Food Security Act Farm Products Lien Rule — Clear Title for Buyers of Encumbered Farm Products

Section 1324 of the Food Security Act of 1985 (7 U.S.C. § 1631) resolved a fundamental problem in agricultural lending: prior to its enactment, buyers of farm products — grain dealers purchasing corn from a farmer, livestock auction markets buying cattle, commission merchants handling soybeans — could unknowingly purchase crops or animals that had already been pledged as collateral to a lender. Under the general rule of Article 9 of the Uniform Commercial Code (UCC), buyers of goods subject to a perfected security interest took those goods subject to the creditor's lien — even if the buyer had no knowledge of the lien and paid fair value. For farm commodities, where buyers routinely purchase at high volume from hundreds of sellers, this created an intolerable risk: a lender could claim the crops the buyer already processed and sold, seeking the loan proceeds from the buyer rather than the defaulting farmer. The Food Security Act overrode this UCC rule for farm products by creating a federally preemptive system that either gives buyers constructive notice of liens (through state central filing systems) or gives buyers clear title (in states without certified systems). The Agricultural Marketing Service implements the system's certification and format requirements at 9 CFR Part 205.

Legal Authority

• 7 U.S.C. § 1631 — Food Security Act of 1985, § 1324: federally preempts the UCC Article 9 general rule that buyers of farm products take subject to perfected security interests; establishes two alternative systems for states — certified central filing systems (giving buyers constructive notice) or automatic clear title for buyers in non-certified states who lack notice
• 9 CFR Part 205 — USDA AMS regulations implementing the FSA lien rule: establishes standards for state central filing system (CFS) certification, required content for financing statements and lien notices, the direct notice process, and state recertification procedures

Key Mechanics

The Food Security Act of 1985 resolved the "farm products exception" to UCC Article 9 — under which buyers of corn, cattle, or soybeans from a farmer could inadvertently acquire encumbered goods and be held liable to the lender. The Act creates two paths to buyer protection. In certified states (those with USDA-approved central filing systems), lenders perfect liens against farm products by filing with the state CFS, and buyers who do not search the CFS take subject to the lien; buyers who search and find no filing get clear title. In non-certified states, buyers automatically receive protection from liens they did not have prior written notice of — meaning lenders must separately notify each buyer (grain dealer, livestock market, commission merchant) in writing, or those buyers take free of the lien regardless of UCC filing. USDA AMS certifies state CFS systems and establishes minimum standards for the financing statements they must process, ensuring the system gives lenders reliable statewide lien priority while giving buyers a workable constructive notice mechanism.

Current Rule (2026)

What This Rule Does

The Food Security Act's § 1324 (7 U.S.C. § 1631) created two parallel pathways for buyers of farm products, depending on whether their state has established a certified central filing system (CFS):

If the state has a certified CFS: A lender who wants to protect its security interest in farm products against buyers must file an effective financing statement (EFS) with the CFS system operator — typically the Secretary of State or a designee. The CFS operator compiles a master list of all EFS filings, organized by farm product type and county. Buyers, commission merchants, and selling agents can register with the CFS operator and receive the master list (or the relevant portion) for the products and counties they deal in. A registered buyer who receives the master list and purchases from a listed debtor takes the goods subject to the lender's security interest — they have constructive notice. A buyer who is not registered but checks the master list before purchasing and finds a listed debtor is similarly on notice. But a buyer who either has no notice or purchases from a debtor not on the master list takes the farm products free and clear of the lender's security interest — clear title. The federal law preempts state UCC rules that would otherwise require buyers to search for UCC financing statements individually.

If the state does not have a certified CFS: Buyers in non-CFS states take farm products free and clear of any security interest created by the seller, even if a UCC financing statement was filed, unless the buyer (a) receives written notice from the lender before the purchase, (b) has signed a written notice (consent), or (c) has received official notice through the CFS if the state later establishes one. This is a significant departure from general UCC Article 9 — it means lenders in non-CFS states effectively cannot protect their security interests against buyers without giving individual written notice to each buyer before each sale.

AMS's role (9 CFR Part 205): AMS does not administer the CFS systems — those are state programs. AMS's regulation establishes the minimum content and format standards that state CFS systems must meet to qualify for federal certification, and the process by which states apply for and maintain certification. AMS certifies CFS systems; certified systems get the federal preemption benefit (registered buyers have constructive notice; others get clear title). Non-certified state systems receive no federal preemption.

Key Provisions

• § 205.101 — Certification of state CFS systems: a state seeking certification must submit a written request to AMS with documentation showing its CFS meets all the requirements of 7 U.S.C. § 1631(c); AMS reviews for compliance with EFS format, master list requirements, distribution procedures, and buyer registration requirements; certified systems are listed in the Federal Register; AMS may decertify a system that fails to maintain compliance

• § 205.102 — EFS name format: the name of the person subjecting farm products to a security interest (the debtor/farmer) must appear on the EFS and on the master list in a standardized format — the debtor's full name as it appears on official identification, to permit accurate searching; inconsistent name formats that would cause an EFS to be missed in a search defeat the notice purpose of the system

• § 205.103 — EFS minimum information: an effective financing statement must contain at minimum: (1) the debtor's name and address; (2) the secured party's name and address; (3) each farm product subject to the security interest; (4) the amount of product subject to the security interest in each county or parish; (5) a description of the farm product (e.g., "corn," "feeder cattle," "soybeans") including the crop year; (6) the county or counties where the product is produced or located. Without all required information, the EFS cannot appear properly on the master list, and lenders risk loss of priority against buyers

