A herdshare is a contractual arrangement between a farmer and an owner of livestock - the shareholder or member - through which the shareholder is able to obtain raw milk, meat, offal and other profits of the livestock proportionate to the shareholder's interest in the herd. Herdshares include cowshares, goatshares, and sheepshares, and are sometime referred to as "farmshares" or "dairy-shares," although the term "farmshare" can also refer to an entire farm (buildings, land, equipment, etc.) held in joint ownership.
A herdshare enables consumers to obtain raw (unpasteurized) milk in a jurisdiction that may otherwise prohibit the sale of raw milk. Parties may also choose to enter into herdshare agreements even in jurisdictions that do permit some type of raw milk sale because a herdshare may provide a more economically secure business model for a dairy farmer than conventional dairy farming otherwise would provide for.
Terms of the herdshare agreement Under the terms of a herdshare agreement, the shareholder purchases a share of a dairy farmer's herd and receives a portion of either the product or the profit of the herd proportionate to the shareholder's corresponding interest. Unlike a direct sale of raw milk for consideration, a shareholder pays a one-time fee in exchange for her undivided interest in the herd. This is the purchase agreement or the bill of sale. In addition to the bill of sale, the shareholder pays a monthly boarding fee (or "agistment fee") that covers the farmer's cost for labor and maintenance of the herd.
For example, if the farmer has one cow valued at $800, the shareholder may purchase a 1/25 undivided interest in the herd (or here, a single cow) for $32.00. The parties would execute a bill of sale transferring a 1/25 ownership stake in the cow from the farmer to the shareholder in exchange for $32.00. If the cow produces 30 gallons of milk per week, the shareholder may choose to receive up to 1 and a 1/5 gallons of milk per week (30 gallons of milk divided by 25 possible shares). If the cow is slaughtered, then the shareholder may also be entitled to 1/25 of the meat or the value of the meat. If the cow is shown at a competition and wins a prize, the shareholder may choose to receive up to 1/25 of the value of that award.
In addition to both the bill of sale and the boarding fee, the herdshare agreement may include terms for a trial period, collection and storage of the milk, care of the herd, maintenance of the farm, liability, default, and risk of loss. Terms for the boarding, care of the herd, and handling of the milk may be separate documents.
History of herdshares
Agistment Advocates of herdshare arrangements argue that herdsharing is rooted in the common law tradition of agistment. Agistment is "a type of bailment in which a person, for a fee, allows animals to graze on his or her pasture."Black’s Law Dictionary (9th ed. 2009). References to agistment in England can be traced as far back as 1305.Sir Simon Degge, The Parson's Counsellor: With The Law of Tythes and Thything 247 (1703). Agistment is still practiced in the countries that make up the Commonwealth of Nations and in the western United States primarily for the grazing of beef cattle (and sometimes sheep).
Herdshare advocates maintain that the dairy farmer operating a herdshare is merely an "agister" who holds the cows in bailment for the cow's owners, the shareholders. However, some courts in the United States reject this interpretation of the herdshare agreement refusing to find that the shareholder has a legitimate claim to ownership in the herd; rather, those courts have found that the shareholder merely has a claim to the milk produced by the herd and that as such the agreement constitutes an unlawful exchange of consideration for raw milk.See Slippy v. Northey
In the United States The Weston A. Price Foundation, an organization that encourages raw milk consumption and advocates for increased consumer access to raw milk, claims that the first example of an arrangement bearing some similarity to a herdshare occurred in 1627 when Captain Myles Standish of the Plymouth Colony purchased a 1/6 share of a "red cow."
The first herdshare began in the United States in 1995 in Loveland, Colorado at Guidestone CSA Farm and Center for Sustainable Living. In 2013, the Weston A. Price Foundation listed 365 herdshares operating in 31 states.
State No. of Herdshares Notes State No. of Herdshares Notes Alabama 2 No law for or against it Montana 0 Sale prohibited Alaska 6 Herdshares tolerated Nebraska 0 On farm sales permitted Arizona 1 Retail sale permitted Nevada 1 Sale prohibited Arkansas 1 Limited on farm sales permitted New Hampshire 3 Retail sale permitted California 6 Retail sale permitted New Jersey 1 Sale prohibited Colorado 35 Herdshares permitted New Mexico 2 Retail sale permitted Connecticut 0 Retail sale permitted New York 2 On farm sale permitted Delaware 0 Sale prohibited North Carolina 0 Sale restricted to pet food Florida 0 Herdshares prohibited North Dakota 2 Herdshares permitted Georgia 2 Sale prohibited (pet food exception) Ohio 25 Retail sale prohibited; herdshares tolerated Hawaii 0 Sales prohibited Oklahoma 0 On farm sales permitted Idaho 1 Herdshares permitted Oregon 17 Limited on farms sales permitted Illinois 5 On farm sales permitted Pennsylvania 2 Retail sale permitted Indiana 23 Sale prohibited (herdshares tolerated) Rhode Island 0 Sale prohibited Iowa 0 Sale prohibited South Carolina 0 Retail sale permitted Kansas 2 On farm sale permitted South Dakota 0 On farm sales permitted Kentucky 18 Goat milk available with prescription Tennessee 43 Herdshares permitted Louisiana 0 Herdshares prohibited Texas 13 On farm sales permitted Maine 1 Retail sale permitted Utah 0 On farm sales permitted, but herdshares prohibited Maryland 0 Herdshares prohibited Vermont 2 On farm sales permitted Massachusetts 1 Retail sale permitted Virginia 88 Sale prohibited Michigan 55 Herdshares permitted Washington 1 Retail sale permitted Minnesota 1 On farm sales permitted West Virginia 0 Herdshares prohibited Mississippi 0 Limited on farm sale of goat milk permitted Wisconsin 0 On farm sales permitted Missouri 1 On farm sale permitted Wyoming 3 Herdshares tolerated
