Why Own the Farm If You Can Own the Farmer (and the Crop)?: Contract Production and Intellectual Property Protection of Grain Crops

The purpose of this article is to survey the emerging legal issues associated with two developments: (1) the trend toward use of contract production for grain and (2) the connection between this development and the protection of intellectual property rights for seeds and plants. The article begins by reviewing the forces contributing to the increased use of production contracts and the reasons companies involved in grain processing and marketing are attracted to using contracts. It then considers the effect entering a production contract may have on the decisionmaking ability of farmers and the potential economic impacts of contracting. This discussion identifies a list of basic rules for farmers to consider when evaluating contracting opportunities. The next section of the article is a more detailed discussion of selected legal issues which may be associated with use of grain production contracts. A variety of issues are discussed, including the nature of the relationship, the forms of pricing terms used, and questions about the timing of payment. This discussion is followed by an inventory of the different clauses typically found in production contracts, illustrated with provisions from contracts currently being used in the Midwest. The article then presents a preliminary analysis of selected issues identified by reviewing contract provisions, including several Uniform Commercial Code (UCC) contract questions commonly considered by courts. The section includes a discussion of the potential to use state legislation to regulate contracting practices. Finally, a comprehensive discussion of the issue of intellectual property protections applicable to the production of grains is presented. The discussion focuses on the impact such protections have on the ability of farmers to save their own crops as seed to plant or sell to other farmers. The article concludes by discussing how the increased use of contracting for the production of grain crops has the potential to create a range of important legal and policy issues which may need to be addressed both at the level of individual producers and from the viewpoint of society as a whole