Practice/Industry Group Overview
As investor capital increasingly flows toward the agribusiness sector, Sutherland’s interdisciplinary team is there to facilitate complex investments.
Agribusiness has inherent complexities, challenges and regulations, and Sutherland attorneys have the experience to help our clients achieve their investment objectives through all uncertainties. For example, we understand the business implications of permanent planting crops rather than row crop farms. We negotiate all types of special agreements that are critical to the success of an agribusiness investment, such as viticulture contracts and other supply agreements, forward sales and management and leasing agreements. Our depth in this sector allows us to quickly identify solutions for institutional clients and private owners in the United States and around the world.
We are extremely efficient when our clients need fast work, particularly when it involves title and survey due diligence for a single transaction involving numerous tracts or parcels across different states and regions. We are plugged in to the varied state and federal regulations that impact agribusiness ventures.
Sutherland closely follows the best management practices issued by the state departments of natural resources. We monitor proposed and final regulations adopted by the EPA; proposed and final regulations issued by the Army Corps of Engineers, especially with regard to wetlands; and proposed and final updates to regulations under the Endangered Species Act.
Global reach. When clients look to expand their investments, we help identify the right opportunities, whether they are in the next state or around the world. We advise clients with respect to agribusiness investments in South America, Latin America, Canada and Australia.
Full-service. Our agribusiness practice brings together attorneys who specialize in real estate, finance, corporate, tax and environmental law to address all the issues clients face.
Business sense. We understand the business implications of adopting a proper legal framework for an investment fund. We base our recommendations on our clients’ objectives and the characteristics of the proposed fund.
Up-to-date. While our experience in agribusiness dates back to the 1930s, we are attuned to emerging issues and can respond quickly.
Creative solutions. An essential part of our approach to agribusiness transactions is obtaining the most favorable tax treatment for the investment fund. We find creative solutions to ensure that our clients receive the tax benefits to which they are entitled.
Reach to oversee major deals. We handle large portfolio acquisitions and assemblies by institutional investors that involve multiple farmlands in many states and around the globe.
Nuts and Bolts
Sutherland provides comprehensive agribusiness services to clients, including:
- Foreign experience
- As timber and agribusiness investors have expanded their investment horizons, we regularly assist clients with investments in Central and South America.
- Tax work
- Agribusiness entails unusual tax implications and opportunities, and our tax attorneys help clients understand local, state, federal and international tax laws.
- Environmental issues
- We are very sensitive to environmental laws and regulations that have a substantial impact on farming and agribusiness operations, particularly with respect to storm water runoff and "point sources" of water pollution under the Clean Water Act and the EPA regulations governing nutrient management and fertilizer use, including the new numeric nutrient water quality criteria adopted by the EPA on a regional basis.
- Contracts and supply agreements
- We are familiar with virtually all classes of supply and forward sales agreements pertaining to permanent plantings, including viticulture, citrus, apples, dates, various nuts and other permanent crops.
- Planning for exempt investors
- In the early 1980s, we secured the first of what have become a series of private letter rulings from the Internal Revenue Service which recognize that dispositions of timber by an exempt organization, or by a partnership composed of exempt organizations, pursuant to a cutting agreement in which the timber owner has a retained economic interest, does not produce unrelated business taxable income to the selling exempt organization. The initial rulings, which were limited to dispositions of timber where the owner met the holding period for capital gains, was an essential step in paving the way for widespread timber investments by pension funds, university endowments and other such organizations.
- In 2001, we obtained for a major university the first ruling issued by the Internal Revenue Service confirming our opinion that dispositions of timber held for less than one year do not generate unrelated business taxable income (UBTI) where the exempt owner has a retained economic interest.
- Pass-through vehicles
- We devise acceptable pass-through vehicles which provide the benefit of capital gains treatment to the investor without burdening the investment with a corporate level tax. These vehicles may be either private or publicly traded. In 1999, we obtained the first private letter ruling from the Internal Revenue Service which confirmed our analysis that timber properties are appropriate assets for a real estate investment trust (REIT), and that regular dispositions of standing timber produce qualifying REIT income.
When clients seek to maximize their agribusiness investments, they turn to Sutherland attorneys to identify strategies to meet their objectives while overcoming anticipated challenges.
Sutherland works with insurance company to acquire agricultural portfolios.
We represented an insurance company in acquiring agricultural portfolios in a series of transactions to purchase close to 150 properties, consisting of both row crops and permanent plantings. The total capital commitment was approximately $400 million.
Sutherland advises public employee pension plan on assembling more than 50 agricultural properties.
We advised a public employee pension plan in assembling nearly 55 agribusiness properties, divided approximately equally between row crops and permanent plantings. We also represented the client in negotiating and documenting an investment management agreement with a nationally known natural resources management company.
Sutherland assists client to form international joint venture with agricultural properties in five countries.
We represented a large insurance company in forming an international joint venture to acquire properties in the United States, Canada, Australia, Brazil and Argentina. Subsequently, the venture was converted into an international agribusiness investment fund.