestock, and other food products which they raise, and
- advisors, such as USDA employees in Extension, and attorneys, who are asked by farm marketers to provide information or advice in specific situations.
Funding for the publication of the book was provided by the United States Department of Agriculture through a special program known as SARE – Sustainable Agriculture Research and Education. The book was written as part of the Professional Development Program under SARE, with the purpose of helping inform USDA staff members so they can better help farmers who are interested in direct farm marketing. The SARE program is organized into four regional programs which use resources of the land grant universities and the Cooperative Extension Service. For more information on the SARE program see the sidebar.
The book is based on several premises.
First, direct farm marketing is an important segment of America’s food and agricultural system, which provides economic opportunities for thousands of America’s farm families and consumers.
Second, direct farm marketing of food to consumers is a historic component of American agriculture, as reflected in the traditional existence of roadside stands selling fresh produce and in the operation of public markets and farmers’ markets in cities across the nation.
Third, interest by farmers and consumers in direct farm marketing of locally produced foods is increasing, as consumers seek out alternative sources of fresh, safe, wholesome food, and as farmers – many of them small farmers and those operating near urban areas – seek out higher value methods of marketing.
Fourth, as discussed in Chapter Three, direct farm marketing can take many different forms – ranging from traditional roadside stands to such things as subscription farms. The number of direct farm marketing opportunities is increasing at a rapid rate in the U.S., especially the growth of farmers’ markets.
Fifth, increasing consumer demand for fresh food, produced locally, means direct farm marketing may be an important method for creating new opportunities for people to become involved in farming, or for existing farmers to increase their incomes. It also offers an important way to increase consumer confidence in food quality by providing a diverse array of fresh foods, produced using the methods consumers desire.
Sixth, direct farm marketing, like other forms of agricultural activities, has associated with it a variety of legal issues. Some issues, such as real estate law or income taxes, are similar to those faced in traditional forms of farming. But there are a rich variety of legal issues which arise because of the nature of direct marketing or result from laws enacted by governments at various levels to protect or regulate direct farm marketing activities. As a result, farmers involved in direct marketing need to be aware of how these laws may affect their operations.
Seventh, while there are a growing number of legal resources and other forms of information written to assist farmers and their advisors in understanding agricultural law topics, this is not true as it relates to direct farm marketing. For the most part there are few examples of educational materials which have been written to help direct farm marketers understand how the law may apply to them.
Eighth, the lack of information about the laws and rules applying to direct farm marketing, creates uncertainty about how different business decisions might impact a farm. This uncertainty can increase the risk that direct farm marketers will engage in behavior which might create legal or financial risks for their operations. Everyone will agree that it is better to know the answer – if one exists – than to guess what the answer might be. This book was written to help give you many of these answers.
How to use the book
This book was written to try to fill the gap in information available for direct farm marketers. The goal is to provide some of the answers – the ones which exist – to the legal questions direct marketers mostly commonly ask. That is why the book frequently uses a question and answer format to explain how the law works. The book is intended to provide general information and advice to help direct farm marketers and their advisors understand how the law might apply to a particular fact situation. Hopefully, in many situations the information provided in the book will be sufficient to answer a question you may have or will provide directions on how you can obtain more specific answers from other sources. The book includes many specific examples of court cases, state laws, and local regulations involving direct farm marketing. Many of these examples are discussed in “Sidebars” highlighted at the margins. For a discussion of USDA direct farm marketing activities see the sidebar.
Whenever a court case, a state or federal law, or a regulation is discussed, the legal citation is provided so your lawyer will be able to locate a copy to read. The book contains many references to other sources of information and resources which might be of interest to direct farm marketers. The Appendix lists the addresses and phone numbers in all fifty states for the state agencies and other organizations involved in direct marketing. If you have a question please do not hesitate to contact these people for more information. Remember, the people who work for the government work for you. It is their job to help you understand how the laws and regulations they administer might affect your operation.
Limitations on What to Expect From This Guide
While we worked diligently to provide a timely and complete guide to the law on direct farm marketing, there are limits to what you can expect this book to do. It is important to recognize several important limitations on the information provided here.
First, no single book can address every possible legal question which might arise in the fifty states, relating to direct farm marketing. That is not possible and this book makes no claim to do so. We have a very extensive legal system in the U.S. and the laws vary by state and by locality. It is impossible to predict all the legal questions farmers may face or to find all of the local laws on the various issues. The book does, however, try to identify the main areas of law relating to direct marketing and discuss them. The book looks at the main forms of direct farm marketing and addresses unique legal issues associated with these different forms of marketing. We have attempted to identify and discuss as many examples as possible of laws enacted for the purpose of regulating and promoting direct farm marketing. However, we may not have found all the laws which exist, or even all of the ones about which you are aware. In this case, you are invited to send us any information about new laws, court cases, legal issues, or corrections, you think should be included in future editions.
