Puzzle pieces laying over a city building.
Updated: March 15, 2023
By Nicole Cook

Managing legal risks to grow your urban farm

Disclaimer: This chapter highlights common legal concerns that may arise in operating an urban farm. The information is for educational purposes only and does not constitute legal advice. Always consult a qualified attorney for legal advice pertaining to your specific legal concerns.


Legal risk is associated with many of the day-to-day activities of all types of farms. For example, there are legal ramifications for not repaying an operating loan or failing to use appropriate safety precautions when using pesticides. Marketing agricultural products involves contractual commitments, and human issues associated with agriculture also have legal implications, ranging from employer/employee rules and regulations to inheritance laws. Urban farms can be presented with additional legal challenges because they exist in densely populated areas surrounded by private and commercial neighbors unlikely to be familiar with (or possibly simply intolerant of) the sights, sounds, smells and activities of farming, and because they are typically located in areas that were specifically not set up to support agricultural activities.

Additional legal risk for urban farms is generated by uncertainties about things like government policies and regulations related to land access and land use, noise and odor nuisances, water access and use restrictions and requirements, and additional food safety concerns. Failing to obey the laws and regulations can have serious consequences including fines, criminal penalties, and/or abatement orders. Understanding and keeping up to date with the laws will help you better manage the legal risks to your farm.

Action items:

Operating an urban farm requires compliance with a number of state or local zoning, permitting, licensing, and other regulatory requirements. These requirements could have a significant impact on your production and operating plans, and the costs to run your farm. To minimize the impacts and plan your production:

  • Identify any zoning or building permits, waivers, variances or licenses that you are going to need and the costs to obtain them and to comply with them.
  • Identify any production regulatory requirements that could significantly affect your farm and the costs to bring your farm into compliance with them (e.g., waste handling and disposal requirements, worker health and safety plans and inspection requirements, environmental permits, food safety regulations, business licenses and food handlers’ licenses)
  • Identify regulatory requirements or industry standards for handling, storing, packaging, and distributing the farm’s products.
  • Identify any property, sales or use tax requirements.
  • Identify insurance tools appropriate to your situation

Key terms

Legislation: Laws passed by a governing legislative body (Federal or State Government), including authorizing an administrative agency to write regulations to carry out the purpose of the laws

Statute: A law enacted by a legislative body

Regulation: The rules and procedures that agencies develop, implement, and enforce to achieve the goals of the laws

Municipality: A city or town with corporate status and its own government

Ordinance: Legislation enacted by a municipal authority

Preemption: A situation where a law enacted by a higher authority takes precedence over a law enacted by a lower authority





Land access, zoning, and permitting

Land acquisition and access:

This manual assumes that you have been farming for some period of time and you are already utilizing land and/or property. Your right to access the land or property, however, may not be entirely secure, or maybe you’ve identified other land that you’d like to use to expand your farm. If you don’t own the land outright or have a legal right to access the land, your farm could be in jeopardy. Not only might lack of legal access to land or property restrict available funding, but all of the investments that you’ve put into the land or property could be lost at any time.

In addition, using land that you do not own could constitute trespass and may result in civil and/or criminal sanctions against the trespasser(s). Unless you own the land or the property, you must acquire the rights to enter and to use the land to avoid trespass charges, compensation claims, and the loss of all the time and money put into the farm.

Types of property rights:


Owning land gives the owner all rights to the property. The owner has the absolute power to enter the land and use it for any lawful purpose. The owner has the power to decide who else may enter the land, when they may enter and what they may do while they’re on the land. The owner also is the only one with the right to sell the property. Purchasing a property is the most secure way to ensure future rights to the land, and to allow for more substantial investment in the property.

Owning property, however, creates obligations. For example, the owner will need to provide liability insurance on the property (see “Insurance” below). The property owner will also have to pay property taxes for the property. If the farm is run by a not-for-profit organization and the use of the land is considered charitable, it may be able to apply for a property tax exemption from the state. Additionally, both for-profit and not-for-profit farms might be able to reduce their property tax if their state or municipality offers an urban agriculture property tax credit (see “Tax Incentives for Urban Agriculture” below).

How do I find who owns the property?

All land is either privately owned or owned by a government entity (e.g., the city, the state or the federal government). Once you’ve identified the land you want to use, whether it’s an empty lot, abandoned property or a neglected park, ownership of the property is a matter of public record. Usually your state’s department of assessment and taxation, or your county’s or city’s planning or zoning department, or your county’s registry of land deeds maintains records on every parcel of real estate within its jurisdiction. Usually the records are available online, although you might have to call or visit the appropriate office. They will, however, have the name of the property owner and the mailing address for the current owner.

For more information about how to locate the owner of a property, read Farmland Access in Urban Settings (Rosen et al. 2018). For land located in Maryland, watch the video How to Access a Farm’s Land Records on Maryland’s Agriculture Law Education Initiative’s website at https://umaglaw.org/for step-by-step instructions on how to access land deeds.


A lease is a contract that allows certain individuals and/or organizations to use land for a particular purpose for the duration of the lease. Because it is a contract that involves real property, most states’ statute of frauds requires the lease to be in writing. It is important that the written lease includes specifics about how the leased property will be used. This will reduce the risk of claims of breaching the lease contract, which could lead to terminating the lease.

The lease will also include the costs and duration of the lease as well as any renewal options. A lease gives the renter (the “lessee”) the right to use the land. A long-term lease is a relatively secure agreement because the landowner (the “lessor”) cannot change his or her mind about the agreement unless the renter doesn’t fulfill the terms of the contract or the duration of the lease term ends.

Some cities offer lease initiatives for urban growers to lease pre-approved plots. And some communities have created Community Land Trusts (CLTs) to assist urban farmers (Yuen 2019). A CLT buys property to be held for the benefit of others—in this case it would be for preserving open space and allowing urban agriculture projects. The CLT then leases the land to urban farmers. Each CLT establishes its own criteria for a property to be eligible for protection and for the farm to eligible to lease the property.

For more information about leases, lease initiatives and CLTs for urban farms, read Farmland Access in Urban Settings (Rosen et al. 2018).

Adverse possession

Adverse possession, otherwise known as “squatters rights,” is a legal principle under which a person (a trespasser) who is possessing a piece of property—usually land—that’s owned by someone else can be granted title to the property through a court action. This is only an option, however, in exceptional circumstances. The requirements have evolved over time and they vary between jurisdictions, but typically:

  1. The trespasser’s possession must be adverse (sometimes referred to as “hostile”) meaning that the true property owner did not give permission for the trespasser to be on the land;
  2. The trespasser’s use must be actual, meaning that the trespasser physically occupied the land;
  3. The trespasser’s use must be open and notorious, meaning that the trespasser’s occupation of the land was visible to passersby and known within the community; and
  4. The trespasser’s possession was exclusive, meaning the trespasser does not share control of the property with anyone else who isn’t in privity with him or her, and it must be continuous for the number of years required by the state’s statute of limitation. If all of the above conditions are met continuously for the required number of years, the trespasser can then file a court action to gain legal ownership of the property.

For questions about acquiring ownership of land through adverse possession, talk to an attorney.


A license is written permission to enter and use another person’s land. Licenses can be as general or specific as the parties choose. For example, a license can allow a particular community group to use the property for agricultural projects generally, or it can allow a group to enter onto the land only for the purpose of planting vegetables and exclude raising livestock. Licenses can be terminated at any time by the landowner, so this option is not as secure as a lease. It does, however, protect urban farmers from any claims of trespass, so long as they are operating within the limits of the license.


An easement allows for the use of land without owning it or developing it. Typically, an easement is a right of way. For example, urban farmers can arrange an easement with neighbors for permission to cross their yard to access an urban garden. Easements are often arranged if (1) there is no other way for urban farmers to access the garden plot or (2) if farmers have been crossing the neighbor’s property without conflict for so long that it is implied that they have permission to do so.

In some urban areas, conservation easements have been used to ensure long-term agricultural use of a parcel. Most often, the encumbered land (the land that is being used) was agricultural land before urban sprawl surrounded it. The easement “goes with the land.” That means that no matter who owns the land, the terms of the easement govern the use of the land. So, through a conservation easement, a farm is protected for agricultural use forever. For more information about conservation easements for urban farms read Farmland Access in Urban Settings (Rosen et al. 2018).

