Below is a list of important phone calls to make to help ensure a successful and legal direct marketing business. Use the questions that follow as a reference when contacting the different agencies and organizations.

Note: Some of the organizations listed here may be hesitant or unable to answer some of your questions, particularly legal questions that depend on specific circumstances.
Note: The questions are provided here as a stand alone resource for quick reference. For a more comprehensive approach, answer these questions as you complete the “Direct Farm Marketing Checklist.”


Questions to Ask Yourself

Your Attorney

Your Insurance Agent

Local Farmer’s Market Officials

Local Land Use Planning Authorities

State Food Inspection and Licensing Officials

State Labor Commissioner


In Conducting a Risk Analysis
Examples of Questions Regarding Physical Risks

1. If customers come on the property what have you done to insure their safety?

2. Are you aware of any hazardous conditions on your property or with your machinery, which haven’t been corrected?

3. Have you trained all employees in the safe operation of machinery or tools?

4. Do you know if your current insurance policies cover your type of direct farm marketing operation?

Examples of Questions Regarding Financial Risks

1. How would you be affected if you lost your major customer?

2. What would happen if a specialty crop buyer failed to pay you or went out of business?

3. What would you do if an employee or a customer was seriously injured on the farm?

4. What would happen if the local farmers market closed or you were not allowed to sell there?

Before Deciding What Type of Business is Right for You
1. How large is the business (or how large do you hope it will become) in terms of sales, employees and capital needs?  The larger and more complicated the business becomes, the easier it will be to justify the expense of forming a corporation and such a form may be needed to help organize and manage the business.

2.  How many people are involved in the ownership and management of the business?  The fewer people involved the less need there is for a formal business structure, beyond a sole proprietorship or partnership.  The more people or family members involved in managing and owning the business, the more valuable it may be to use some form of business structure, such as a corporation, to help allocate ownership interests and decision making.

3.  What is the relation of the people involved, are they family, unrelated business partners or employees?  The number of people involved in the business and their relation to each other can influence whether some business other than a sole proprietor may be needed. If the parties are unrelated and are contributing capital or other assets to the business, then a partnership or some form of corporation may be needed.

4.  Do you intend to transfer or sell part of the business to family members or employees?  If the future existence and ownership of the business is a concern, then it is worth considering a business form which may make it easier to transfer interests and continue the life of the enterprise after you retire.  One benefit of incorporation is that the assets can be represented by shares which can be divided and transferred among the owners, more easily than other assets, such as land and equipment.

5.  Do you intend to be liable for the debts and obligations of the other owners or do you want to limit each party’s risks?   One main reason to use a business organization is the issue of liability.  When people are general partners they share not only the profits and decision-making, but also the risks and obligations.  If you do not want this joint liability, then a business form such as a limited partnership or a corporation may provide limited liability.

6.  Do you have the time and money to spend on the legal paperwork and record keeping which some business forms require?  Creating a corporation means that  decision making and accounting for the business will become more complicated.  If you want to be able to run the business however you desire and not worry about holding meetings, keeping minutes, or getting the approval of other owners then a sole proprietorship or closely held corporation may be attractive.

7.  What are the potential risks or liabilities associated with the business and how serious might they be?  The greater the potential for large liabilities, such as borrowing large amounts, hiring numerous employees, conducting dangerous activities, or creating potential environmental risks, then the more important it may be to choose a business form which offers some form of limited liability to investors and owners.

8.  Do you have other businesses or do you have other personal assets you do not want to place at risk?  If all of your assets and efforts are tied up in the direct farm marketing business, it may not make much difference what type of business form you choose because everything you own may already be at risk.  However if you have other separate businesses or have other property or assets you do not want to put at risk, then you should consider choosing and operating in a business form which will limit your potential liability and exposure.Find Contacts

Before You Sign a Contract
1. Do you understand what you are agreeing to do, for example are you selling a specific quantity or quality of product?

2. What is the price you will be paid and how is it determined?

3. When will you be paid, or when is payment due if you are buying something?

4. Who will decide whether you have satisfied the terms of the contract?

5. What will happen if a dispute arises, will it go to court or does the contract include some form of alternative dispute resolution such as mediation or arbitration?

6. If there is a dispute where will it be heard and which state’s law will be used?

7. How long will the agreement run and how can it be terminated or extended?

8. Can the agreement be modified once it is signed?

9. Are you considered a merchant under the agreement and held to a higher commercial standard or will you be treated as a farmer?

10. Can the contract be assigned to another person or is it personal to you?

Your Attorney

You’ll probably want to ask your attorney many of the questions you ask other organizations and yourself. As mentioned above, the organizations may be unwilling or unable to answer all of your questions, and you’ll need to seek independent legal advice. This is particularly true if entering into a contract with the other party, such as with officials at a farmers market.

Your Insurance Agent

Your Agent About Your Insurance Coverage
1. Does my farm liability policy cover my direct farm marketing sales, such as at my roadside stand, or are they excluded as a “separate business” for which I need to buy a commercial policy?

2. Is there a limit to the amount or type of direct farm sales I can make and still have them considered as incidental to my farming operation?

3. Even if my farm liability policy covers my direct marketing operation are there reasons why it would be better to obtain a commercial business policy?

