Also known as: farm products · agricultural product
Written by attorneys · grounded in primary & secondary sources — see below
Goods, other than standing timber, with respect to which the debtor is engaged in a farming operation and which are crops grown, growing, or to be grown, livestock born or unborn, supplies used or produced in a farming operation, or products of crops or livestock in their unmanufactured states.
Francois Fortier purchased hogs from a farmer who had granted Fidelity Trust a security interest in all livestock. Fortier bought the animals in the ordinary course of his business and knew of the financing statement. Because the hogs qualified as farm products, Fortier took the animals subject to the security interest even though he paid value.
Atlantic Garage planted soybeans on land next to its factory using specialized agricultural equipment. The company cultivated the crop solely to test bio-based materials for its vehicles. Because Atlantic Garage engaged in a farming operation with respect to the growing soybeans, the crop met the definition of farm products rather than inventory or equipment.
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Kenneth stored irrigation pumps and drip-line kits in a warehouse for sale to neighboring farmers and for installation under service contracts. The items were not used in Kenneth's own farming operation. Because the pumps and kits were held for sale rather than produced in a farming operation, they qualified as inventory and not farm products.
Farm products are goods produced or used in a farming operation. Inventory consists of goods held for sale or lease that are not farm products. The categories are mutually exclusive, so goods grown or raised by a debtor engaged in farming operations are classified as farm products even if the debtor's primary business is manufacturing.
Supporting sources
No. UCC § 9-320(a) expressly excludes a person buying farm products from a person engaged in farming operations from the protection that allows a buyer in ordinary course to take free of a security interest created by the seller.
Supporting sources
Yes. Article 9 expressly applies to agricultural liens, which are nonpossessory statutory interests in farm products securing payment for goods or services supplied to a farming operation.
Supporting sources