City-supported land access programs:

“Vacants to Value” programs

Some cities have created programs to encourage individuals and investors to purchase blighted city-owned properties, for a relatively small amount of money. One such program is Baltimore’s Vacants to Value Program. The city provides a map of the properties that are available for the program. When considering an application to purchase land through Vacants to Value, the city takes into account planned development in the area and the applicants’ capacity to complete that development (i.e. the plans for the project and the applicants' ability to successfully achieve those plans).

“Side Yard” and “Mow to Own” acquisition programs

Some cities have programs that help residential or commercial property owners purchase vacant city-owned lots that are adjacent to their existing property either for very little money and/or for sweat equity. For example, St. Louis’ “Mow to Own” program allows a property owner with a vacant city-owned property adjacent to his or her own property, which might be used for an urban agriculture project, to take immediate ownership of the lot for a nominal fee. If they continually maintain the lot for 24 months, they’re eligible to be granted a deed to the property with a maintenance lien, which is removed after another 24 months if there are no findings of violations from the City’s Forestry Division and no complaints. In Baltimore City, a 2011 side-yard policy allows home-owners to purchase adjacent vacant lots smaller than 1500 square feet for $500.

Temporary lot adoption

Baltimore’s Adopt-a-lot program has been an entry point for many of the city’s urban gardeners and farmers. It enables community members to adopt vacant, city-managed lots. The agreement is a license to use and maintain the space, not a lease, and must be renewed annually. Adopt-a-lot participants can also apply for water access, if available, for $120 per year. http://www.baltimorehousing.org/adopt_a_lot and https://dhcd.baltimorecity.gov/water-access-program

Land leasing initiatives

Baltimore City is piloting 5-year formal leases of city-owned land to urban farms through its Homegrown Baltimore land leasing initiative. The initiative provides growers with five-year leases, for $100 per year. In order to be eligible, growers must have one year of experience and demonstrate that their farms will be profitable. The lots remain available for sale and the city can revoke leases with 30-days’ notice. More information is available from the Baltimore Office of Sustainability: https://www.baltimoresustainability.org/

St. Louis, MO has a Garden Lease Program that allows residents a 5-year lease for $1.00 a year giving the lessee control of the site, including fencing it off and building a community garden, until such time as the city is ready to develop the land.


Land use regulations and zoning:

Zoning and land-use regulations are how states and local governments control how land within their jurisdictions may be used. Some land uses will be allowed without a permit and others will require a permit, usually called either a “special use” or “conditional use permit” depending on the community. Permit applications usually allow land uses and structures on a case-by-case basis and typically require site plan approval, public meetings, and permit fees. Before licensing, leasing, or purchasing land, make sure the property is zoned for the planned use of the land, and research whether you will need a permit.

Zoning involves government agencies (typically at the local level) drawing zoning maps of cities that indicate which areas of the city are to be used for residential purposes, commercial purposes, industry, mixed-use, etc. Once these zones are designated, certain activities and structures are allowed or disallowed in each of the zones, such as where certain types of urban agriculture may be practiced, permissible lot sizes, whether commercial production is permitted, the type and number of livestock that may be kept, and the types of structures that can be built. Some codes also set standards for irrigation runoff, pesticides, sanitation, livestock slaughter, setback requirements, and aesthetics, among other things (Public Health Law Center; Vaage and Taylor).

Among the types of allowed structures in a zoning district, some are allowed as principal structures and others as accessory structures. Accessory structures are usually structures that complement the primary structure. For example, in a single-family residential zone, a single-family home will typically be permitted as a primary structure, but a shed or greenhouse will likely be an accessory structure.

In some communities, the zoning provisions do not specifically discuss or identify some or all structures in their list of permitted uses in various zoning districts. If that is the case in the community where your farm is located, you may be able to demonstrate that the structure you intend to use is similar to another type of use that is contemplated in your local jurisdiction. Keep in mind that in some jurisdictions if an activity or structure is not specifically allowed, that may mean it is prohibited.

At the same time, some activities may only be allowed as accessory uses to another allowed primary structure or activity on the property. For example, in some zoning districts, on-site agricultural sales may only be allowed as an accessory use to the primary permitted use of crop agriculture.

Zoning and permitting rules change over time in response to strategic planning and community advocacy. For up to date, local information you will need to consult your local municipality. In most municipalities, zoning and permitting information is housed in the city or county planning department. Enforcement of zoning and permit applications may be housed in other municipal departments. For example, in Baltimore City, livestock permit applications and enforcement fall under the Baltimore City Health Department, Office of Animal Control’s Regulation of Wild, Exotic, and Hybrid Animals.

To find out what the rules are, it’s usually best to start with the planning department. Be patient and professional when communicating with municipal staff, and know that, especially in large cities, front desk staff in departments other than the planning department may not be familiar with urban agriculture, or up to date on the latest zoning and permitting changes.

How do I find my city’s zoning maps and building codes?

If you have not already done so, or if you are considering an expansion or a change in your operation, you will want to find out what city or county zoning regulations apply to the property. Local municipalities typically have zoning maps available for the public to review, often at city or county planning offices, or online. This is an important step before making any changes to the land. If you build something or start an activity that is not allowed by the zoning regulations you may be forced to remove your improvements and may even be fined.

For land located in Maryland, watch the video “Understanding and Participating in Local Planning and Zoning” on Maryland’s Agriculture Law Education Initiative’s website at www.umaglaw.org for information about how to find a parcel’s zoning, and the video “How to Access a Farm’s Land Records” for step-by-step instructions on how to find the liber (book) and folio (page) numbers, which you may need to locate your parcel on your county’s zoning map.

Below is a resource list for zoning and permitting in some of Maryland’s major urban areas. For updated links, see the digital version of this guidebook on our website here: https://extension.umd.edu/programs/agriculture-food-systems/programs/urban-agriculture/urban-agriculture-guidebook

County Incorporated Cities Planning Departments

Anne Arundel County




Baltimore City*
*Baltimore is one of only three “Independent Cities” outside of Virginia. This means it operates essentially as a county. 

Not applicable

Baltimore County

None, all administration is by county government

Frederick County

Brunswick, Frederick


Howard County

None, all administration is by county government

Montgomery County

Gaithersburg, Rockville, and Takoma Park

Prince George’s County




Bowie, College Park, District Heights, Glenarden, Greenbelt, Hyattsville, Laurel, Mount Rainier, New Carrollton, Seat Pleasant




All zoning is local

The City of Baltimore, Maryland, established two Chesapeake Bay Critical Area overlay zones to guide development around the Chesapeake Bay and promote resource conservation. One of the zones allows a number of agricultural uses, including farms and produce stands, by right. Baltimore, MD, Zoning Code § 1A05.2 (2017).

The City of Salina, Kansas, has a zoning ordinance that allows accessory structures, such as greenhouses, in all zoning districts, but they cannot exceed 360 square feet and can be no taller than the primary structure or 16 feet in height, whichever is less. Salina Kan., Code § 42-58 (2017).

Elmurst, Illinois, bans hoop houses, but allows smaller low tunnels or low cold frames that are no taller than 3 feet and no bigger than 100 square feet in size.

Building codes:

Building permits may also be required for structures to ensure construction and other standards are met. Construction codes—such as electrical, mechanical, plumbing and building codes—often overlap with zoning codes. Along with health, sanitation, and fire codes, they also lay out minimum standards to ensure health and safety. Keep in mind that, depending on your municipality’s code, “structures” might include hoop houses, greenhouses, low tunnels, and compost bins. To be sure any structure you plan to build satisfies building or other construction permit requirements in your jurisdiction, contact your local planning office before beginning construction.

Other hyper-local building standards:

In addition to city or county zoning laws and construction codes, there are other potential restrictions that may affect your use of a property. Historic preservation councils, architectural review boards and other neighborhood groups may set covenants on properties. Make sure you’re aware of any aesthetic or other standards those types of groups might require.

Water access and usage laws:

Access to a reliable water source is crucial for an urban farm. In urban areas, it’s state and local laws that most affect water access and usage rights. Local governments, in particular, may have water regulations like water emergency restrictions, graywater usage rules and water service fees. You will have to work with your local utilities department(s) if a potential lot doesn’t have established water inputs or isn’t connected to a meter. Check to see if your local government has programs to help subsidize the cost of equipment installation and water usage.

Also be sure you know whether your city or state has any restrictions on water usage. For example, does the state restrict where and how rainwater can be collected or used? In 2016, Colorado became the last state to allow for residential rain barrel water collection, with restrictions on the number and size of the barrels and how the collected water could be used. The rain barrel allowance is, however, limited to residences and does not apply to non-residential urban farms and gardens (Cabot et al. 2016).