Motivation for participating in herdshares Researchers at Michigan State University Department of Large Animal Clinical Studies interviewed 56 individuals all of whom obtained raw milk for personal consumption through a herdshare arrangement. Shareholders drove an average of 24 miles approximately 4 times per month to pick up their raw milk from the farm. Half of the respondents lived in the "country" while the remainder lived in the suburbs or the city. 64% of respondents had a bachelor's degree or higher. 91% of respondents believed that raw milk is healthier than pasteurized milk and nearly 80% disagreed with the claim that drinking raw milk would increase their risk of contracting a foodborne illness. Virtually all respondents had visited the farm where their milk was produced. Respondents drink raw milk for the following reasons:
Reason for consuming raw milk % Taste 83.9% Immune-related disease prevention 60.7% Doesn't feel processed milk is safe 57.1% Supports local farms 85.7% Holistic health benefits 76.8%
Raw milk controversy
Legal status of herdshares in the United States
No jurisdiction in the United States bans either the production or the consumption of raw milk. However, a few states restrict to varying degrees the sale of raw milk. Twelve states in the United States permit herdshare arrangements via legislation, regulation, policy, or court decision:
State: Legal by: Citation: Alaska statute Alaska Administrative Code 32.010(c) Colorado statute Colorado Revised Statutes, 25-5.5-117. Raw milk Connecticut statute Senate Bill 360, 2015 Session Idaho statute Idaho Statutes, Title 37, Ch. 11 - Acquisition of Raw Milk Michigan policy Michigan Department of Agriculture and Rural Development, Policy 1.40 North Dakota statute North Dakota Century Code, Ch. 40-30 Ohio court decision Schmitmeyer vs. Ohio Department of Agriculture, Case No 06-CV-63277 Utah statute Utah Code, Title 4, Ch. 3 Utah Dairy Act Tennessee statute Tennessee State Code, 53-3-119 Use of milk from hoofed mammal for owner's personal consumption or use. Wyoming regulation Wyoming Food Safety Rule, Chapter 3 Food Care, Section 8, Fluid Milk and Milk Products West Virginia statute West Virginia Code, §19-1-7. Shared animal ownership agreement to consume raw milk. Washington statute Washington State Code, 15.36.012
Federal law The federal government of the United States prohibits the interstate sale or transfer of raw milk.
No person shall cause to be delivered into interstate commerce or shall sell, otherwise distribute, or hold for sale or other distribution after shipment in interstate commerce any milk or milk product in final package form for direct human consumption [that has not been pasteurized].21 CFR § 1240.6.
While not expressly prohibiting herdshares, the language "otherwise distribute... in interstate commerce" would appear to bar herdshares from operating across state lines. Indeed, in 2012, the U.S. District Court for the Eastern District of Pennsylvania convicted a dairy farmer for unlawfully entering raw milk into interstate commerce.United States v. Allgyer, 2012 WL 355261 (E.D. Penn, Feb 3, 2012). The farmer claimed to operate a herdshare. The court stated (in dicta) that the herdshare agreement here was merely a subterfuge to create a transaction disguised as a sale of raw milk to consumers. The practical result of the arrangement is that consumers pay money to [the farmer] and receive raw milk, which is transported across state lines and left at a 'drop point.' As such, despite any artful language, the agreement involves the transfer of raw milk for consideration, which constitutes a sale and is lawfully regulated by the FDA.Allgyer, WL 355261 at 4, fn. 15 (2012).
Following this ruling, one noteworthy commentator speculated that the era of the herdshare agreement was nearing its end noting that raw milk activists would do better to pursue legislative rather than judicial strategies.
State laws The regulatory power of the federal government does not currently extend to intrastate raw milk transactions.See Public Citizen v. Heckler, 653 F.Supp. 1229 (1986)(noting that "there is no indication that a rule banning the intrastate sale of raw milk is necessary to effectuate the interstate ban... [I]t is up to the states to decide on such matters of purely local concern.") But at least one commentator has argued that the federal government may have authority to regulate the intrastate sale and transfer of raw milk in light of the Supreme Court's recent Commerce Clause jurisprudence.
46 of 50 states have adopted the Food and Drug Administration's Grade A Pasteurized Milk Ordinance (PMO), a uniform code of guidelines to promote the standardization of milk production. Section 9 of the PMO concerning the sale of raw milk reads in pertinent part:
[O]nly Grade “A” pasteurized, ultra-pasteurized, or aseptically processed and packaged milk and milk products shall be sold to the final consumer, to restaurants, soda fountains, grocery stores or similar establishments.
Several courts have interpreted the word "sale" in the PMO to preclude herdshares on the grounds that a herdshare is little more than an impermissible sale by another name. Nevertheless, herdshares continue to operate in states governed by the PMO.
State statutes Not content to leave regulation of herdshares to either a court or agency interpretation of the PMO, seven states have supplemented the law with more precise language. Nine states currently permit herdshares through statute: Colorado, Connecticut, Idaho, North Carolina, North Dakota, Tennessee, Utah, Tennessee, West Virginia, and Wyoming. Nevada expressly prohibits milk herdshares by statute.