Small and medium agribusiness is the basis of any agricultural market in developed countries. Such farms cultivate more land, create more added value and jobs.
In the agro-industry, the clients of our company are mostly small, less often medium-sized agricultural producers. Such clients have a lot of problems, but the clients themselves do not always want to solve these problems. Only a few work ahead, and most turn to lawyers when it is "hot".
What are the main problems of farmers and what are lawyers for?
Today, many farmers cultivate land that is not allocated in kind. Land plots have no normal title documents, no cadastral numbers, no registration. This applies to property rights, and leases, and permanent use. This format of work creates opportunities for raiding or risks that contracts with landowners will be renegotiated by a new farmer. How can a lawyer help? First of all, to conduct an audit of the land bank, and then - the procedure for registration of land. As the experience of our clients shows, it is usually better for a farmer to bear the costs of land lease than to lose such land.
Problems with contracts
Farmers do not pay enough attention to land lease agreements. Often such contracts are signed by the relatives of the owners, the rent is not fixed, especially in kind, and no one monitors the renewal of contracts. All this leads to the fact that landowners or someone in their interests file lawsuits for invalidation of contracts or their termination. To prevent such risks, we audit contracts for our clients, develop new contracts, create a register of contracts and a clear system for their extension.
Access to finance
Farmers sometimes cannot get normal credit, especially when it comes to agricultural receipts or collateral for future harvests. The first problem is the inability to show their previous income, as many people work for cash, have no financial statements and simply pay a single tax without supporting documents.
The second problem is that the farmer often cannot pass the lender's test. If there is no registered land, creditors will not want to finance the farmer on the security of the future harvest, because there is no land on which this crop will grow.
Also, when applying for funds, PPE or fertilizers on credit, farmers do not pay attention to the little things that may be grounds for denial of funding. These are, for example, open enforcement proceedings, which can be an indicator of a refusal to grant a loan. In addition, it is not easy for farmers to get support from the state. Funding programs are quite confusing and are primarily aimed at reimbursing loan costs. Therefore, the farmer should first avoid the mistakes described above, get a loan, and only then count on the help of the state.
We help our clients with the preparation of documents for financing and conduct a preliminary inspection of the farm before submitting documents to the credit institution.
Law enforcement and regulatory agencies, untrained workers
For law enforcement and inspectors, small farmers are a pretty good target. They do not have large legal departments with lawyers or PR services that can cover the illegal actions of civil servants. Often the farm can be fined heavily for poor paperwork and untrained workers. For example, if a worker works under a civil contract for seasonal work, the State Labor Inspectorate may impose a fine on him as if it were not registered. This can be avoided by properly preparing the contract and other documents, as well as instructing the employee.
During the searches, law enforcement officers learn a lot of information from employees, which results in the seizure of property and arrest.
Of course, from time to time there are some improvements on the horizon, such as the adoption this year of the Law "On Agricultural Cooperation". This law should promote small-scale farming, improve sales and access to resources. However, there are still many problems.
What can lawyers do for their farming clients? First of all, they try to understand their client's business as much as possible. After many years of working with small agribusinesses, we have realized that clients mistakenly believe that lawyers are needed to solve point problems. However, our main task is to give clients advice that will help develop their business, and not just provide legal advice. Clients often do not understand that there are problems, so lawyers should tell them about the risks and how to avoid them.
Article by Andriy Gevko for Yuridichna Gazeta.