Check with your local utility company about local restrictions on water usage. And while you’re talking with them, be sure to ask if your city has a rebate program or other incentive program to help purchase rainwater harvesting or water retention equipment and materials. A number of cities offer rebates for rainwater harvesting systems, including Gaithersburg, Maryland. Other cities provide rain barrels free of charge. For more information about government initiatives to encourage water conservation, see Good Laws, Good Food by the Harvard Law School Food Law and Policy Clinic, in the literature cited section.

You can also contact your local USDA Natural Resources Conservation Service (NRCS) office for both financial and technical assistance to help implement conservation practices, including water-use efficiency.

Those pesky nuisance claims:

A farm that fits within or is exempt from construction code requirements, zoning laws, and other building rules and regulations can still run into legal problems if its activities create a nuisance. Nuisance laws are intended to protect the rights of others to use and enjoy their property or to protect the general public health or safety of a community. A farm that creates a nuisance could be subject to a common law court claim even if there is no specific law prohibiting the activity.

There are two types of nuisance claims: private nuisance and public nuisance. A private nuisance occurs when the farm’s activities interfere with another person’s enjoyment of his or her own land. Interference from an urban farm could include noise from animals, equipment or increased customer traffic, significantly increasing dust, introducing strong odors that are deemed to be “unpleasant,” attracting pests, creating vibrations with equipment, creating changes in the water table, etc. To prevent liability for private nuisance, start by consulting your local planning and zoning codes. (See above for information about how to locate your local zoning codes.)

A public nuisance affects the public in general and is not limited to immediate neighbors. A farm with standing water that becomes a breeding ground for mosquitoes might be deemed a public nuisance. Keeping animals in unsanitary conditions can also constitute a public nuisance because it can lead to disease that may endanger the public. In order to prevent liability for public nuisance, it is important to be aware of any public health, welfare, or safety concerns that your farm might create.

Being proactive and informing neighbors in advance about your plans for your urban farm is one of the best ways to reduce legal risk. Surprising your neighbors or being indifferent to their complaints can often leave your neighbors feeling like their only option is to sue you to rectify the situation. Let neighbors know in advance that you are aware of relevant regulations, that you intend to be a good neighbor, and that you would appreciate them letting you know if they have any concerns (within reason) so that you can address them in a timely manner.

All nuisances are local

In Eugene, Oregon, chickens or goats that make noise longer than 15 minutes may be prohibited from the neighborhood. See Urban Animal Keeping, City of EUGENE, www.eugene-or.gov/farmanimals; see also Eugene Code (EC) 9.5250.

Seattle, Washington, doesn’t allow “odors or fumes from an urban farm … to escape into the open air in such amounts as to be detrimental to the health of any individuals or the public; or noticeable, discomforting or disagreeable so as to offend the sensibilities of a reasonable individual at a distance of more than 200 feet from an urban farm.” Seattle, Wash. Land Use Code chap. 23.42.051(C).

Marysville, Washington, allows animals, but it requires “All houses, pens or enclosures where chickens, turkeys, geese, ducks, pigeons or other domestic fowl or rabbits are kept shall be kept clean and free from disagreeable odors. No organic materials furnishing food for flies shall be allowed to accumulate on the premises. All manure and other refuse must be kept in tightly covered fly-proof receptacles and disposed of at least once each week in a manner approved by the animal control officer. (Ord. 2404 § 1, 2002; Ord. 2013 § 34, 1995).” Marysville, Wash., Municipal Code 10.04.340 (available at https://www.codepublishing.com/WA/Marysville/).

Somerville Massachusetts’ city health inspectors can issue fines if gardens or structures are attracting rodents. Sommerville, MA Code of Ordinances § 9-56

Production, handling, and distribution

Soil testing and nutrient management are covered in Chapter 1: Urban production systems. Employment and labor laws are covered in Chapter 5: The human element.

Food safety:

Food safety is an area of significant legal risk for farmers, and a culture of food safety must be a priority on your farm. Although federal regulation is a large component of the food safety picture, particularly for food products that travel across state lines, state governments have a great deal of authority to design flexible legal regimes with more appropriate regulations for small-scale operators that sell at local markets or within state borders. Federal and state governments share regulatory authority with respect to many aspects of food safety. Some food safety issues are primarily regulated by the federal government (such as meat and poultry inspection), while others are primarily within the state’s jurisdiction (such as farmers market and restaurant regulations).

Federal food safety laws:

In general, federal regulations apply to all foods that are sold in interstate commerce (meaning across state borders) or foreign commerce, and states have the power to regulate most foods that are only sold intrastate (see “What’s federalism got to do with it?” below for more information about the interplay between federal and state governments). With a number of specific exceptions, the U.S. Food & Drug Administration (FDA) has jurisdiction over processed foods, seafood, and food additives, while the U.S. Department of Agriculture (USDA) regulates fresh produce, livestock, poultry, and eggs. In January 2011, President Obama signed into law the Food Safety Modernization Act (FSMA), which was the first major overhaul to the federal food safety regime since 1938. There are two major parts of FSMA that are particularly important to small and local food producers. First, FSMA increases federal regulatory power over agricultural producers of fruits and vegetables, which were not heavily regulated in the past. The Act does, however, exempt many small-scale producers from most of its regulatory requirements. Agricultural producers who average annual gross produce sales of less than $27,528 over three years are not covered by FSMA’s Produce Safety Rule (PSR). Operations that gross less than $550,551 annually and who sell a majority of their products in direct sales to consumers, restaurants, or retail stores, either within the state or within 275 miles of the farm or production facility, are exempt from the produce safety standards. They must, however, maintain records to support that they qualify for the exclusion or exemption.

Second, under FSMA, facilities that “manufactur[e], process, pack, or hold food” are now required to maintain an extensive hazard analysis and critical control point (HACCP) plan. Small-scale processors and facilities are exempt from the specific hazard control requirements laid out in the statute, and instead must submit modified hazard control plans to the FDA. Similar to the PSR standards, facilities whose operations gross less than $550,551 annually and who sell a majority of their products in direct sales to consumers, restaurants, or retail stores, either within the producing state or within 275 miles of the production facility, are subject to the modified hazard control requirements. In the case of a foodborne illness outbreak or incident involving an exempt facility, the FDA retains the authority to conduct more comprehensive inspections and reinstate some of the standard requirements vis-à-vis that facility.

Note, the above gross sales cutoffs have provisions to adjust for inflation. For updated numbers, see the FDA website: https://www.fda.gov/food/food-safety-modernization-act-fsma/

Information about FSMA and food safety laws is available at umaglaw.org

State food safety laws:

States share regulatory authority with the federal government in many areas, but states enjoy complete jurisdiction over farmers markets and other types of direct farm sales, retail sales, restaurants, and many types of small-scale agricultural production and processing entities. In any given state, a variety of government agencies may have collective responsibility for the safety of the retail and restaurant food supply, including, for example, agriculture departments, health departments, environmental protection agencies, consumer protection agencies and business licensing agencies. These state agencies (1) administer federal food safety programs (if the state has adopted a cooperative agreement with the federal government), (2) create, implement, and enforce state-level food safety regulations, and (3) provide guidance to industry participants on compliance with federal and state laws.

Food safety certifications:

Urban farmers who sell fresh produce to large retailers or other distributors may also be required by those buyers to certify their fruits and vegetables through one of many third-party voluntary quality certification programs for agricultural producers like USDA’s Good Agricultural Practices & Good Handling Practices (GAP and GHP) audit verification programs. Neither federal nor state law requires farmers to participate in third-party voluntary quality certification programs. Farmers agree to undergo the certification process in order to be able to sell to those buyers, and the certification requirement becomes a condition of the sales agreement; meaning that failure to obtain or maintain the required certification can be a basis for refusing to accept produce. In some cases, growers can negotiate with buyers for buyers to help cover the costs of obtaining certification. As always, it is recommended that you have an attorney review contracts before you sign them. Information about how to find an attorney in your area is provided below. More information about USDA GAP, GHP and GAP+, as well as the Harmonized GAP certification programs is available at https://www.ams.usda.gov/services/auditing/gap-ghp.

Food safety laws for processed, “cottage,” or value-added foods:

There is no comprehensive set of guidelines to determine whether a product is “value-added.” The term, however, generally refers to raw products that have had their value enhanced through some method of production (e.g., popped corn, jam, salsa) or marketing (e.g., gift baskets). If a product is “value-added,” then three major areas of regulation become important:

  1. labeling;
  2. licensing and permits; and
  3. food health and safety.

