Kansas Attorney General Opinion 1992-115

ROBERT T. STEPHAN
ATTORNEY GENERAL August 27, 1992
ATTORNEY GENERAL OPINION NO. 92- 115
The Honorable Alex Scott
State Representative, Sixty-Fifth District
835 West Fifth
Junction City, Kansas 66441-3219
Re: Corporations--Agricultural Corporations--
Limitations; Exceptions; Penalties; Production
Contract Requirements
Synopsis: Corporations with production contracts that do not
involve pork processors are exempt from the
proscription against corporate ownership of
farmland found at K.S.A. 1991 Supp. 17-5904. In
order to qualify under this exemption a corporation
must enter into a contract with a person engaged in
farming for the production of agricultural products
that are the subject of the production contract
with the corporation. Cited here in: K.S.A. 1991
Supp. 17-5904; K.S.A. 17-5905.
Dear Representative Scott:
As representative for the sixty-fifth district you inquire
whether a production contract under the following facts comes
within the exemption contained in subsection (b) of K.S.A.
1991 Supp. 17-5904.
You indicate that a multi-state foreign corporation
(incorporated in another state) desires to contract for the
production of hogs in Kansas with certain farmers actively
engaged in farming operations. The corporation owns what it

believes to be genetically superior breeding stock, and it has
further developed animal husbandry programs and management
techniques for the large scale, low cost production of hogs.
The corporation will help with the financing of a large scale
facility to be built and owned by the farmer. The farmer will
have the option of contracting with the corporation for
technical support on increasing production in accordance with
the programs and techniques developed by the corporation. On
the other hand, the farmer, at his option, could manage and
operate the facility himself, as provided in the production
contract. In either case, the farmer would be required to
furnish all necessary labor and no personnel from the
corporation would be employed in the facility.
Some of the farmers may be involved in only farrowing
operations and nursery operations. There would be a number
that would additionally or separately be involved in finishing
floors or facilities for the feeding out of the pigs to market
weight. All of the hogs produced by the farmer pursuant to
the production agreements would either be fed out for sale to
slaughter by the corporation or would be transferred as
breeding stock to other facilities with which the corporation
has a production agreement. The production contracts would
contain a prohibition against entry of any hogs into the
farmer's facility except hogs furnished by the corporation.
Because of the great degree of specialization and technical
nature of this business, contracts would detail specific
requirements to protect the health and breeding of the hogs as
well as specific records to be maintained with respect to hog
production, health and the like.
Your question is whether the facts stated above come within
subsection (b) of K.S.A. 1991 Supp. 17-5904. Generally, the
corporate farming act, K.S.A. 17-5902 et seq., prohibits
certain corporations from directly or indirectly, owning,
acquiring or otherwise obtaining or leasing agricultural land
in this state. K.S.A. 1991 Supp. 17-5904. With one exception
found at K.S.A. 17-5905 (where pork processors are involved),
the 1988 legislature excepted production contracts from this
prohibition. L. 1988, ch. 99, sec. 56. Subsection (b),
dealing with production contracts, states:
"(b) Except as provided for in K.S.A.
17-5905, and amendments thereto,
production contracts entered into by a
corporation, trust, limited liability
company, limited partnership or corporate

partnership and a person engaged in
farming for the production of agricultural
products shall not be construed to mean
the ownership, acquisition, obtainment
or lease, either directly or indirectly,
of any agricultural land in this state."
The statute dictates that production contracts, as specified,
shall not be construed to mean ownership in land. Thus at
issue is whether the facts indicate that the corporation is
contracting with a person "engaged in farming for the
production of agricultural products." The questions of how
farming is defined in this act and whether the production of
hogs is the production of livestock have been addressed in
Attorney General Opinion No. 91-133. The analysis that finds
that the production of hogs is the production of livestock is
hereby incorporated by reference. A person engaged in the
production of hogs is engaged in producing livestock and thus
the facts meet the first requisite "engaged in farming."
The next requisite is that the farming must be "for the
production of agricultural products." We must determine_
whether this requirement necessitates that the farmer with
whom the corporation contracts, be engaged in the production
of the agricultural product that is the subject of the
contract, thereby having a significant tie to the land being
used by the corporation. In other words, for purposes of this
exemption does the farmer have to be engaged in producing hogs
and not just engaged in farming generally. The following
rules of construction aid our analysis: where the
interpretation of a statute is a question of law, the statute
must be interpreted to give it the effect intended by the
legislature, State, ex rel., v. Unified School District, 218
Kan. 47 (1975); when the intent can be ascertained from the
statute, that intent of the legislature governs, Szobozlay
v. Glessner, 233 Kan. 475 (1984); words in common usage are
to be given their ordinary meaning in arriving at a proper
construction of the statute, Stephens v. Van Arsale, 227
Kan. 676 (1980); when a statute is susceptible to more than
one construction, it must be construed to give expression to
the legislature's intent and purpose, though such construction
is not within the strict literal interpretation of the
statute, In re Birdsong, 216 Kan. 297 (1975).
If the legislature intended for subsection (b) to apply
whenever a corporation contracts with a farmer who is not
involved in the production that is the subject of the

contract, then first the legislature would not have needed
to define the farmer as one engaged in the production of the
agricultural products and more critically, the argument
contravenes the intent and purpose of the prohibition, that by
not owning agriculturual land corporations will not engage
in farming. See K.S.A. 1991 Supp. 17-5904 subsection
(a)(3), specifically,and generally (a)(2), (a)(4), (a)(6),
(a)(9). Taken to its logical conclusion this argument would
allow a corporation to in effect contract with a farmer for
the use of a farmer's land. In our judgment, this conclusion
clearly contradicts the intent and purpose of the act.
Under the facts presented the farmer will be involved in a
farrow to finish operation. Both the farrowing operation that
involves giving birth to litters of piglets and the nursery
operation that involves weaning and raising the pigs are the
production of livestock. While it is questionable whether the
finishing operation is the production of livestock see
T-Bone Feeders, Inc. v. Martin, 236 Kan. 632, 648
(distinguishing a feedlot from farming in definitions found
at K.S.A. 17-5903), added to the other two operations the
farmer is engaged in producing livestock and thus is engaged
in producing what is the subject of the production contract in
question.
In conclusion it is our opinion that K.S.A. 1991 Supp.
17-5904(b), which exempts certain production contracts from
the prohibition against corporate ownership of farmland,
requires that the farmer be engaged in the production of the
agricultural product that is the subject of the production
contract with the corporation. The facts stated herein come
within this exemption.
Very truly yours,
ROBERT T. STEPHAN
Attorney General of Kansas
Guen Easley
Assistant Attorney General
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