The Bamberger Blog » farm products http://www.bamberger.com/blog Tue, 07 Feb 2012 13:30:16 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Grain is Not Inventory http://www.bamberger.com/blog/2011/08/grain-is-not-inventory-2/ http://www.bamberger.com/blog/2011/08/grain-is-not-inventory-2/#comments Tue, 02 Aug 2011 13:30:00 +0000 kjewell http://www.bamberger.com/blog/?p=1041 In a commercial loan setting, bankers are used to thinking of the raw materials, work in process, and products held by people for sale or lease as inventory. The Uniform Commercial Code in section 26-1-9.1-102 specifically codifies this perception. 

There  is, however, an important  exception to this designation.  If your borrower is a farmer, grain and seed will not be included in the definition of inventory.  This is because the definition of inventory specifically excludes farm products.  The term “farm products” is defined as not only crops growing in the field, but also, without limitation, crops grown or to be grown and supplies used or produced in a farming operation. 

Although revised Article 9 has simplified the process of taking a security interest in agricultural products, these liens do still differ in application from liens on ordinary equipment and inventory.

Author: Andrew C. Ozete (bio)
Phone: 812.452.3582
email: aozete@bamberger.com

]]> http://www.bamberger.com/blog/2011/08/grain-is-not-inventory-2/feed/ 1 Down on the Farm – Notice of Security Interest to Buyers of Farm Products http://www.bamberger.com/blog/2011/03/down-on-the-farm-notice-of-security-interest-to-buyers-of-farm-products/ http://www.bamberger.com/blog/2011/03/down-on-the-farm-notice-of-security-interest-to-buyers-of-farm-products/#comments Thu, 17 Mar 2011 13:30:34 +0000 kjewell http://www.bamberger.com/blog/?p=842 Secured lenders need to be aware that they must provide a notice to buyers of farm products if the buyer is to take the farm products subject to the lender’s security interest. Failure of the secured lender to send such a notice to the buyer will not obligate the buyer to deliver proceeds of the sale to the secured lender and the secured lender could miss out on the opportunity to collect such proceeds before they are in the hands of the debtor. Of course, the secured lender would still have a security interest in such proceeds, but if they are in the hands of the debtor, they may no longer exist when the secured lender seeks to collect them.

In order for the notice to be valid, the buyer must receive the notice within one year before the sale of the farm products. The notice must include, among other provisions:

  1. name and address of the secured party
  2. name and address of the debtor
  3. description of the farm products subject to the security interest, including, crop year, description of the product, amount of the product
  4. county where located

Of course, the secured party also needs to attach and perfect its security interest.

If you have questions about the notice to buyers of farm products, please contact Laura Scott.

Author: Laura A. Scott (bio)
Phone: 812.452.3557
email: lscott@bamberger.com

]]> http://www.bamberger.com/blog/2011/03/down-on-the-farm-notice-of-security-interest-to-buyers-of-farm-products/feed/ 0 Grain is Not Inventory http://www.bamberger.com/blog/2010/03/grain-is-not-inventory/ http://www.bamberger.com/blog/2010/03/grain-is-not-inventory/#comments Fri, 05 Mar 2010 15:44:49 +0000 kjewell http://www.bamberger.com/blog/?p=358 In a commercial loan setting, bankers are used to thinking of the raw materials, work in process, and products held by people for sale or lease as inventory. The Uniform Commercial Code in section 26-1-9.1-102 specifically codifies this perception. 

There  is, however, an important  exception to this designation.  If your borrower is a farmer, grain and seed will not be included in the definition of inventory.  This is because the definition of inventory specifically excludes farm products.  The term “farm products” is defined as not only crops growing in the field, but also, without limitation, crops grown or to be grown and supplies used or produced in a farming operation. 

Although revised Article 9 has simplified the process of taking a security interest in agricultural products, these liens do still differ in application from liens on ordinary equipment and inventory.

Author: Andrew C. Ozete (bio)
Phone: 812.452.3582
email: aozete@bamberger.com

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