Because processed and value-added foods can carry a greater risk of contamination or adulteration, they are subject to a number of stringent federal, state and, in some cases, local laws. The Federal Food, Drug and Cosmetic Act (FDCA) gives the FDA authority to regulate processed foods that travel in interstate or foreign commerce (Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301-392 (2012)).

The FDCA has been amended over the years by various acts (including the Nutrition Labeling and Education Act and the Fair Packaging and Labeling Act) to create the full set of laws by which food producers must abide. First, producers are barred from selling adulterated foods (21 U.S.C. § 342 (2012)). FDA has defined adulterated foods and set out regulatory standards for good manufacturing practices to protect processed foods from adulteration or foodborne illness (21 C.F.R. § 110.5 (2012)).

States are able to create exemptions for small-scale producers that do not sell their products across state lines (products that are limited to intrastate commerce). Second, food producers are prohibited from selling misbranded food and must satisfy certain requirements for labeling of food packages (21 U.S.C. § 343 (2012)). They are required to utilize uniform labels for foods sold in interstate commerce (Nutrition Education and Labeling Act, 21 U.S.C. § 343-1 (2012)); for example, they must list the item’s basic identity, nutrition, ingredients, and source information on the package label (21 C.F.R. §§ 101.3(a), 101.4, 101.5 (2012)). Additionally, food packages must clearly state the net quantity of contents and must not be deceptively sized (Fair Packaging and Labeling Act, 15 U.S.C. § 1453 (2012)). There are a number of exemptions and modified requirements in these labeling regulations (21 C.F.R. § 101.9(j) (2012)). Remember, the FDCA federal food safety laws for processed foods do not apply to foods that are only sold within the same state (“intrastate”). If you are selling processed food outside of your state, however, you will want to check out the resources listed below for more information about the federal food safety laws.

State food codes or food safety regulations and laws covering processing and selling “cottage” foods or value-added foods are generally more relevant to urban farmers. Cottage food businesses are typically small, in-home food processing entities that prepare only small-scale, non-potentially hazardous foods (i.e., foods that do not support pathogenic microorganism growth or toxin formation). FDA 2009 Food Code 1-201.10. Meat, dairy, and shellfish are all examples of potentially hazardous foods. Less obvious foods, however, such as low-sugar jams, cooked vegetables, and low-acidity pickles and salsa are also considered potentially hazardous because they can support viral or bacterial growth if not properly stored. In effect, if the food has the potential to cause harm to consumers when not kept under proper temperature and storage conditions, the food is considered “potentially hazardous.”

Most states have carved out exemptions in their food safety laws allowing for the intrastate sale of non-potentially hazardous foods processed in home kitchens, either without obtaining a permit or at least without undergoing traditional permitting requirements. In other states, farmers selling value-added foods will have to comply with state and/or local licensing or permitting requirements.

The State of Maryland has adopted many of the federal regulations into state law. In order to sell value-added products at a farmers’ market in Maryland, farmers are also required to obtain a “Producer Mobile Farmer’s Market License.” The license is required to sell all products covered by the state’s “On-Farm Home Processing License” as well as meat and poultry certified by the Maryland Department of Agriculture. It is not necessary to obtain a Producer Mobile Farmer’s Market License to sell eggs, non-processed fresh fruits and vegetables, non-potentially hazardous baked goods, and non-potentially hazardous jams and jellies. The City of Baltimore has separate licensing and permitting requirements from the state. Farmers selling value-added products are considered a “food service facility” within the city. In order to operate as a food service facility within city limits, producers of value-added products must obtain a license from the Baltimore Commissioner of Health.

For more information on complying with the Maryland Cottage Food Business Law, see the Maryland Department of Health website https://health.maryland.gov  and consider taking the Maryland Food Ventures course: https://go.umd.edu/mfv 


States also set the food naming and labeling requirements for foods that are sold strictly within their respective state (Fair Packaging and Labeling Act, 15 U.S.C. § 1461 (2012).

Although the naming and labeling requirements may be very similar to the federal rules, it is important to remember that foods sold intrastate are governed by state rules, not federal rules. The labeling requirements in Maryland are typical. They require the name of the product, name and address of the cottage food business, ingredients of the product in descending order of the amount of each ingredient by weight, net weight or net volume of the product, allergen information (as per federal labeling rules), nutritional information that complies with federal rules if a nutritional claim is made, and the statement (printed in 10 point or larger type) made by a cottage food business that is not subject to Maryland’s food safety regulations (MD. HEALTH GEN. § 21-330.1(c)(2) (2012).)

Contact your Extension agents, your state department of agriculture, or your state or local department of public health for information about your state’s food safety and labeling laws.

The costs of complying with federal and/or state and local regulations along with technical barriers and difficulties understanding regulatory obligations can create seemingly insurmountable obstacles to maintaining a successful farming business. Ignoring the laws, however, will not protect you. To reduce your risk of running afoul of food safety laws, you have to be proactive. To stay in business, you are going to have to actively seek information and advice about what the law requires as well as what your customers require, and get help if you do not understand the law or you need technical or financial assistance to bring your farm into compliance.

Resources for food safety laws:

Your Extension agents are a good source for questions about the food safety laws that may impact your farming operation. You can also contact your state’s department of agriculture. You might also check with your local food policy council, food hub or farmers markets in your area, and contact your state or local bar association to ask for a referral for an attorney who practices in food or agricultural law. Maryland Extension has a lot of helpful information about food safety rules for value-added food products on their Ag Marketing website: https://extension.umd.edu/agmarketing/value-added-products

For information about state laws covering meat, poultry and egg processing for small-scale producers, see “Good Laws, Good Food” by the Harvard Law School Food Law and Policy Clinic, in the literature cited section.

Information about FSMA’s Produce Safety Rule is available at the following websites:


A contract is any agreement (written or oral) where the parties (the people making the agreement) exchange mutual promises in return for some sort of consideration (typically money or a good) or benefit (e.g., a service). Contractual arrangements in agriculture take many forms including financial agreements such as mortgages, insurance policies, leases and license agreements. Many state and federal farm programs are contractual in nature, and the production and sale of farm products is often accomplished and compensated for by contract for future performance and delivery, like a Community Supported Agriculture (CSA) member agreement. Even employment arrangements, although often not written, are treated as contracts.

Most states have what is known as “statutes of frauds,” which require that certain types of agreements be in writing before they can be enforced. Examples of contracts that often must be memorialized in writing to be considered valid are agreements for the sale of real estate and agreements that cannot be performed within one year. The risk in a contractual arrangement is the failure of either party to perform. The legal issue in contracts is their enforceability if one party fails to perform on their promise (“defaults” or “breaches the contract”). Often, contracts specify what constitutes default and the remedies if default occurs. If the contract is unclear, the courts generally employ two types of relief for breach of contract: specific performance and damages. In the case of specific performance, the breaching party is ordered to remedy the default and fulfill the contract. If specific performance is not possible or reasonable, damages are awarded to compensate the offended party. Contractual nonperformance can have ramifications well beyond the scope of the contract itself. For instance, the inability to meet contractual financial obligations to a mortgage lender may result in debt restructuring, foreclosure, or bankruptcy. Deviation from the specification of a production contract may result in the refusal of a contractor to take delivery of the product. Contracts are designed to protect the interests of all parties to the agreement. Performance failure can be a major source of risk and result in severe financial consequences.

Marketing laws and social media:

Many farmers, including urban farmers, use a variety of tools, including social media, to market their farms and farm products. Be aware that there are federal and state advertising and marketing laws that do need to be followed when you’re advertising, especially if you are making any health benefit claims or someone is endorsing your product. For more information about legal considerations for direct farm marketing, see the social media section of the recorded webinars available from MidAtlantic Women in Agriculture: https://extension.umd.edu//programs/agriculture/program/farm-and-agribusiness-management/women-agriculture/webinars

Taxes and related legal issues

Choice of business entity structure:

How you choose to structure your farm operation is an important risk management decision. But, choosing isn’t always easy. There are several types of business entities, each with its own pros and cons, and states have different requirements for different business structures. Also, depending on where your farm is located, there could be different requirements at the municipal level as well. In addition, it can be difficult to switch your legal structure after you've registered your business. So, choosing correctly at the start is crucial. You need to consider your business and personal financial needs, risks and ability to grow. Your choice can significantly affect the way you run your farm business, impacting everything from liability to taxes to control over the farm and succession planning. What you have to decide is which structure gives your farm the most advantages to help you achieve your goals; whether it personal financial goals, organizational goals, or community impact goals.

