Protecting Diversified, Direct-Market, and Value-Added Operations with Smart Business Structures, Written Agreements, and Regulatory Compliance

2014 Annual Report for LNC13-348

Project Type: Research and Education
Funds awarded in 2013: $158,660.00
Projected End Date: 12/31/2015
Region: North Central
State: Wisconsin
Project Coordinator:
Rachel Armstrong
Farm Commons

Protecting Diversified, Direct-Market, and Value-Added Operations with Smart Business Structures, Written Agreements, and Regulatory Compliance

Objectives/Performance Targets

The following is the Approach, Activities, Methods and Inputs section from our original grant application. We have three program areas and several outputs for each area. The outputs are numbered beneath each area. I have listed our current status for each target and detailed completed items.

Create and Distribute Educational Materials

  1. Survey farmers on three legal subject areas: Completed. Survey was successfully developed, distributed, and analyzed.
  2. Hold 2 focus groups: Completed. We held a single focus group and did personal interviews to supplement, rather than host two groups.
  3. Research legal issues: Nearly completed. We put in hundreds of hours of research in 2014 and nearly completed all the research necessary to write our guides and educational
  4. Draft supplementary model contracts/agreements: Partially complete. We began drafting and completed about half of our resources. The remainder will be drafted and finalized in 2015.
  5. Engage a network of attorneys and farmers for review: Completed. We have recruited several attorneys and farmers to serve as reviewers
  6. Revise materials based on reviewer feedback: Not Completed- set for 2015.
  7. Disseminate materials to farmer and educator audiences: Not Completed- set for 2015.
  8. Create videos of farmers who have made changes: Nearly complete. We created 3 videos of farmers in the Midwest who have made legal changes. (We were also able to leverage additional funds to create three additional videos of Northeast farmers also making legal changes.)

Host workshops and webinars

  1. Schedule 8 workshops and 1 webinar: Partially Completed. We scheduled 1 workshop and 1 webinar in 2014 (held in 2015), with the remainder to be scheduled in the spring of 2015. They will be held in the fall of 2015.
  2. Reserve facilities for workshops: Not Completed. We will get to this as soon as we schedule them for fall of 2015
  3. Conduct outreach campaigns on workshops: Partially Completed. We successfully recruited farmers for our 2 workshops so far, and will complete the remainder in 2015.
  4. Create interactive workshop/webinar criteria: Partially Completed. We were able to create interaction on a few levels with workshops/webinars but we have more to do.
  5. Deliver workshops and webinars: Partially Completed. We hosted one webinar and one workshop.
  6. Send post-event survey and revise as needed: Not Completed
  7. Disseminate curricula: Not Completed
  8. Send follow up survey: Not Completed

Deliver Legal Services

  1. Develop computer infrastructure for referrals and attorney collaboration: Completed. We have a basic system in place to manage this.
  2. Establish fee structure: Partially completed. Our approach in this area has evolved since writing this application. Rather than set out a “fee structure” that partners have to adhere to, we have focused on reducing costs overall through standardized forms. Our progress developing these forms is moving along nicely.
  3. Recruit 4 attorneys: Completed


Below, I have detailed our accomplishments and milestones in our 2 activity areas where we have accomplished most of our tasks in 2014: educational resources and legal services.

Create and Distribute Educational Materials

  1. We started our SARE project with a list of 9 detailed and difficult legal questions to research and resolve through this project. At the end of 2014, we had worked through each of them. In the process, we wrote 11 detailed legal memos that are the basis for the farmer guides we are drafting now. We also created 4 model legal documents for farmers: an LLC operating agreement, S Corporation bylaws and shareholder agreement, a land contract, and a promissory note. These are currently in review. We have created a detailed, exhaustive flowchart to choosing a farm business entity that spans 4 pages and is very easy to use. Several other diagrams and graphic illustrations are also in production.
  2. Our initial survey was sent to 200 farmers and we received 60 responses, which is quite good. Results were very informative and shaped how we researched the above issues and continue to define the educational guides we are drafting.
  3. We registered 180 people for our webinar on business entities, which is our second most-popular webinar out of the 14 we are hosting this winter. Engagement during the webinar was very high with the majority of attendees indicating that they planning to implement one of our recommended risk management strategies after the webinar.
  4. We distributed a new chart organizing the characteristics of the most popular farm business entities and 62 farmers downloaded it in the first week.
  5. 150 farmers attended our first workshop and informal feedback has been very positive, thus far.
  6. We finished filming and rough edits on our 3 midwestern farmer videos. They look very impressive and we’ve screened an initial version at our first workshop. It went over very well. I’m incredibly excited about releasing full versions this summer. We are planning cross-promotion with other organizations, too.

Legal Services

  1. Through our outreach, 7 farmers reached out to Farm Commons for legal services to create a farm business entity. Through subsidization by this grant, we were able to provide legal services at a very affordable rate of about 50% of local market rates.
  2. We helped these 7 farm businesses decide on a business entity and create LLC operating agreements. Several of these clients were partnerships of 2 or more farmers, which means that our work has directly benefited 22 different farmers in the Midwest with specialized legal services.
  3. Our legal services led to the development of more standardized forms unique to the sustainable farm business, and these forms have been leveraged to create forms for other farmers to use in their business operations.
  4. Through this grant, we have provided farmers with the equivalent of $13,700 worth of legal services. Farmers themselves have contributed $1,800 for these services.

Impacts and Contributions/Outcomes

Impacts and Contributions/Outcomes

  1. As a result of our webinar, 43 farmers plan to create a new business entity such as an LLC or S Corporation. By doing this, these farmers will be protecting their personal assets from business liabilities. For the lifetime of their business, these farmers will be able to build personal wealth without worry that their business activities will unfairly be taken to satisfy business debts.
  2. As a result of our webinar, 26 farmers plan to write an organizational document to accompany their LLC or S Corporation. These organizational documents are very important for two reasons: they preserve the legal protections the entity offers and they protect the farm business from internal disputes. By writing these documents, farmers are forced to clearly consider and formulate a plan for dealing with business inevitabilities such as partners joining, partners leaving, dissolution of the farm business, allocation of authority, and other essential issues.
  3. As a result of our legal services, one farmer was able to start his new farm business a process that protected his interests as a member of a partnership. He learned in extensive detail the legal aspects of his farm partnership including allocation of responsibilities, communication obligations, budgeting procedure, debt structuring and more.
  4. As a result of our legal services, two existing farmers were able to launch an innovative new farm business that diversified their existing operations. Through Farm Commons, they were able to set out a framework to compensate each other based on actual work done throughout the year rather than on cash investments made into the enterprise.
  5. As a result of our legal services, two beginning farmers laid out a very concise plan for launching a new farm business including choosing a business entity, settling on insurance needs, and sourcing initial investment funds.
  6. Through our legal services, two farmers were able to join forces to develop a new value-added product. One farmer handled the marketing and the other the product development. With Farm Commons, they laid out an allocation of authorities and created a succession plan in the event one partner was no longer able to proceed.
  7. Through our legal services, we helped a group of farmers join forces to develop a collaborative marketing business. We helped the group work through very detailed issues within their operating agreement for adding members, removing members, and allocating profits, losses, and responsibilities within the enterprise.


Edward Cox

[email protected]
Staff Attorney
Drake Agricultural Law Center
2507 University Ave
Des Moines, IA 50311
Office Phone: 5152712205
Bryan Endres

[email protected]
University of Illinois, Department of Agricultural and Consumer Economics
326 Mumford Hall
Urbana, IL 61801-3605
Office Phone: 2173331828