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If you have been thinking of getting into the agricultural industry and starting your own agribusiness, then it’s important to understand your legal obligations before taking the leap.
Like starting any small business, there are a number of legal considerations to take into account before setting up an agribusiness. It’s a priority to make sure you know them well, so you can be equipped to make the best decisions possible for your business. Let’s get started!
What Is An Agriculture Business?
An agriculture business or an agribusiness is the farming, cultivating, rearing or managing of livestock and crops. Agriculture produces the food we consume and many of the raw materials that are essential to society, such as sugar and wood.
Why Should I Start An Agribusiness?
Agriculture is one of Australia’s most important sectors.
In 2021, the Australian government invested $72.7 million into agribusinesses. The investment recognised the continued importance of the agriculture industry and rightfully so.
The agricultural industry not only cultivates the most important products for survival, but it also plays a crucial role in Australia’s climate future.
If you’re thinking about starting an agribusiness, you will be part of an essential industry.
How To Set Up An Agribusiness
Having your own agribusiness to manage is exciting, however, it’s really important to get started the right way. Let’s go through some essential steps for setting up your agribusiness.
Register Your Agribusiness
First, it’s important to register your agribusiness. All businesses need to be registered and get an Australian Business Number (ABN) – this first official step can be done online. The ABN is an 11 digit number that is used to identify your business on most official documentation, so you want to get this done early on.
If you set up your agribusiness under a company structure, you’ll also need to get an Australian Company Number (ACN).
Get Funding For Your Agribusiness
You’ll need to think about how you will fund your business. After all, you need money to carry out your business activities.
Depending on the kind of agribusiness you will be starting, your set up costs may be more than the average costs when factoring in additional matters such as equipment, training or hiring staff. You might think about raising capital, getting grants, taking out loans or using your own personal finances.
Whichever way you decide to fund your business, it’s important to have a clear plan for your expenditures. Many businesses incorporate this aspect of their business venture in their business plan, so that goals are clear from the outset (you may also wish to have a Business Plan Non-Disclosure Agreement if you are sharing your business plan with investors or other external parties).
What Licence Do I Need?
Agriculture is a pretty regulated area, so you may require a licence to carry out certain activities. The type of licence you will require will depend on your specific operations.
Chemical licences, land use permits, council approvals, water licences are some that you may wish to look into. These licences can also vary based on your locality, so it’s worth reading up on any requirements and getting the licences you need before conducting business.
Plan Your Agribusiness
The agribusiness industry is rather broad. There are many various jobs and sectors within the industry your business can specialise in. It’s important to take the time to plan out your business, assess the market and competition as well as consider how you will run your business.
It’s common for entrepreneurs to create a business plan where they keep all these matters and more. It’s good to have it all in the one place and can really help keep things on track!
Legal Documents For Your Agribusiness
This may not be the most exciting part of running a business, but it is one of the most important. Having the correct legal documentation can help protect your business so you can focus on tending to everything else.
Let’s go through the key legal documents you need.
Employment Contracts
Hiring people with the right skills can be integral to growing your business, however, it’s extremely important to have a firm foundation for your working relationship with any employees.
An Employment Contract can ensure both you and your employees are well aware of the terms of their employment. These agreements can be catered to fit your needs and usually cover matters like pay, entitlements, leave, working hours, work days, dispute resolution, termination and a description of the role.
It should also be consistent with the National Employment Standards or the modern award that applies to your workers.
Supply Agreements
Needing certain materials to run your business means you are likely to hire a supplier to provide them for you. Having a trusted supplier can help in making sure business operations run smoothly. This is where a Supply Agreement is useful.
A Supply Agreement is a contract between you and your supplier covering what products will be supplied, their delivery times, payment, warranties, termination and anything else that is important. In case of any disputes or misunderstandings, it’s always better to have a written agreement in place.
Supply Agreements are particularly important if you’re working with overseas suppliers, so be sure to consult a lawyer before drafting one.
Non-Disclosure Agreements
Privacy and confidentiality are essential for all businesses as this can help with managing any competition and keeping information secure. In order to secure your privacy, look into getting Non-Disclosure Agreements (NDAs).
The agreement legally binds the signing party to keep certain private information to themselves. For example, before showing a potential investor your business plan, you might get them to sign a Business Plan Non-Disclosure Agreement so they don’t reveal the content of the business plan to anyone outside of the business.
Business Terms and Conditions
Terms and conditions let others know the terms for using your business. In other words, users need to agree to the terms you’ve set out before they can further engage with your business.