In most states, you will register your business with your state’s Secretary of State’s office (unless you’re a sole proprietorship or a general partnership because those businesses don’t have to register), and in most states you can file online. Most states and many cities also have a business or economic development office that can provide information about choosing a business entity structure. For example, Maryland’s Department of Commerce’s website at https://open.maryland.gov/business-resources/starting-a-business/ has information about how to choose a structure, how to register your business, how to determine if you need a business permit or a license, how to establish a tax ID/Federal Employer Identification Number (EIN) and how to develop a business plan.The Ag Law Education Initiative’s publication library has a guide to farm business structures under the Agricultural Liability section: https://umaglaw.org/publications-library/ . Virginia’s State Corporation Commission has information about the different types of business entity types at https://www.scc.virginia.gov/clk/busdef.aspx as well as links to information about how to register a business and how to submit required annual reports.

Below are brief descriptions of the most common types of business entity structures. For more information about the different types of business structures and choosing a business entity structure for your farm, see the additional resources at the end of this chapter, and, of course, speak to an attorney and/or accountant. Information about how to find an attorney is below in the “Additional Resources” section.

Sole proprietorship

A sole proprietorship requires no formalities whatsoever to form. It also offers no protections against liability. Selecting the sole proprietorship business structure means you're personally responsible for your company's liabilities. As a result, you're placing your own assets (e.g., you family’s home or car) at risk, and they could be seized to satisfy a business debt or legal claim filed against you. It can also be difficult to obtain funding as a sole proprietor precisely because there is no protection for your assets.


A partnership is owned by two or more individuals. It requires a signed agreement to define roles and percentages of profits. There are two types: general partnerships, where everything in the business is shared equally (the partners share equally in managing the business as well as the profits and losses); and limited partnerships, where only one partner has control of the business, while the other partners simply contribute to and receive only part of the profit as spelled out in the partnership agreement. Partnerships carry a dual status as a sole proprietorship or limited liability partnership (LLP), depending on the entity's funding and liability structure. A partnership allows the partners to share profits and losses and make decisions together within the business structure. The partners will, however, each be held liable for the decisions made, including the actions of the other business partners.

Limited Liability Company

A Limited Liability Company (LLC) is a hybrid structure that allows members of the LLC to limit their personal liabilities and protect their personal assets while enjoying the tax and flexibility benefits of a sole proprietorship or a partnership, depending on the number of members in the LLC. Under an LLC, members are protected from personal liability for the debts of the business, as long as they do not act illegally, unethically or irresponsibly in carrying out the activities of the business. The LLC itself pays no federal income taxes.


Because the law holds that it is its own entity—separate from its owners—a corporation carries the least amount of personal liability risk. This means that creditors and customers can sue the corporation, but they cannot gain access to any personal assets of the officers or shareholders. The corporation also has its own legal rights. It can sue on its own behalf to recover damages. It can own and sell property, and can sell the rights of ownership in the corporation in the form of stocks.

There are several types of corporations:

  • C corporations are owned by shareholders and are taxed as separate entities.
  • S corporations avoid double taxation, much like partnerships or LLCs. Owners of S corporations also have limited liability protection.
  • corporations, otherwise known as “benefit corporations,” are for-profit entities structured to make a positive impact on society. For more information about benefit corporations see  https://www.bcorporation.net/en-us/
  • Closed corporations, typically run by a few shareholders, are not publicly traded and benefit from limited liability protection.
  • Not-for-profit corporations, exist to help others in some way and are rewarded by tax exemptions. See more about not-for-profit corporations below.


A cooperative is owned by the same people it serves. Its offerings benefit the company's members, who vote on the organization's mission and direction. Cooperatives offer tax advantages similar to an LLC. They’re not usually taxed on dividends paid to members, so members are only taxed once on their income from the cooperative and not both individually and as the cooperative.

More about not-for-profit corporations

Many urban farms establish their farm as a not-for-profit organization because they want to give back to their community, and the federal and state governments encourage these charitable organizations by providing benefits to them. Not-for-profit organizations can be associations, trusts or corporations. The benefits of setting up a farm as a not-for-profit include a not-for-profit property tax exemption, the ability to apply for public or private grants (which don’t have to be repaid) and to be able to request tax-deductible contributions. Incorporation (becoming a corporation) is necessary, however, to also limit the liability of your organization’s board members and obtain personal liability protection for general and advocacy activities that are in line with the not-for-profit’s mission.

Starting a not-for-profit corporation is just like starting a for-profit business—there are steps that you need to take to set your business up for success:

  1. A key step is to clearly state the organization’s charitable purpose in terms that will satisfy the requirements for not-for-profit state and federal tax-exemptions. Start by researching other not-for-profit farms’ mission statements, especially farms that are similar to the one you want to establish. Then, be able to state the purpose of your farm, what population it will serve, and the role that your farm will play in your overall charitable mission. For example, the farm’s income might directly support charitable activities like providing low-cost fresh food for the community or maybe the farm will provide education about agriculture. Fulfilling your farm’s mission will be the reason behind every business decision made and action taken. It will also assist you in developing your business plan.
  2. Research state laws and procedures for incorporating as a not-for-profit. You might start by asking your local library for resources on how to start a not-for-profit. There are lots of books on how to start a not-for-profit, for example, “How to Form a Nonprofit Corporation” by Anthony Mancuso walks you through all of the federal issues. Many not-for-profit groups successfully incorporate without legal assistance, while some do consult with an attorney and others rely entirely on an attorney’s services.
  3. Consider the pros and cons of utilizing not-for-profit status. The benefits mentioned above are balanced with a lack of individual ownership, which may be a concern for the day-to-day functioning of the farm and/or for farmers who want to pass land on to the next generation. The property of the not-for-profit corporation is owned by the organization and managed by its board of directors, not by any individual or group of individuals.
  4. Write a business plan. A business plan explains in detail how your organization plans to accomplish its mission. It provides a way to review and plan operational issues, including the costs to start the not-for-profit, how the organization will obtain future funding, and how everyday activities will be managed such as who will be in charge of making decisions about what the farm grows or which growing practices the farm will use, etc. You will also need to include parts of your business plan in your federal application for tax-exempt status and future fundraising. You will need to demonstrate to funders that your organization is making a difference, so your business plan should include how you will determine the farm’s impact and whether it’s meeting its stated mission. Again, your local library may have resources to help guide you through writing a business plan. Also check with your local Extension Office to see what resources they may have. There are also resources available online to help people prepare business plans, and you might find that there is assistance also available through not-for-profit organizations or clinics whose mission is to assist small start up businesses.
  5. Create your organization’s bylaws. Bylaws set up the corporation and how it is to be run. They may incorporate much of what you set out in your business plan, but they will definitely include provisions for who is eligible to be on your board of directors, what the board members’ duties and powers are, how members are elected and what is the process for removing a board member. Generally, you will need to file a copy of your bylaws as part of your articles of incorporation and to apply for federal tax-exempt status.
  6. Choose a name for your not-for-profit and research to make sure it’s not already being used. A simple online search is a good place to start. You can also search the U.S. Patent and Trademark Office’s Trademark Electronic Search System (TESS), for free, to make sure that you aren’t infringing on any trademark: https://www.uspto.gov/trademarks-application-process/search-trademark-database
  7. Complete and file your organization’s “articles of incorporation” as directed by the state. Usually it will be the state where the farm is located. Check your state’s Attorney General or Secretary of State for information about what’s required.
  8. Get your Federal Employer Identification Number (EIN). You can apply for the EIN at the Internal Revenue Service's (IRS) website: www.irs.gov (search for “Apply for an employer identification number”).
  9. Once you get your EIN, file for state and federal tax-exempt status. It’s the federal determination made by the IRS that determines whether your organization qualifies as a 501 (c) (3) or other charitable tax-exempt organization recognized under the Internal Revenue Code (the federal tax laws). So, you will need to file for federal tax-exempt status in order to avoid state taxes. Seek assistance from a tax professional, especially starting out, to make sure you are filing the required documents by the required deadlines.
  10. Appoint your organization’s initial directors and hold an initial board meeting. Your board is crucial for fulfilling various positions and legal obligations within your organization. Typically, your board will start with at least 3 people and will grow as the organization grows.
  11. As with any business, obtain the necessary business permits and licenses to carry out the activities of the farm.


