Legal Definitions - agricultural lien

An agricultural lien is a legal claim that a lender or service provider holds against a farmer's property, specifically farm products or equipment. This claim acts as security for a debt, such as a loan of money, supplies, or the use of land, which enables the farmer to operate their agricultural business. If the farmer cannot repay the debt, the holder of the agricultural lien has the legal right to take possession of the specified farm assets to satisfy the outstanding obligation. These liens are often automatically established by state law under certain conditions, recognizing their importance in financing the agricultural industry.

Here are some examples to illustrate how an agricultural lien works:

• Example 1: Crop Production Loan

  Imagine a wheat farmer who needs a substantial loan to purchase specialized seeds, fertilizers, and pesticides for the upcoming planting season. A local agricultural bank provides this loan. As part of the agreement, the bank places an agricultural lien on the farmer's future wheat crop. If the farmer is unable to repay the loan after the harvest, the bank has the legal right to claim the harvested wheat (or its value) to recover the money owed. This demonstrates a lien on "farm products" (the crops) to secure a loan for "goods" (seeds, fertilizer, pesticides).

• Example 2: Livestock Feed Financing

  Consider a hog farmer who needs to purchase a large quantity of feed to sustain their herd over several months. A feed supplier extends credit to the farmer for this purchase. To secure the payment, the supplier places an agricultural lien on the farmer's hogs. Should the farmer fail to pay for the feed as agreed, the supplier can enforce the lien, giving them the right to take possession of a portion of the hogs to cover the unpaid debt. This illustrates a lien on "livestock" to secure payment for "goods" (the feed).

• Example 3: Equipment Repair Services

  A pecan farmer's harvesting machine breaks down during a critical period. A specialized repair company fixes the complex machinery, but the farmer cannot pay the full repair bill immediately. The repair company, under state law provisions, might automatically acquire an agricultural lien on the repaired harvesting machine itself, or potentially on the farmer's pecan crop. If the farmer defaults on the repair payments, the company could then legally claim the machine or a portion of the crop to satisfy the outstanding service charges. This shows a lien on "farm equipment" or "farm products" to secure payment for "services" related to agricultural operations.