Manure easement a bonus?
We are seeing more manure easements on farms. If you have a farm with a 10-year manure easement on it and you decide to sell the farm, do you see any strength? Does it help the sale or hurt the sale of the farm? In what situation would having a manure easement be a negative?
Swanson: The strength of the manure easement depends on the value and/or the cost of the nutrients as applied. Typically, this value is at some discount to commercial fertilizer nutrients. Whether it helps or hurts the sale of the farm depends on the perspective of the buyer. Negatives could include a history of overapplication of nutrients, absence of a manure management plan and future neighborhood development.
Gassett: We haven’t seen manure easements help or hurt the sale of a farm. One reason is even if there is a 10-year agreement, the agreements are always subject to renegotiation. A situation in which the manure easement was negative would be if there was evidence that poor application practices had resulted in compaction or inconsistent fertility.
Herbold: At the ISU Center for Ag Law and Taxation, we have been talking a lot about manure lately (insert your favorite lawyer joke here), particularly in the context of manure easements.
An easement, in agricultural and legal terms, is an interest in someone else’s land that runs with the property upon transfer of ownership. So if you are contemplating a sale of land and there is an existing recorded manure easement on the land, the buyer will take the land subject to that manure easement. An ag land easement should be in writing and properly notarized. The Iowa Code allows a landowner to record these types of easements, so a potential buyer will be on notice that a manure easement exists before they purchase the property. To date there is little evidence concerning the effect a manure easement may have on the value of ag property. The best course of action is to be open with potential buyers regarding the existence of the easement and be fair to all parties involved.
William Edwards referred this question to Erin Herbold, staff attorney for ISU’s Center for Agricultural Law and Taxation. For more information, go to www.calt.iastate.edu.
Grow feed for neighbor
A new cattle-feeding operation is being built near our farm. My husband is ready to grow alfalfa and make haylage for them. What should we know before we enter into such an agreement?
Swanson: You should have a written contract with the cattle feeder specifying terms such as price, delivery criteria, quality factors, storage, a termination clause and other factors I’m not familiar with.
This document should be reviewed with your attorney so you understand what you are committing to. Call the Iowa Attorney General at 515-281-5351 or visit the Web site at www.iowa.gov/government/ag/
working_for_farmers/index.html, which has a discussion on production contract issues and a number of sample production contracts. The ISU Center for Ag Law and Taxation at www.calt.iastate.edu is another source of information.
Edwards: Most important, how much feed will they need each year and when do they need it? What happens if your actual production is more or less than they need? How long do you want to commit to this transaction? Ask for sufficient advance notice if they quit feeding cattle so you won’t be stuck with the crop. Who will transport it? How will it be priced? For a large quantity, it would be worth having the haylage analyzed by a lab for feed value and for moisture content, so it can be priced on a dry-matter basis.
Gassett: You’ll want to enter into a written agreement, outline the method that will be used to price the forage, state the method used to arrive at the compensation for your equipment cost of harvesting and hauling, and describe the timing of payments.
This article published in the January, 2010 edition of WALLACES FARMER.