Wallaces Farmer

Legal Issues: Resources are available to help farmers deal with legal issues raised in the era of COVID-19.

6 Min Read
Tractor in field with bales of hay in background
TOUGH TIMES: As the coronavirus outbreak continues, farmers are facing uncertain times that are taking an emotional as well as a financial toll. Rod Swoboda

In a world that is constantly changing, we are now gaining a better understanding of how the COVID-19 crisis is impacting the farm sector. This month, we are focusing on the unique legal issues involved and resources to help farm families dealing with these specific issues.

Some of the legal issues farmers are dealing with are brand new or simply have not been addressed for years. Furthermore, the COVID-19 crisis hit during an extended downturn in the farm economy. So, the question remains: What will be the long-lasting impact of events surrounding COVID-19? Answers lie in the following tools and resources available to farmers to help weather the storm: 

Farm lease arrangements. According to Iowa law, whether a lease is written or is a verbal handshake agreement, leases for farmland automatically renew for another crop year under the same terms and conditions as the original lease unless either party provides written termination notice on or before Sept. 1, or the parties mutually agree to terminate at a later date in writing. This is a topic we have discussed many times, in light of the uncertainty in the farm economy. 

One thing that remains the same in an era of uncertainty is the publication of the 2020 Iowa State Extension Cash Rent Survey, published on the AgDecision Maker website in May. The most recent survey indicated a small increase in farm cash rental rates by an average of 1.4% in 2020 to $222 per acre.

However, it has been noted by Iowa State University Extension specialists that the data on rental rates was compiled months ago, before the onset of COVID-19. That said, it will be important for both landlords and tenants to re-evaluate their leasing strategies and contemplate the need for termination of farm leases this summer due to the uncertainty in the markets. 

ISU Extension. ISU’s AgDecision Maker website continues to be a helpful resource for farmers. Extension has put together a special resource page for agriculture. The website gives helpful resource information for crisis and stress resources, farm management publications relating to labor issues and workforce contingency plans, farm financial planning resources, and data relating to market outlooks. 

The Center for Ag Law and Taxation at ISU continues to offer helpful information relating to ag legal issues for Iowa producers. One area of particular interest is information recently published regarding Paycheck Protection Program loans available to farmers. Many Iowa farmers have applied for these loans with the Small Business Administration. There have been follow-up questions and concerns relating to these loans, and CALT does a nice job of highlighting and addressing the legal concerns. 

Farm programs.  According to the USDA Farm Service Agency state office in Des Moines, the state staff is still working, but some staff are working remotely. This might make acreage reporting, with a deadline of July 15, more complex. It is recommended that producers obtain their maps ahead of time and work with local FSA staff to plan ahead to meet the deadline. 

Additionally, there has been talk among producers about the recently introduced Coronavirus Food Assistance Program, which will provide direct payments to farmers and ranchers that produce certain commodities. More information can be found at farmers.gov/cfap. According to a recent news release from USDA, FSA began accepting applications on May 26. 

Livestock production. The Iowa Pork Producers, Iowa Cattlemen and the Iowa Poultry associations, among others, have each created links and “toolkits” of resources for producers related to COVID-19. As livestock producers struggle to find a market for their livestock and are faced with devastating choices, the staff of these organizations are offering information and assistance to producers. 

Grain commodities. Both the Iowa Corn Growers and the Iowa Soybean association have also compiled helpful resources, including economic analysis and updates on their response to COVID-19. 

Financial issues. Generally, it’s best to keep an open line of communication with your banker to determine the best course to get through tough financial times. If those resources aren’t available, the Iowa Mediation Service is available to mediate farm disputes and has published helpful links to information and crisis resources. 

Finally, the National Agricultural Law Center has also published and compiled helpful resources for farmers, As always, if you are presented with a legal issue in your farming operation, it is always best to visit with your attorney before the problem becomes unmanageable. 

Iowa Legislature. In upcoming months, we hope to provide an update on the activities of the Iowa Legislature as they reconvene on June 3 at the state Capitol to pass a budget for the upcoming fiscal year and finalize other matters, including appropriations bills. Before the COVID-19 shutdown, there were several bills relating to ag still deemed “alive.” It remains to be seen what issues the Legislature will tackle aside from budgetary concerns. 


USDA offers loans to offset COVID-19 challenges 

USDA’s Farm Service Agency offers farm ownership and operating loans to agricultural producers who may not find success obtaining loans from their traditional financial institutions because of COVID-19. Farmers who can’t obtain commercial credit from a bank can apply for FSA direct or guaranteed loans. 

“Farming is a capital-intensive business, and FSA is committed to helping producers maintain their agricultural operations during this time of crisis,” says Amanda DeJong, FSA state executive director. “FSA loans are designed to assist beginning and historically underserved farmers and ranchers, as well as those who have suffered financial setbacks from natural disasters or economic downturns. Producers may find that an FSA loan is the best option for them if they can’t qualify for a loan with their traditional financial institutions or other lenders because of COVID-19.” 

USDA offers a variety of loans to meet different production needs. Direct loans are made to applicants by FSA. Guaranteed loans are made by lending institutions who arrange for FSA to guarantee the loan. FSA can guarantee up to 95% of the loss of principal and interest on a loan. The FSA guarantee allows lenders to make ag credit available to farmers who don’t meet the lender’s normal underwriting criteria. 

The direct and guaranteed loan program offers two types of loans: farm ownership loans and farm operating loans. 

Farm ownership loan funds may be used to purchase or enlarge a farm; purchase easements or rights-of-way needed in the farm’s operation; build or improve buildings such as a dwelling or barn; promote soil and water conservation and development; and pay closing costs.

Farm operating loan funds may be used to purchase livestock, poultry, farm equipment, fertilizer and other materials necessary to operate a farm. Operating loan funds can also be used for family living expenses; refinancing debts under certain conditions; paying salaries for hired farm labor; installing or improving water systems for home, livestock or irrigation use; and other improvements. 

Repayment terms for direct operating loans are scheduled from one to seven years. Financing for direct farm ownership loans cannot exceed 40 years. Interest rates for direct loans are set periodically according to the government’s cost of borrowing. Guaranteed loan terms and interest rates are set by the lender. For information on FSA farm loan programs, contact your local FSA office or visit farmers.gov. 

Herbold-Swalwell is an attorney with Brick-Gentry in Des Moines. 


Read more about:

Covid 19

About the Author(s)

Erin Herbold-Swalwell

Erin Herbold-Swalwell is an attorney with Wickham & Geadelmann PLLC.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like