Second, the information which is provided is often general in nature and tries to summarize how the legal system typically will address an issue. The purpose of the information is to educate readers and help you recognize when you may have a legal matter which deserves attention. In those cases which might apply to your situation, you are strongly encouraged to contact your own lawyer so he or she can give you specific advice. Each direct farm marketing operation is unique, and the answer to any legal question is determined largely by the facts.
Third, this book is not intended to provide specific legal advice nor should you rely on it as the only source of information in taking an action or decision which might have legal effects on your farm. The disclaimer printed on the inside of the front cover makes this same statement. The book is designed to educate readers not serve as a substitute for obtaining legal advice when it is necessary. The key to understand is that this book is to help you understand the law, not to provide specific legal answers, that is the role of your attorney.
Fourth, there are a variety of legal issues applicable to agriculture, which are not addressed in this book. Some issues, such as estate planning are beyond the scope of the discussion possible in this book. Other issues, such as how the Uniform Commercial Code applies to financing a farm, do not relate directly to direct marketing. Some topics, such as federal income taxation, are not addressed because they do not apply in a unique fashion to direct marketing. However, in those situations where there are tax rules of special interest or application to direct marketing, they are discussed briefly.
Who is the Audience
As noted above, the book was written for direct farm marketers and their advisors. Advisors who will find the book of value include:
- USDA personnel providing information to farmers engaged in direct farm marketing;
- local extension officials, who are often the first source farmers turn to for advice concerning crop production and marketing;
- lawyers representing direct farm marketers, who are in need of information to educate themselves about how the law typically deals with direct marketing issues;
- farmers who are involved in direct farm marketing or who are considering adding a new venture to the farm; and
- people not currently engaged in farming but who are considering whether some form of direct farm marketing enterprise might benefit them and their family.
Within the category of farmers engaged in direct farm marketing, the book tries to address a full range of issues which might arise. However, in order to provide some continuity and focus to the discussion, we have relied on several assumptions about the main farm audience for the book. The assumptions are that the typical direct farm marketing enterprise using the book will probably share these traits:
First, it is a family owned and operated business with the primary goal being to raise fresh food for direct sale to local buyers. While the business may commonly hire non-family employees, these employees are seasonal and probably fewer than 5 in number;
Second, the main source of labor is from the operator and other family members and the main source of management and marketing is provided by the operators;
Third, the business is involved primarily in selling products raised on the farm or food items processed on site. While some direct farm marketers, such as roadside stands may sell goods produced elsewhere, most of the operations are not involved in wholesale marketing of produce raised by others, or in large-scale processing and marketing of products across a wide geographic area.
Fourth, the direct farm marketing businesses involved will typically be described as “small businesses” with sales from direct marketing of generally less than $250,000, although some operations may be larger.
Fifth, some direct marketing ventures, will be secondary or incidental operations to larger, more traditional farms which are engaged in raising and selling bulk commodities in wholesale markets.
Sixth, many of the direct farm marketing operations being created across the nation use either organic farming methods or rely more on sustainable practices than on chemical intensive practices. Many of the ventures also raise traditional or heirloom varieties of vegetables, fruits, and livestock.
We recognize these assumptions might not fit your farm. In fact few farms will fit all of the assumptions, but please do not let this stop you from using the book. The purpose of the assumptions is not to exclude anyone from using or benefiting from the book or information contained herein, or to imply that a certain size or style operation is somehow better than another. Instead the goal is to try to define a target audience for purposes of tailoring the discussion and the examples used. Further, the larger a direct marketing operation is, either in terms of the number of employees or the gross sales, the more closely the operation will resemble other commercial ventures involved in food marketing. While larger businesses may have greater need for legal information, there is generally not a lack of legal assistance available for such enterprises. This is in contrast to the lack of legal information generally available for smaller direct farm marketers, which was the reason for writing the book.
What is in the Book
So you can know what is in this book and to help you focus on the issues of most interest to you, the following description explains the coverage of the different chapters. There is also a detailed index which can help you find the discussion of a particular issue or state.
Chapter One – An Introduction to Direct Farm Marketing. The first chapter explains the purpose of the book, the reasons it was written, and the approach used, such as the use of a question and answer format and the use of sidebar examples. The discussion includes a description of the audience and a review of the general assumptions about the types of direct farm marketers for whom it was written.