If it is important for you to have sole or primary control of the business and its activities, a sole proprietorship or an LLC might be the best choice for you. You can negotiate such control in a partnership agreement as well. A corporation, however, is constructed to have a board of directors that makes the major decisions to guide the business. A single person can control a corporation, especially at its inception, but as the business grows, so does the need to operate it as a board-directed entity. Even for a small corporation, the rules intended for larger organizations – such as keeping notes of every major decision that affects the company – still apply.

Capital investment

If you need to obtain outside funding sources, like investor or venture capital and bank loans, you may be better off establishing a corporation, which has an easier time obtaining outside funding than does a sole proprietorship. Corporations can sell shares of stock, securing additional funding for growth, while sole proprietors can only obtain funds through their personal accounts, using their personal credit or taking on partners. An LLC can face similar hurdles, although, as its own entity, it is not always necessary for the owner to use their personal credit or assets.

Licenses, permits and regulations

In addition to legally registering your business entity, you may need specific licenses and permits to operate. Depending on the type of business and its activities, it may need to be licensed at the local, state and federal levels.

Income taxes for for-profit businesses:

An owner of an LLC pays taxes just as a sole proprietor does: all profit is considered personal income and taxed accordingly at the end of the year. Generally, a business owner will want to avoid double taxation in the early stages. The LLC structure prevents that, and makes sure you're not taxed as a company and then again as an individual.

Individuals in a partnership also claim their share of the profits as personal income. Your accountant may suggest quarterly or biannual advance payments to minimize the end effect on your return.

A corporation files its own tax returns each year, paying taxes on profits after expenses, including payroll. If you pay yourself from the corporation, you will pay personal taxes, such as for Social Security and Medicare, on your personal return for what you were paid throughout the year.

Taxes for not-for-profit organizations

There is a lot of information about tax benefits for not-for-profits available on the Internet. For general education about tax treatment for not-for-profit urban farms, see the following:

  • Community Law Center, Inc.’s “Legal Tools for Urban Agriculture in Baltimore City”: https://communitylaw.org/
  • The Sustainable Economies Law Center’s UrbanAgLaw.orgwebsite NonProfit Urban Ag (has information about each type of tax exemption organizational structure as well as examples of applications submitted by urban agriculture organizations to obtain the desired exempt status): http://www.urbanaglaw.org/non-profit-urban-ag/
  • Candid’s GrantSpace website has lots of information about starting a not-for-profit organization, including a comprehensive state-by-state resource guide for starting a not-for-profit organization with links to not-for-profit associations, legal support resources, and government agencies: https://grantspace.org/resources/knowledge-base/starting-a-nonprofit/

The 2018 Tax Cuts and Jobs Act eliminated the deduction for not-for-profit losses for individuals, partnerships, estates, trusts, and S corporations that operate a farm as a hobby or mainly for sport or recreation, or which have investment activity intended only to produce tax losses for the investors. Not-for-profit corporations other than S corporations, however, can still deduct the expenses of carrying on the activity. See IRS Publication 225. Always seek tax advice from an attorney and/or accountant.

Property tax incentives for urban agriculture:

Some states and cities have created tax incentives, like reductions in property taxes or tax rebates, to help encourage urban agriculture. Usually the state legislature passes an enabling statute allowing localities to choose to enact an incentive and giving the locality the authority to establish eligibility criteria, determine the process for granting and maintaining the tax incentive, and even set the amounts of the incentives. Contact your local economic development office, your state’s department of commerce, your local bank, or your lawyer or accountant to find out if there is a tax incentive program for your area.

In Maryland, Baltimore City and Prince George’s County have tax incentives for urban agriculture, but the conditions which qualify a property for those incentives are very specific and may not apply to all urban farms. Information about the Baltimore City urban agriculture tax credit is available from the Baltimore Office of Sustainability: https://www.baltimoresustainability.org/

The Prince George’s County urban agriculture tax can be found by going to the following website and searching for CB-74-2015: https://princegeorgescountymd.legistar.com/Legislation.aspx



Insurance is one of the most important tools you can have to manage a variety of risks associated with having a farm, but it can be especially important to understand the layers of insurance protection that might be needed if you are farming in an urban area.

How does insurance work?

An insurance policy is a contract. Generally, the parties to the contract are the policyholder (the “insured”) and the insurance company (the “insurer”), and the terms of the insurance contract spell out the rights and responsibilities (or “duties”) of both parties. Basically, the insured’s duties are listed in the conditions section of the policy and they include paying premiums on time, being honest and acting in good faith and not making any misrepresentations in applying for the insurance, notifying the insurer of any changes that are material to the protections (“coverage”) provided under the policy (for example, if you add another vehicle that your employees use to do their work or you build a new addition onto a building you use for the farm), providing notice of a loss as set out in the policy (within a certain timeframe and through certain means) and cooperating with the investigation and legal defense of a loss or claim. Failure to fulfill any of the duties is grounds for breach of the contract, cancellation of the policy and forfeiture of the premiums paid. The insurer’s duties are to also act in good faith and fair dealing in handling claims, to pay the losses suffered by the insured or a third party as a result of a covered risk, and under liability policies, to also defend or pay the legal expenses of an insured who is subject to a legal action for the covered risk.

Insurance policies are not the easiest contracts to understand. Ask other businesses for recommendations for insurance agents to contact when you’re shopping for insurance. You can get quotes from different agents for no cost. And, although your insurance agent can provide information about what the policy covers, it is prudent to have an attorney review the policy to make sure it will be able to provide the protection that you want in the event of a loss. The legal costs and potential liabilities as well as the loss of your time in trying to get payment from the insurance company is worth the small fee that an attorney will charge to review your policy. The time to find out that your policy does not actually cover what you thought it did is not after a loss has occurred.


Mandatory insurance:

If you own a business, you may be legally required to carry certain insurance for your employees. Even if you’re not required, however, it might be prudent to obtain coverage to protect your farm business against unforseen losses. Requirements for legally required employee insurance vary from state to state. Every state has a department or division of insurance and a department of labor. Check your state’s insurance department and department of labor for information about your state’s requirements.

Maryland's Insurance Administration is online here: https://insurance.maryland.gov/Pages/default.aspx

They keep a list of agricultural insurance providers, and have a helpful guide to agricultural insurance.


Unemployment insurance provides for payments of unemployment compensation to workers who have lost their jobs through no fault of their own. The IRS and state workforce agencies require most employers to pay federal and state unemployment insurance, which provides benefits to eligible workers who have lost their jobs. State criteria vary, but IRS requirements are generally standard. Under federal law, if your employees qualify as farmworkers, you’re subject to Federal Unemployment Tax (FUTA) on the wages you pay them if you meet certain criteria. (See following column for link to IRS FUTA website for the most current requirements.)

Information about FUTA, including who must pay and how to figure out how much tax to pay, see IRS Publication 15. For a list of state unemployment agencies, visit the U.S. Department of Labor’s website at oui.doleta.gov/unemploy/agencies.asp

Workers’ compensation

Workers’ compensation insurance provides income replacement and rehabilitation and medical benefits to employees who are injured at work. Workers' compensation benefits are secured by insurance policies, paid for by the employer. Because it is a no-fault insurance, employers are responsible for benefit payments regardless of what caused the on-the-job injury or who contributed to it. Most states require employers to obtain workers’ compensation insurance. Although agriculture is one of the nation's most hazardous industries, about half of all states allow agricultural employers to provide little or no workers' compensation coverage for migrant and seasonal farmworkers.

If your state does not require workers’ compensation insurance, but you would like to provide it, contact your state’s workers’ compensation division for requirements. If the insurance is not legally required and you choose not to carry it, still contact the division, as it may require you to carry out certain procedures, such as providing each employee with a written statement of non-coverage.

In Maryland, agricultural employers with less than three full-time employees or an annual payroll for full-time employees below $15,000 are exempt. Agricultural office workers, independent contractors on farms (other than migrant laborers), and owner-operators of large tractor-trailer vehicles are also exempt. Workers Compensation insurance can be purchased from a commercial provider or Maryland’s state-administered fund.

Business liability protection:

Liability insurance is a part of the general insurance system of risk financing, It protects the purchaser of the insurance (the "insured") from the risks of liabilities imposed by lawsuits and similar claims. It provides legal counsel and pays the costs and any damages that might be awarded against the insured in the event someone sues or makes a claim that comes within the coverage of the insurance policy.

Commercial general liability (CGL)

A CGL policy is a standard insurance policy issued to business organizations to protect them against liability claims for bodily injury and property damage arising out of premises, operations, products, and completed operations; and advertising and personal injury liability (injury to mind or emotional injury).

