Future of Nebraska Agriculture being Debated by Legislature

Article XII, Section 8 of the Nebraska constitution, popularly known as Initiative 300 (I-300), was adopted in 1982. I-300 prohibited corporations, other than family farm corporations, from owning agricultural land or engaging in farming and ranching. Since January 2007, the state has been prohibited from enforcing I-300 after the 8th Circuit Court of Appeals upheld lower court rulings that I-300 violated the dormant commerce clause and did not comply with the Americans with Disabilities Act.

The Agriculture Committee held a public hearing on LB 1174 on February 12th. LB 1174 would place in statute many of the policies of I-300, but with modifications intended to address the constitutional defects the courts found. LB 1174 would prohibit certain business "entities", defined to include corporations, limited partnerships, and other types of limited liability businesses, from owning agricultural land or carrying out farming activities or livestock production. LB 1174 would continue to limit who would qualify as family farm entities to those in which the majority ownership is held by related family members and where at least one member of the family provides day-to-day management and labor for the farming operations.

I-300 required that labor and management be performed on a qualifying entity's farming operations in Nebraska. This provision of I-300 was found to discriminate against interstate commerce since it effectively excluded family farm corporations located outside Nebraska from meeting the day-to-day labor and management requirements. This created an unfair benefit for Nebraska family farm corporations while discriminating against family farm corporations in other states. Under LB 1174, any family farm corporation in any state would qualify as a family farm corporation in Nebraska to satisfy the concerns of the court. It also directs the Secretary of State to allow reasonable accommodations to allow disabled individuals meet the day-to-day labor and management requirements to carry out agricultural operations as a permitted family farm entity. Without an accommodation for disabled persons to qualify, the courts concluded that I-300 violated the Americans with Disabilities Act.

The ability to respond to evolving economic conditions and legal rulings was severely inhibited by the inflexibility of placing I-300 corporate farming policy in the constitution. LB 1174 would place its provisions in state statute allowing for a more reasonable and practical response if necessary.

I don't believe it is prudent to put something back into law, just because it was the law for 25 years. We should consider alternatives and ideas that are visionary for the agriculture industry, not just historic. LB 1174 prohibits unrelated agricultural producers in Nebraska from forming a limited liability corporation or a non-stock cooperative. These business models are common in many other industries and even in the agriculture industry of other states. It is unwise to restrict the tools available to Nebraska's farm families to attract capitol and manage risk, and to compete in an era of increasing global competition with rising input costs. We must provide family farmers every opportunity for success for their family and their rural community. I am hopeful there is common ground on this issue and we can achieve a new era in Nebraska Agriculture; one where the agriculture community moves forward together in promoting our state's top industry.

Your involvement is vital as we discuss issues in your Legislature, please contact me, toll free at 1-866-800-7445, by mail at: State Capitol, District 47, PO Box 94604, Lincoln, NE 68509, or by email at perdman@leg.ne.gov.