Chapter Two – How Law Relates to Direct Farm Marketing: Considering the Benefits and Risks. This chapter sets out a series of general assumptions about how law works which direct farm marketers should keep in mind when thinking of their own legal matters. It also provides examples of how the law affects direct farm marketing and includes a discussion of the benefits and the risks of this type of marketing.
Chapter Three – An Introduction to the Common Forms of Direct Farm Marketing. This chapter describes the common forms of direct farm marketing and identifies the legal issues most often associated with them. The discussion covers farmers’ markets, roadside stands, pick-your-own operations (PYO), community supported agriculture (CSA), agricultural tourism, and direct sales to retailers. It includes detailed discussions of how state and federal laws are used to promote direct marketing opportunities.
Chapter Four – Farmers’ Markets: Organizing, Managing and Participating in America’s Favorite Way to Buy Food. This chapter gives a special focus to the many legal issues related to farmers’ markets. It includes a discussion of how to organize a market, the role of market managers, and insurance issues related to markets. It also looks at examples of farmers’ market regulations and examines court cases on enforcement of market rules.
Chapter Five – Organizing and Operating a Direct Farm Marketing Business: Selecting a Form, Licenses, and Taxation. This chapter looks at many of the business organization and operational issues involved in direct farm marketing. It includes a discussion of the different legal forms of businesses, from which to choose and their attributes. It also considers the possible need to have a government permit or license to operate, and looks at several issues of federal and state taxation unique to direct farm marketing.
Chapter Six – Contracts, Food Stamps, and Getting Paid: Financial Issues in Direct Farm Marketing. This chapter looks at the important financial issues relating to marketing farm products. It includes a discussion of the different laws and procedures available to help insure you get paid for what you sell and provides a set of basic rules you should know about contract law. Participation in public food assistance programs – such as food stamps and the WIC Farmers’ Market Nutrition Program – which are important for many direct farm marketers, is considered.
Chapter Seven – Marketing Your Products: Advertising, Organic Certification, Eco-Labels, and Other Claims. This chapter includes a detailed discussion of the various laws and regulations which control how food can be labeled and advertised. It covers topics ranging from rules on organic production to issues of when something is “locally grown.” Controls on what terms can be used to describe foods as well as restrictions on signs are discussed.
Chapter Eight – Land Use and Property Law: Zoning, Leases, Farmland Protection, and Pesticide Drift. This chapter addresses a range of legal issues relating to the ownership and use of land. It includes a valuable discussion of how local zoning ordinances may impact direct farm marketing operations and explains how farmers can be involved in shaping local land use laws. It also looks at a number of other property issues including the operation of farm leases, right to farm laws, and pesticide drift cases. Special attention is given to how local programs to preserve farmland may create opportunities for direct farm marketers.
Chapter Nine – Labor and Employment: Who is an Employee, What Laws Apply, Worker Compensation and Internships. This chapter examines the important issue of labor law as it may apply to direct farm marketers. It examines the application of state and federal labor rules concerning issues such as wages and hours, safety rules, and the application of workers compensation law. The interplay between labor laws and private insurance is also addressed. Several new issues, such as the application of labor laws to on-farm internships and to CSA members, are addressed.
Chapter Ten – Insurance and Liability: How to Protect Your Farm from the Risk of Being Sued. This chapter addresses the important issue of liability and the operation of insurance policies. It examines closely the typical liability policy purchased by most farmers and explains the benefits and limitations of insurance coverage. The chapter identifies a number of insurance and liability questions for direct farm marketers which unfortunately may have no clear answers. It also reviews the court cases involving liability claims against direct farm marketers, such as suits involving PYO operations, and identifies basic rules to follow to reduce the possibility of being sued.
This chapter considers the important issue of marketing various types of higher value or processed foods. The main focus is on the application of federal, state, and local food safety and processing laws which establish the rules which must be followed. Rules for inspecting and licensing of food preparation facilities and determining what are “processed foods” are discussed. The chapter includes a discussion of food safety and how it applies in the context of direct farm marketing.
Chapter Twelve – Marketing Meat, Poultry, Eggs and Dairy Products: Inspections, Exemptions and other Legal Issues. This chapter addresses the important marketing opportunities relating to the sale of meat and livestock products. It examines issues of state and federal meat inspection requirements and identifies state exemptions for the direct marketing of small quantities of products such as eggs and poultry. Rules relating to dairy products such as raw milk are also considered.
Appendix – Public and Private Contacts in the Fifty States. The Appendix is an attempt to provide contact information about the people in state government who may be able to answer specific questions concerning the laws in your area. Addresses and phone numbers are provided for such people as the State Department of Agriculture contacts for farmers’ markets and direct farm marketing.