CGL policies have different levels of coverage. A policy might cover premises liability, which protects the business from bodily injury or property damages that occur at the business’ physical location. It may also include coverage for bodily injury and property damage that is caused by the farm’s products (product liability).

Product liability

Covers the cost of defending claims in the event that a product from your farm causes injury or other damage to third parties.

For farms, product liability insurance protects them in case a food that they produce for sale harms a consumer. This is different than general liability insurance, which covers risks of bodily injury or property damage caused by direct or indirect actions of the insured, like a customer slipping on water in the greenhouse. Product Liability insurance covers the legal defense costs as well as paying any judgments that might be awarded against the farm, which, in the case of foodborne illnesses can be in the millions of dollars. Although food safety planning and good agricultural practices reduce the chance of a farm product making someone sick, they won’t protect you from being sued and having to defend your business. In addition, many farmers markets require vendors to carry product liability insurance.

Employer liability

Covers financial loss if a worker has a job-related injury or illness not covered by workers’ compensation.

Premises liability

Premises liability insurance protects the property owner from claims that a person was injured on the premises. If your farm business is located on your personal property, like your home, it is unlikely that your homeowners policy will provide protection in the case that a customer or visitor to the farm is injured while at the farm. Your farm business will need to be separately protected under a business liability policy. Premises liability coverage for businesses is often part of a CGL policy, but it can be purchased as a separate policy. Contact an insurance agent for information.

Errors and omissions (an “E&O” policy)

Covers errors and omissions made in financial reporting statements, as well as coverage for damages, resulting from the actions of its directors and officers. This policy is useful for businesses that have boards of directors, and investors. An E&O policy can be made part of a CGL policy or can be purchased separately. Contact an insurance agent for information.

Note that, depending on who owns the land on which your urban agriculture project is located, you may need to consider different ways of obtaining liability insurance. Any agreement allowing use of land (for example, a lease, license, etc.) should make clear which party is responsible for obtaining liability insurance. If the lease or license indicates that the farmer or urban agriculture organization will be liable for all activities conducted on the property, it will be the organization’s responsibility to obtain liability insurance. It is likely to be much easier for the property owner to obtain private property insurance. This insurance can protect the property owner and the organization farming the land, as lessees or licensees, from the costs of any injuries caused on the site. If an organization is leasing land it will be important to check with the landowner to make

sure that the agricultural project is covered by the landowner’s private property insurance. If the property owner does not wish to obtain property insurance or if the organization is unable to obtain insurance, the organization may want to consider extra precautions such as fencing the property, if permitted, posting signs around the lot limiting open hours, and warning of hazardous conditions on the property. Cities do not provide liability insurance for city-owned property, but they also typically do not require the lessees or licensees to obtain their own liability insurance either.

For more information about liability insurance, read Goeringer (2015) “Understanding agricultural liability” and Goeringer (2014) “Premise’s liability.”

Tort liability

Tort liability arises from the negligent or intentional infliction of damage to a person or to property. This type of liability is commonly insured under a general liability insurance policy. The simplest type of tort arises where someone is injured on a farm. Tort liability may also include employment torts, such as wrongful discharge, discrimination, or harassment. The effects of agricultural activity on the environment has both statutory and liability components. Adjacent landowners, communities, and public interest groups may use a combination of regulation and tort liability to influence agricultural activities. Traditional liability insurance policies may not cover pollution claims, and noncompliance with environmental regulations could result in severe civil or criminal penalties. Use of sound and safe production practices; education, certification, and licensing; third party audits; and compliance with statutes and regulations can mitigate the risk of tort liability. Accurate records of production activities, pesticide and fertilizer application; proper sanitation; and timely and appropriate response to adverse events, like spills or contamination, can provide evidence of reasonable care to protect workers, neighbors, and the environment.

Commercial auto insurance:

Typically, auto policies for businesses (“Business Auto Policies” or “BAPs”) include both liability and casualty protection for a company’s use of cars, trucks, vans and other vehicles in the course of carrying out its business. This may include vehicles owned or leased by the farm, hired by the farm, or employee-owned vehicles used for the farm’s business purposes. All automobile coverage is typically specifically excluded from all other general liability policies, so you will have to buy a separate policy to insure any vehicles that are used in your farm business.

Liability protection

This coverage helps pay for legal defense costs and/or another person’s medical expenses or repair bills if one of your covered vehicles is involved in a car accident. Your personal auto policy will not cover the regular use of your personal car for business purposes. Just like your personal auto liability insurance, however, if you use vehicles to run your farm business, the cost of paying premiums for insurance protection in the event of an accident is miniscule compared to the potential costs of being sued or paying for damages. In addition, just like our personal vehicles, if you have business vehicles on public roads, especially if the business holds the title to the vehicle, in most states they will have to have at least a minimum of liability insurance to be on the road legally.

BAPs can be purchased from many insurance companies. Contact an insurance agent for information.

Casualty protection

Covers damage to your vehicles due to things like hail, vandalism, theft, or someone else causing an accident. For businesses, this coverage can help pay for repairs if your vehicle is damaged, and it can cover the cost of renting a vehicle to continue business operations while your vehicle is being repaired or you purchase a new one.

Property casualty protection:

First party property protection for structures, machinery, equipment, inventory (fire, hurricane, etc.)

Protects the things you need to run your farm business. It can pay for repairs or replacement of your business property if it’s stolen, damaged or destroyed in a fire or natural disaster. Just like homeowners insurance, property protection for your business helps offset the costs of major repairs or having to replace expensive items that you need to keep your business operating.

Commercial Property insurance can be purchased from many insurance companies. Contact an insurance agent for information.

Crop insurance:

Crop insurance protects against either the loss of crops due to natural disasters or the loss of revenue due to declines in the prices of agricultural commodities. It is federally supported and is sold and serviced by certain approved private-sector crop insurance companies and agents.

Whole-farm revenue protection (WFRP)

Provides a risk management safety net for farms of all sizes that produce two or more commodities. Coverage is provided under one insurance policy, and is available in all counties nationwide. This insurance plan is tailored for any farm with up to $8.5 million in insured

revenue, including farms with specialty or organic commodities (both crops and livestock), or those like urban farms that are marketing to local, regional, farm-identity preserved, specialty, or direct markets.

For more information, visit https://www.rma.usda.gov/Policy-and-Procedure/Insurance-Plans/Whole-Farm-Revenue-Protection

The Noninsured Crop Disaster Assistance Program (NAP)

Covers commercial crops. There is no minimum size of an operation (meaning that small urban farmers can take advantage of risk protection for their commercial operations that traditionally would not have crop insurance available to them) in order to be eligible for NAP.

The 2018 Farm Bill re-authorized incentives for NAP coverage for socially disadvantaged, limited resource, or beginning farmers. Although NAP does not cover home gardens (because they are not ordinarily viewed as commercial enterprises), NAP does provide risk coverage for producers who may commercially produce small crop acreage in an area for local or direct markets.

Contact your local Farm Service Agency Service Center to learn about more about NAP coverage for your farm. You can locate your local FSA office and get more information about NAP at https://www.fsa.usda.gov/state-offices/index

Other types of crop insurance

Crop-Hail Insurance is a type of insurance that insures against crop damage caused by rain and hail, but it can also cover damage due to fire, wind, lighting, and vandalism. It typically protects crops that are still in the field and have yet to be harvested. Hail damage is not covered under the federal crop insurance program. Farms with large field crops in areas with high risk of hail damage typically purchase hail insurance.

Information about Crop Insurance is available at http://www.ag-risk.or/AboutCropInsurance/default.htm


Bonus reading

What’s federalism got to do with it?

The United States is governed using a system of federalism. Federalism means that both the federal and state governments have their own spheres of responsibility and authority. The federal government has a variety of powers, but its authority is limited by the U.S. Constitution. Anything outside the federal government’s constitutionally-limited authority is left for the states to govern exclusively. In areas where the federal government has authority to govern, those federal laws will, subject to some exceptions, generally override state laws. Both the federal government and state governments have authority over urban agriculture issues.

Federal authority: The three most important powers that the federal government has in relation to urban agriculture issues are the authority to regulate interstate commerce, the taxing power, and the ability to attach conditions to federal funds given to states.

