This page is intended to provide a quick reference for terms and concepts related to direct farm marketing and corresponding legal issues.

Agri-tourism:  Some form of on-farm recreational activity such as hayrides, a petting zoo, or a cornfield maze.

Commercial Liability Insurance:  Insurance policies that cover claims of damage and injury caused by the insured during the course of business. This can cover everything from bodily injury for accidents to contract liability claims.

A standard insurance policy issued to business organizations to protect them against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations – See more at: http://www.irmi.com/online/insurance-glossary/terms/c/commercial-general-liability-cgl-policy.aspx#sthash.IFSATJ0D.dpuf
A standard insurance policy issued to business organizations to protect them against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations – See more at: http://www.irmi.com/online/insurance-glossary/terms/c/commercial-general-liability-cgl-policy.aspx#sthash.IFSATJ0D.dpuf

Community Supported Agriculture (CSA): A form of subscription marketing where consumers buy a share of production and receive weekly deliveries for a growing season.

Note:
The terms and definitions provided here are for general use. They may have specific legal definitions that vary from one jurisdiction to the next depending on local and state laws.

Cooperative:  A cooperative is a form of corporation created under state law, which allows for a number of owners or shareholders to pool their funds to operate a business which will provide services to them.  Cooperatives are given special treatment under federal anti-trust and tax laws and are required to operate the business in special ways.  The business is to be operated for the benefit of the owners who actually use or patronize the business.  The cooperative does not experience profits but instead allocates the extra income it takes in to the account of each member based on the amount of patronage or business the member did with the cooperative.  This income is then divided between payments or “refunds” to the member and funds reinvested in the cooperative.  The member is responsible for taxes on all of the allocated patronage

Corporation:  A business form created under state law, by filing the articles of incorporation with the state.  The law recognizes the business as a separate legal entity, owned and managed by the shareholders.

Custom Meat Processing: Processing of meat for the personal consumption of the livestock owner. Custom meat processing does not require the inspection of the animal before or after processing and producers can pre-sell portions of the live animal prior to processing.

Direct Farm Marketing: Selling food and farm products directly to consumers without using an intermediary.

Farm Liability Insurance:  Insurance that protects against liability for accidents that occur on the farm premises or while engaged in typical farm activities. Depending on the policy, it may or may not cover direct farm marketing activities.

Farm Stand: A market outlet set up on or near the farm for direct retail sales to consumers.

Farmers Market: Local open air markets held regularly during the growing season where producers sell directly to consumers.

Food Hub:  Food hubs are distribution and, occasionally, processing centers that aggregate local food products in order to make them more accessible to consumers, businesses, and institutions. Instead of the farmer marketing and delivering the product to many consumers, the food hub does the marketing for many farmers who then deliver their items to the food hub for distribution. There are many models discussed in more detail later.

HACCP:  HACCP stands for Hazard Analysis and Critical Control Points. This is a preventative food safety system in which every step in the manufacture, storage and distribution of a food product is scientifically analyzed for microbiological, physical and chemical hazards. Potential hazards are, therefore, identified and appropriate control measures are taken before the problem can occur.

Limited Liability Company (LLC):  This business form is essentially a cross between a partnership and a corporation, which allows for limited liability of the owners and taxation on the individual income received by the owners. State law controls the establishment and management of LLCs.

Limited Partnership:  A partnership business form in which one party is the general partner, who typically runs the business and who has full liability, and the other partners are “limited partners” meaning they are liable only to the extent of the money or assets they invest in the business.  State law will provide the rules for creating such an arrangement.

Partnership:  A business entity that is formed when two or more people desire to be co-owners of a business.  State law will provide the legal rules for creating and operating a partnership.  Typically the best way to create one is to enter a written legal “partnership agreement” setting out the terms of the agreement, but a court may rule the parties operated a business as partners, even without a written agreement.

Pick-Your-Own: Farms where consumers are invited onto the property to pick the crops, most commonly fruits and berries.

Product Liability Insurance:  An insurance policy that pays for any damage or injury resulting from the use of the insured’s goods or services, within the limits of the terms in the policy.

Recreational Use Statute:  A law that limits the exposure of landowners to liability for accidents that occur on their property. These have been enacted in all 50 states but with variations in the extent of the protections.

Retail Agriculture:  Agriculture based on consumer demand for certain characteristics of the product, such as organic, local, or sustainably raised, whether sold directly to the consumer or not.

Roadside Market: A market outlet set up along a road or in a parking lot.

SNAP:  The Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program) is the Nation’s largest domestic food and nutrition assistance program for low-income Americans.

Sole Proprietorship:  A business that is personal to the owner, which means all the income is taxable to the individual and all of the assets are at risk with the business. Anyone operating their own business, if not assuming another business form, is a sole proprietor.

Workers’ Compensation:  A system in which an employer pays, or provides insurance to pay, the lost wages and medical expenses of an employee who is injured on the job. The structure of workers’ compensation is different in each state.