Amendment would keep ag in hands of family farmers

On Feb. 8, North Dakota Farmers Union’s Board of Governors voted to pursue an amendment to House Bill No. 1371, the bill that would weaken the state’s corporate farming law. Nine days later, the House Agriculture Committee approved an amendment consistent with NDFU’s proposal. The amendment addresses each of our members’ most significant concerns with the bill. This article provides a summary of the amendment.

Family Farmer And Rancher Control

In its original form, HB 1371 would have completely exempted swine, dairy, poultry and cattle feeding operations from North Dakota’s corporate farming law, as long as they owned 160 acres or less. One of NDFU’s biggest concerns with the original bill was that it did not require these new corporations to be controlled by farmers or ranchers.

The recently approved amendment would guarantee farmer and rancher control of new livestock feeding operations. As amended, HB 1371 would authorize two new types of entities: authorized livestock farm (ALF) corporations and authorized livestock farm limited liability companies. Farmer and rancher control of these entities is protected through the ownership and governance requirements for ALF entities.

The amendment requires that family farmers and ranchers have a controlling interest in ALF corporations or ALF LLCs. At least 75 percent of the interest in an ALF corporation and 51 percent of the interest in an ALF LLC must be owned by individual farmers or ranchers, family farm corporations or family farm LLCs. The amended bill also requires that the officers and directors or governors and managers of these new entities are actively engaged in the operation.

Strengthened Acreage Limitation

HB 1371 originally established a 160-acre limit for any new animal feeding operation. However, NDFU was concerned that acreage limitation could be easily circumvented by allowing the same shareholders to establish multiple corporations.

As amended, HB 1371 maintains the 160acre limit for each operation and prevents the unlimited “stacking” of entities. The bill prohibits a shareholder in an ALF entity from having an interest in other ALF entities that together own more than 640 acres.

The amendment also clarifies that any land owned by an ALF entity cannot be used for crop production or livestock grazing. That restriction creates an economic disincentive to prevent ALF entities from owning more land than required for swine, poultry or dairy barns, or cattle feedlots.

Restrictions On Ownership

As amended, HB 1371 limits ALF entities to 10 shareholders. This provides ample flexibility for multiple family farms to incorporate together to establish an animal feeding operation together. But the shareholder limit mitigates the potential for entities to be controlled by passive investors.

The amendment also clarifies the corporate farming law’s prohibition on foreign ownership. The amendment prohibits foreign individuals or companies, including subsidiaries of foreign companies, from owning an interest in ALF entities.

Monitoring And Reporting Requirements

Under current law, family farm corporations and LLCs are required to submit an initial report