• § 205.104 — Buyer/merchant/agent registration minimum information: to receive the master list, a buyer, commission merchant, or selling agent must register with the CFS operator providing: name and address; which farm products and counties of interest; signature of an authorized representative. Registration creates the constructive notice relationship — once registered, the buyer is deemed to have notice of all EFS entries on any master list portion distributed to them, even if they did not actually read it

• § 205.105 — Master list format: the master list must be organized by farm product type first (e.g., all corn entries together), then by county within each product, then alphabetically by debtor name within each county; the specific organization allows buyers handling particular crops in particular areas to quickly identify relevant EFS filings without searching an undifferentiated list of all agricultural security interests in the state

• § 205.106 — Farm products covered: AMS defines which products count as "farm products" subject to the § 1324 system, based on the statutory definition in 7 U.S.C. § 1631(a)(4) — crops, livestock, supplies used or produced in farming operations, and products of crops or livestock in their unmanufactured state. The regulation lists specific commodities and provides guidance on edge cases; the "unmanufactured" limitation is significant — once farm products are processed (grain milled into flour, cattle processed into beef), they become ordinary goods subject to normal UCC rules, not the special farm products notice system

• § 205.201 — System operator identity: the state CFS system operator may be the Secretary of State or any designee under state law; many states use the Secretary of State's office (which already administers UCC filings); some states have designated agricultural agencies or private contractors; the system operator is responsible for receiving EFS filings, compiling the master list, distributing to registrants, and maintaining the system's accuracy and timeliness

• § 205.202 — Effective financing statement distinguished from UCC financing statement: an EFS under § 1324 is distinct from a standard UCC-1 financing statement; while both may be filed in the same state office, only an EFS creates the constructive notice rights under federal law for farm product buyers; lenders who file only a UCC-1 (without also filing an EFS with the CFS) do not get the federal preemption benefit — their security interest may be defeated by buyers who take without notice under the state's clear-title rule

• § 205.209 — Amendment and continuation of EFS: EFS filings must be amended to reflect material changes in the security agreement (different crop year, different county, different quantity); lenders must file continuation statements to keep EFS filings active beyond the initial term; a lapsed EFS effectively loses its priority against buyers — even buyers who previously received notice of the original EFS are entitled to clear title once the EFS expires without renewal

• § 205.211 — UCC court decisions applicable: AMS guidance states that courts interpreting the UCC's "farm products" definition and related terms are a useful interpretive source, but the federal statute controls in case of conflict; the scope of what constitutes a "farm product" for purposes of § 1324 is a federal question, not purely a state law question

• § 205.214 — Litigation and federal supremacy: compliance with § 1324's CFS requirements is a matter of federal law; litigation over whether a state's system is operating in compliance with federal requirements is subject to federal court jurisdiction; this provision ensures that disputes about system certification or EFS compliance are not purely resolved under state law

How It Affects You

If you are a grain elevator, livestock dealer, commission merchant, or selling agent: in states with certified CFS systems, register with the state system operator for the products and counties you deal in. Registration is typically low-cost or free. Once registered, you receive the master list (usually electronically), and you can check EFS filings before purchasing from a farmer. Checking the master list before a major purchase protects you from paying a farmer for crops that are already pledged to a bank — the lender could otherwise claim the proceeds from you. In states without certified CFS systems, buyers take free and clear of security interests unless they receive written notice from the lender before the sale.

If you are an agricultural lender: in certified-CFS states, file an EFS (not just a UCC-1 financing statement) with the state CFS operator for each crop and county where your borrower is producing pledged commodities. The EFS must be in the statutory format with all required information. Keep your EFS filings current across crop years — a lapsed EFS means buyers can purchase pledged crops without taking subject to your lien. Monitor the crop-year specific information carefully: an EFS for the 2024 corn crop does not automatically cover the 2025 corn crop. In non-CFS states, send written notice to every buyer your borrower might sell to before each sale — a significant operational burden that is why many states have chosen to establish CFS systems.

If you are a state agricultural or securities regulator: 9 CFR Part 205 sets the federal minimum standards your state's CFS must meet to receive AMS certification. The key requirements are EFS format compliance, master list organization by product and county, distribution to registered buyers, and timely updating. A lapse in certification means your state's lenders cannot rely on the constructive notice system — buyers in your state get free and clear title regardless of EFS filings, devastating to agricultural lenders who have loans secured by crops in your state.

Statutory Authority

This rule implements:

• 7 U.S.C. § 1631 (Food Security Act of 1985, § 1324) — the core statute that overrides UCC Article 9's general rule for farm products; establishes the two-tier system (CFS states vs. non-CFS states); defines who takes free and clear and who takes subject to a security interest; delegates to USDA the authority to certify state CFS systems and establish format requirements; preempts inconsistent state laws

Recent Rulemakings

• 71 FR 56343 (September 25, 2006) — technical corrections to 9 CFR Part 205; updated references and clarified certain format requirements; no substantive policy changes.
• 51 FR 29451 (August 14, 1986) — original final rule implementing § 1324 shortly after the Food Security Act of 1985 was enacted; established the foundational EFS and master list requirements.

Since the 1986 original rulemaking and 2006 technical corrections, 9 CFR Part 205 has been stable. State CFS systems have been developed, certified, and in some cases modified over the decades, but the federal format requirements have remained structurally unchanged. Most agricultural commodity-producing states now have certified CFS systems — the map of certified vs. non-certified states has shifted over time as states responded to the incentives created by the federal law.

Pending Action