Corporate Farming Law – Minnesota

Date: 21 Nov 2008 | posted in: agriculture | 1 Facebooktwitterredditmail

Minnesota’s corporate farming law passed in 1973 to "to encourage and protect the family farm as a basic economic unit". The law states that "No corporation, limited liability company, pension or investment fund, trust, or limited partnership shall engage in farming…directly or indirectly, own, acquire, or otherwise obtain any interest, in agricultural land". However, several exceptions exist. While the law applies to all livestock, poultry is completely exempt. For other livestock a corporation can retain livestock ownership for one production cycle or 18 months. Other exemptions exist for timber land, nonprofits, and farm trusts.

Under the law, authorized farm corporations, farm limited liability companies (LLC’s) and partnerships are allowed provided that they have no more than 5 members, limit their shareholder holdings to 1500 acres of land, and require members of the company that hold more than 51% or more of governance or financial rights in the farm to reside on the farm or actively engage in farming. All corporations and partnerships of this type must register with the state agriculture department. Failure to be certified by the MDA or to report annually can result in a $500 civil penalty and gross misdemeanor.

The law also requires corporations that take over land by reposession to sell the land in under 5 years after acquiring it. The corporation cannot work the land, and is required to lease it to a qualifying farmer. If the corporation leases the land back to the farmer who defaulted, it can retain ownership for 10 years. The law does not bar shareholders from investing as individuals in other farm corporations, as long as they invest as an individual, not a corporation.

To date, the law has been enforced and has been effective in keeping large corporate owned farms out of the state, though limiting corporate ownership has led corporations to increase contracting with farmers.

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