This is a good way for you to regulate what goes on and how users interact with your business.
As a business owner, it’s good to have the right kind of control so you can protect your customers, employees and even minimise your business’ liabilities.
Protect Your Agribusiness’ IP
Intellectual property (IP) is one of the main aspects of almost any business. IP refers to the intangible assets of your business, such as its logo or signature scent. These are important for a business’ brand and visibility.
Protecting your IP can help keep your business secure in many ways. IP Australia is the primary government body for IP – trade marks, patents and plant breeders’ rights can be registered here. This means that you have exclusive ownership of that IP under the law and no one else can use it.
Other forms of intellectual property (such as trade secrets and copyright materials) don’t need to be registered, but instead, they can be secured through the right legal documents, such as a Non-Disclosure Clauses. It’s necessary to identify your intellectual property and take steps to secure it.
Do I Need Insurance?
Most types of insurance are optional, however, business owners often choose to have coverage regardless. This way, if something goes wrong, they have a safety net.
In some circumstances, insurance will be compulsory. In NSW, if you hire staff, then you will need to get workers compensation insurance.
Other types of insurance will depend on your business activities and the risks associated with it. For example, you may wish to get public liability insurance, product liability insurance or employers liability insurance if you have staff engaging in labour intensive work that can lead to injuries.
It’s advisable to look at the areas in which you’d have higher levels of risk and assess potential insurance policies from there.
How Does Liability Work?
Liability is the legal responsibility you will have towards others as the owner of a business to ensure their safety.
As a result, you must take reasonable measures to ensure others are not caused harm by your business practices. If you fail in your duty of care towards them, then you can be considered liable and will likely need to pay damages.
To avoid this, many businesses insert limitation of liability clauses in their business agreements.
Running An International Agribusiness
You might be considering opening your agribusinesses to the international market. This is great news, but first, you must be legally compliant to prevent your business from running into trouble.
For example, you may need a Privacy Policy that meets the requirements of the overseas regions you plan to operate in. If your agribusiness will be conducting business activities in the EU, the General Data Protection Regulation (GDPR) will apply to you.
Also consider customs regulations, additional taxes, fees, tariffs, shipping requirements and internationally enforceable contracts.
Operating outside of Australia demands some additional considerations – be sure to prepare for them before doing so.
What Are My Employer Obligations In Agribusiness?
Agribusinesses are rarely done alone, as most of it involves work that needs multiple pairs of hands. As a result, you may look to hire staff sometime in the future.
Having staff on board can be an effective way to be more productive, however, it also comes with responsibilities to your staff in the workplace. This means making sure your staff are receiving the correct standard of wages, days off, breaks and working conditions (these apply whether your employees are on physical premises or working remotely!).
Furthermore, you need to provide an environment that is safe for your employees’ physical and mental wellbeing. This is commonly known as workplace health and safety.
It’s wise to become familiar with Safe Work Australia and Fair Work Australia to meet your employer obligations under Work Health and Safety laws.
Agtech Startups In Australia
The agricultural industry is growing and expanding its reach into the tech industry, with agtech startups gaining more traction with time.
As the name suggests, agtech is the combination of technology and agriculture to create products that allow farmers to utilise technology in their practices.
For example, some companies have created products that allow farmers to keep track of their crops, data, grains, payments and paddocks.
It’s not necessary that every agribusiness is centred on working in the fields – technology plays an important role in agriculture.
If this sounds like your business, you’ll need to think carefully about technology-related legal matters. For example, if you use an app, you’ll need to have well-drafted App Terms and Conditions.
If you’re hiring developers to build software for you, you’ll need to capture the details of your arrangement in a Software Development Agreement.
Here at Sprintlaw, we can help with getting the right legal documentation to get your agtech startup off to a good start. .
Need Agribusiness Lawyers?
Starting an agribusiness or an agtech endeavour can be a rewarding experience. It’s crucial to take the right steps and be legally compliant from the beginning to give your business a good start.
To summarise what we’ve discussed:
- An agriculture business involves working with livestock and crops, mainly to produce food and materials
- Agribusinesses are a major part of the Australian economy and can be a worthwhile venture
- In order to get started, make a business plan, get funding and register your business
- You should also look into get the right legal documentation to protect your agribusiness
- If you hire staff, become familiar with your employer obligations
- Agtech is a growing aspect of the agriculture business
Thankfully, we have a team of experienced business lawyers at Sprintlaw who can help you out.
If you would like a consultation on agribusiness, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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