North Dakota bill to 'modernize' animal ag passes Legislature
Under House Bill 1371, farmers could partner with a corporation for a feedlot or dairy operation, a major change in North Dakota's corporate farm law.
BISMARCK — Rep. Paul Thomas said House Bill 1371 had several names as it made its way through the North Dakota Legislature in 2023 — corporate farm bill, the next generation ag bill, the farm freedom bill and the modernization bill.
“Really the term modernization is quite appropriate,” Thomas, the primary sponsor of the bill, said in the House on Thursday, April 20.
A technicality forced the House to have a do-over vote, passing it again in the morning on Monday, April 24.
The Senate passed the bill that afternoon, sending it to Gov. Doug Burgum, who has advocated for more flexibility in North Dakota law that has kept corporations from owning farmland.
The bill now has emergency provision, meaning it will take effect as soon as it is signed, so farmers and ranchers could potentially get started on a building project this construction season.
The new law will allow livestock operations to be able to attract outside investment, much needed to help build modern livestock facilities, but with several limitations.
“Across the spectrum in North Dakota, there's still a wide variety of opinions on this subject,” Thomas said in an interview with Agweek after the Senate vote. “I think we really found a middle ground that will allow for the industry to grow, but also keep that assurance … that it keeps the family farms and ranches in control of the operations, land and what's happening in our communities.
Some of the limitations include:
- Requiring the majority of shareholders in any livestock corporation to be operators.
- Limiting the number of shareholders to 10.
- Limiting the amount of farmland the corporation can own to 160 acres.
- One operator could be a partner in only four corporations.
- Requiring that livestock corporations are subject to the same regulations and reporting requirements as family-owned farms.
Thomas grew up with cattle but doesn’t have any livestock as part of his current farming operation. That’s not uncommon, as North Dakota has seen its livestock industry shrink, especially in comparison to neighboring states.
Greg Lardy, vice president for agriculture affairs at North Dakota State University, said that’s been a concern and an opportunity.
“You look at our state compared to the three neighboring states, Minnesota, Montana, South Dakota, and look at just gross ag receipts, we would routinely average 15% to 16% of our gross receipts coming from livestock and those neighboring states would be in the 40 to 50% range routinely,” Lardy said. “So there's a lot of room to grow the livestock industry here; we've got a great set of resources.”
Some advantages that North Dakota has are good access to feed sources, especially with two soybean crushing plants to start operating in the next couple of years at Spiritwood and Casselton , and another planned in Grand Forks .
Where North Dakota is at a disadvantage is in livestock processing. North Dakota’s last major meat processor, a hog processing plant in Minot, closed in 2011.
Thomas said the lawmakers and other stakeholders saw a need to ensure that dairy and meat processing stays alive and other legislation has incentives for that industry.
There also is legislation to designate livestock friendly counties, clean up restrictive local ordinances, and a bill to boost infrastructure for value-added processing in general.
The infrastructure bill provides up to a $10 million cost share for road and bridge improvements tied to value-added projects. There also is money for improvements to water and power supplies.
“So now, my local township of 35 people, it's not just local landowners that see their taxes going towards enhancing that township road into a larger structure that can handle more semi traffic,” Thomas said. “It's now the state saying we recognize there is so much potential and if the local community wants it, we're willing to participate in helping the cost-share of that infrastructure that's needed for that business to locate there.”
Thomas said willing compromise from ag groups, North Dakota Farmers Union and North Dakota Farm Bureau, were key in getting a bill passed .
“I think everybody, to everyone's credit, came to the table and said, ‘Let’s not start from polar extremes. Let's see where we can find something in the middle that we can all feel that's going to serve our state and our industry better,’” Thomas said.
On the final passage, Thomas said, “It almost became anticlimactic for me because the biggest part of the work was getting that compromise.”