Before the adoption of Revised Article 9, agricultural liens were subject to a variety of rules regarding their creation and enforcement under a myriad of state laws and court decisions. The revision brings more uniformity to the law of agricultural liens, making them subject to the perfection and enforcement rules of Article 9, the same as security interests for many purposes, but not all. State law must still be consulted to determine when an agricultural lien exists and what assets are covered by the lien. This Commentary discusses how Article 9 affects the law on the creation, perfection, priorities, and enforcement of agricultural liens.
Professor Nehf writes: Laws governing the creation and enforcement of agricultural liens in most states are centuries old and vary widely. A task force of the American Bar Association reported that the number of agricultural lien statutes in farming states can exceed a dozen, and can cover subjects ranging from the outdated thresher’s and livery liens to the more relevant seed/fertilizer supplier and veterinarian’s liens. The report noted that the rules for creating and enforcing agricultural liens were often difficult to find and could differ greatly even in the same state.
The 2000 revision of Article 9 sought to bring more uniformity to the law of agricultural liens, but it was only partially successful in this regard. Article 9 applies to agricultural liens generally. U.C.C. § 9-109(a)(2). Article 9 does not, however, change the way in which agricultural liens are created. Determining whether an agricultural lien attaches, and the extent of its coverage, is still determined by the myriad of state statutes addressing the subject. Thus, agricultural liens are not treated the same as security interests for all purposes. For instance, while a security interest automatically attaches to identifiable proceed of the collateral, it does not attach to proceeds of an agricultural lien unless the lien statute so provides. U.C.C. § 9-315(a). The situation is improved, however, because Article 9 sets forth the rules for perfection, priorities and enforcement of the liens.
For purposes of Article 9, “agricultural lien” is defined to include an interest in farm products that secures payment or performance of an obligation (1) for goods or services provided in the ordinary course of business to a person engaged in farming operations, or (2) for rent provided to a person leasing the land for farming operations. U.C.C. § 9-102(a)(5). The lien must be created by a statute and it must not require possession of the goods for the lien to arise. This definition is broad enough to cover most interests that are generally regarded as agricultural liens under state law. [footnote omitted]