Federal preemption of state laws: As mentioned above, anything outside the federal government’s constitutionally-limited authority is left for the states to govern. States have authority to pass laws regarding the health, safety, and morality of their citizens (referred to as the states’ “police powers”). The federal government has the power to preempt state and local governments from imposing laws and regulations in areas in which the federal government has constitutional authority to act. Federal preemption can either be express or implied. Express preemption occurs when a federal statute explicitly states the intention of Congress to preempt state law. For example, states are preempted by the Nutrition Education and Labeling Act (NLEA) from imposing labeling requirements for processed and packaged foods that are not identical to the labeling requirements in the Federal Food, Drug and Cosmetic Act. The NLEA gives specific examples of the actions that are preempted and those that are not. Those that are listed as preempted in the NLEA are, thus, expressly preempted. Implied preemption occurs when the language and content of the law suggests Congress intended to preempt state law, but Congress has not clearly said in the law what it intends to preempt.

State & local government: The interplay between state and local governments works slightly differently. Local governments do not have any express authority under the U.S. Constitution. Instead, local governments have only the power given to them by their state under that state’s constitution and statutes. All states have the same amount of constitutionally-derived power and authority, but determine on their own how to apportion this power between the state and local governments. Thus, while all states have the same amount of authority under the federal government, the amount of authority that states give local governments varies from state to state and sometimes from city to city within the same state. Because there is so much variation, this manual cannot lay out all of the specific authorities given to local governments in each state, but it will provide some examples of the different types of authority.

Urban farming in the 2018 Farm Bill:

The Agriculture Improvement Act of 2018, a/k/a “the Farm Bill,” is an omnibus piece of federal legislation covering agriculture, conservation, rural development, research, and food assistance. It has been continuously reauthorized approximately every five years since 1933. What’s in the Farm Bill directly affects how U.S. agriculture operates for the next five years. The 2018 Farm Bill officially recognizes urban farmers—from those with community gardens to those operating multimillion-dollar vertical farms—with the creation of both a new office at the USDA and a research, education, and extension initiative. Specifically, the bill creates the USDA Office of Urban Agriculture and Innovative Production. Congress created the office “to encourage and promote urban, indoor, and other emerging agricultural production practices.” The bill:

  • Provides for the assignment of a farm number for rooftop, indoor, and other urban farms.
  • Provides authority to award competitive grants to operate community gardens or not-for-profit farms, educate a community on food systems, nutrition, environmental impacts, and agricultural production, and help offset start-up costs for new and beginning farmers.
  • Establishes an Urban Agriculture and Innovative Production Advisory Committee.
  • Establishes pilot projects to increase compost and reduce food waste, and create urban and suburban county committees.

The Farm Bill also establishes the Urban, Indoor, and Other Emerging Agriculture Production Research, Education, and Extension Initiative. This Initiative does the following:

  • Authorizes competitive research and extension grants to support research, education, and extension activities for the purposes of enhancing urban, indoor, and other emerging agricultural production.
  • Provides $4 million in mandatory spending for each fiscal year 2019-2023.
  • Requires the U.S. Secretary of Agriculture to conduct a census of urban, indoor, and other emerging agricultural production.

USDA’s website with info. about the Farm Bill is at https://www.farmers.gov/farmbill.

Tips on how to work with regulators and permitters:

Working effectively with the many agencies that regulate your urban farm is an important tool to have in your legal risk management toolbox. There is no downside to implementing a decisive strategy of consistent, constructive engagement with regulators, and creating relationships with people inside regulatory agencies before a problem arises. An avoidance or antagonistic approach to regulators, however, often does lead to needless and costly adversarial interactions and increased angst and anxiety on the part of the farm owner, and could wind up subjecting your farm to increased scrutiny or maybe stiffer penalties in the event of a violation.

Like you, most regulators take pride in the work that they do. Like you, they choose to serve the public good. And like you, they take seriously their role in ensuring a safe food supply and healthy environment for the public. And most farmers, in turn, are trying to do the right thing and meet the regulations that apply to their farm. As noted in the What if I Want to Change a Law? Action Item Box below, engaging often with your regulators from the start helps build trust. Most regulators aren’t out to get farmers or put farmers out of business. Regulators have to eat, too. The vast majority of regulators view their job as finding solutions to problems. Developing a dialogue with the people who enforce the laws that impact your farming business and who can help you understand your options for solutions if and when a problem occurs “is the best path to complying with your regulatory burdens while running a profitable business.”

And that honest dialogue shouldn’t necessarily end should you receive a notice of a violation. If you receive a notice of non-compliance, it is certainly prudent to quickly obtain legal representation to protect your rights, however, as your attorney will surely advise you, the best way to manage the risks associated with an investigation is to be honest and cooperate with the regulatory body. Deceit and delay very rarely serve a farm that is under investigation. The only winners, then, are the lawyers who represent you in the protracted administrative proceedings and your competition who will seek to gain an advantage in the marketplace by publicizing your misfortune.

For more information about working effectively with regulators and permitters, see “Working With Regulators” and “Dealing with Regulators Tipsheet: An inspector, certifier or other regulator has made a decision I disagree with. What can I do?” from Farm Commons: https://www.farmcommons.org/

What if I want to change a law?

Start by being plugged in or connected where you might not already be. Get to know some of the people who are writing the laws and enforcing the laws that uniquely affect your urban farm. Do you know anyone on the planning and zoning committee? What about the city’s waste collection authority—who know about the city’s requirements for disposing of pesticides? Do you know any of the inspectors from the department of health, who might be tasked with inspecting for compliance with a city’s set-back requirements for small livestock structures? Talking with the lawmakers and regulators will help you learn what they think are the most important aspects of the laws, and they, in turn, might learn from you ways that the laws could be improved to support urban farms. Also, having a more than arm’s length relationship with regulators helps build trust and cooperation between you and the enforcement agencies, and the agencies might be more likely to work with you to find a solution to problems.

Public outreach can also help build the social capital and community consensus necessary to make changes in local policy. Advocates of urban farming can provide forums for the discussion, negotiation, and evaluation of urban agriculture issues. The list of strategies/approaches/forums/ways to engage community members and increase awareness, etc., is endless. Many communities have utilized a variety of strategies to engage community members and increase awareness about the benefits of urban agriculture and provided information about pertinent legal issues for urban agriculture. Advocates can engage community members in a variety of forums, from open community meetings to more targeted outreach. For more information about creating a “campaign for urban agriculture,” see Good Laws Good Food Putting Local Food Policy to Work for Our Communities.

An attorney can help you understand and negotiate the procedural process for seeking to change a law or policy as well as help craft language for proposed changes. See above for information about how to locate an attorney in your area. When you interview attorneys, be sure to ask if they would like to volunteer all or some of their time to assist you. Many lawyers provide pro bono assistance for various causes they care about. It can also be a way to expand their client list. Or, if you have a law school in your area, you might contact the school to see if there are law students who could assist you, at no cost to you.

Additional resources and literature cited

General resources

Local resources

  • Cooperative Extension Agents
    The Cooperative Extension System is a nationwide, non-credit educational network. Each U.S. state and territory has a state office at its land-grant university and a network of local or regional offices. Find your local Extension agent at https://pickyourown.org/countyextensionagentoffices.htm
  • Food policy councils
    A local food council, or food policy council, is an organization comprised of community members from various sectors within the food system including health officials, farmers, local food processors, local food distributors and retail outlets, farmers’ markets, restaurants, farm preservation advocates, cooperative extensions and local government formed to facilitate partnership, provide learning and growth opportunities, and offer and promote policy recommendations that can improve local economic conditions for farmers and access to local foods. You can find out whether there is a council in your area or how to start a council at https://connectourfuture.org/tools/and http://www.foodpolicynetworks.org/directory/.

Business structures and legal risk management

  • Newhall, A., & Goeringer, P. (2014). EB-422 Using a business organization structure to limit your farm’s liability. University of Maryland Extension and Agriculture Law Education Initiative. http://umaglaw.org/publications-library/
  • Crane, A, Gantz, G, Isaacs, S, Jose, D, Sharp, R (2013) Understanding agricultural risks: Production, marketing, financial, legal, human. Extension Risk Management Education and Risk Management Agency

Attorneys in your area

  • Every state has a bar association to which every attorney who is licensed to practice in the state must belong. And, in larger cities, there are local chapters or associations that attorneys belong to. A search on the Internet for the name of your state and “bar association” will provide you with the website for your state’s bar association. The same search can be done for your city. Contact your state and local bar associations, tell them you are looking for local legal assistance, and get information about their lawyer referral program.
  • Maryland agricultural attorneys are listed here: https://drum.lib.umd.edu/handle/1903/16374

Other literature cited in this chapter