range of legal matters, including contract drafting and negotiation, technology transfer, business organizations, agriculture and alternate energy supply. This article was written with the assistance of Ashley Trotto, a 2013 graduate of The University of Tennessee College of Law. Part I of the article was published in the Winter 2013 edition of this publication, which is available at primerus.com. 550 Main Street, Fourth Floor Knoxville, Tennessee 37902 865.546.7311 Phone 865.524.1773 Fax wemason@kmfpc.com bbrent@kmfpc.com www.kmfpc.com and biorefinery business formation are to the future of the biofuels industry, success is also wholly dependent on enormous quantities of biomass being produced by America's farmers. The purpose of this article is to further thinking and discussion on the essential terms of biomass supply arrangements among all parties farmers, biorefinery owners, seed suppliers, feedstock supply companies, bankers, lawyers and public officials. Many interests must be balanced: be competitive and fair to farmers in the short- and long-term to attract the required quantities and quality of switchgrass, miscanthus, sorghum, agricultural residues and other energy crops. dependent on reliable and uniform feedstock, and supply arrangements the life of the facility. biomass conversion project financing demand assurance of feedstock supply for the life of the project, and agricultural contract arrangements must provide confidence in the availability of feedstock for the long- term. and introduces uncontrollable variables into all parties' contract expectations. Supply contracts will fail unless they: take account of drought, storm or other acts of God; are adapted to realistic agricultural, capital and labor input cycles, as well as requirements for planting, cultivating and harvesting; and fit the particulars of the specified crop. include agreements between farmers and those that purchase or market the farmers' crops, agreements between concerning land use. Two common forms of agricultural contracts, elements of each, common contractual clauses, and state statute considerations are summarized below. Contracts by which farmers and purchasers work together to accomplish their respective goals. To meet these goals, a cooperative may enter into marketing contracts requiring its member-farmers to sell a specified portion of the member's crop or a specified crop produced from identified acreage exclusively to the cooperative. Marketing contracts under a cooperative structure may, in some cases, be limited in duration by state statute. For example, Tennessee mandates that marketing contracts under a cooperative structure may not exceed ten year terms. contract, the member retains title to the crop until delivery, at which point title passes to the cooperative. decisions and assumes production- Energy Crops to the Biofuels Industry: Part II |