4. Does my farm liability policy cover any sales made off the farm such as at a farmers market or direct deliveries to stores or restaurants?

5. If my farm policy does not cover sales at the farmers market then what type of policy should I buy for this purpose?  Is product liability insurance available or necessary for what I sell?

6. As part of my direct marketing operation some customers pay to visit the farm to engage in recreation and other customers pick their own produce, does my farm liability policy apply or do these activities present special insurance needs?

7. As part of my direct marketing business sometimes I, other family members, or employees make deliveries of produce to customers using farm vehicles.  Does my automobile insurance cover such trips and if not what type of policy do I need?

8. When buying insurance for buildings and equipment, should I set the value at “replacement cost value” or “depreciated value”?  Is there a “co-insurance” provision in my policy which requires me to pay part of any loss?

9. Is my policy a “claims and occurrences” policy and if so when does coverage end and what happens if I change insurers?

10. Are you a general agent working for one company or an independent agent?Find Contacts

Farmer’s Market Officials

About Your Farmers' Market
1.  Who is the sponsor of the farmers market, is it a local government or a non-profit group?

2. Who owns the land on which it is located and are they responsible in case of accidents or injuries to shoppers?

3.  Who is in charge of the farmers market and who has authority to make decisions about how it is run, such as deciding who gets to set up in which location?

4.  Is the farmers market a “producers only” market meaning only farmers who produce food may sell it, or are other vendors and wholesale peddlers allowed to participate?

5.  Does the farmers market provide for “carrying rules” which allow one farmer to sell food raised by another farmer?

6.  What type of rules or regulations apply to your market participation, for example can you provide samples to customers?

7.  What penalties apply for violating market rules, are there fines or can you be expelled from the market for serious violations?

8.  If you are forced to leave the market or are unable to continue to come, is any portion of the seasonal fee you paid refundable?

9.  What happens if you just miss one market day, do you lose your location in the market?

10.  What is the procedure to be followed if there is a dispute over a rule violation, is there a committee of vendors and customers who decide the matter or does the market manager?

11.  Does the market have all the necessary local business permits or licenses or do you need to obtain business permits for each of the farmers markets in which you participate?

12.  Is the farmers market approved for participation in the USDA’s Women Infants and Children (WIC) Farmers Market Nutrition Program (FMNP) and SNAP?

13.  If you want to sell products such as meat, poultry, eggs and canned or processed food is this allowed by the market rules and what licenses will you need to obtain?

14.  How does the market manager make sure all of the vendors are not selling the same thing, such as sweet corn, so that people don’t start lowering prices?

15.  Does the market carry insurance in case of accidents?

16.  What type of insurance does the market expect you to have and what proof of insurance must you provide?

17.  Do the market rules require the farm owner actually attend the market or can you send employees to do the selling?

18.  Does the market require you to submit a plan before the market season begins listing what you intend to produce and the approximate amounts?

19.  Can the market officials visit your farm and inspect your operation and records?

20.  Do the market rules place limits on how you can label or describe your products?Find Contacts

Local Land Use Planning Authorities

The Local Land Use Officials
1. Which political jurisdiction has legal authority over your property?

2. If the land is zoned, how is it classified?

3. Are farming and direct farm marketing allowed as “permitted uses” on the property?

4. How is your farm direct marketing operation classified, as a farm or commercial business?

5. Are you subject to “commercial” standards concerning the design of facilities?Find ContactsDownload PDF

State Food Inspection and Licensing Officials

State and Local Food Officials About Inspections and Licenses
1. Do I need a state license or permit to produce and sell the products in question?

2. Do the local health officials – such as the city or county inspectors – have their own set of rules for food processing and marketing?

3. If I am presently marketing “processed foods” which require a state or local license what is the procedure for obtaining a license and what is the penalty for failing to have one?

4. What types of home produced foods can I sell without having to be licensed or inspected?

5. What type of kitchen or food processing facility will require me to obtain a food processing license?

6. Does the state license or approve “community” or “shared use kitchens” and are there any licensed facilities in my area which I might be able to use?

7. Does the state provide assistance to producers who want to develop food processing and manufacturing businesses?Find Contacts

State Labor Commissioner

About Employment and Labor Issues
1. Are there people working on your farm who are considered employees under state law?

2. If family members work in the operation are there special labor laws which apply to them?

3. Does the state workers’ compensation law apply to your operation or is there an agricultural employers exception for which you are eligible?

4. If you are required to acquire workers’ compensation insurance is it available through the state or through private insurers?

5. Even if the law does not require you to have workers’ compensation coverage does it still make sense to acquire it voluntarily?

6. If you operate an “intern” program do you need to treat the people participating in it as employees for purposes of such laws as wage and hour requirements?

7. If some of your employees perform both “agricultural” tasks and “non-agricultural” tasks how does this affect their legal status?

8. Does your farm liability insurance policy provide any coverage for workers, such as if an employee would injure a visitor?

9. When your employees are away from the farm premises will your liability insurance still cover their actions?

10.  Are any of your employees engaged in dangerous activities – such as using farm chemicals – which might raise questions about the need for special training or safety equipment?Find Contacts