By Teri Moss
County Executive Director,
Chase County FSA Office
Agriculture is definitely the bread and butter at FSA. Agricultural producers have had an exciting year!
We started the year with rising land prices and rising costs. Commodity prices went higher, way higher…….who would have ever believed it……and then crashed and look at them now.
And what about fuel costs? We all pay those bills. Just put those numbers down on paper. What a relief when fuel costs started going down.
Several major storms affected the southern part of Chase County, accounting for some major damages.
Who knows what lies ahead but I do know FSA is charged with providing a large part of that ag safety net that the ag industry relies on. With a new farm bill, we need to be ready and see what wild ride we take next year!
The new farm bill was enacted in 2008, with many of the changes in procedure not being implemented until 2009. The Chase County FSA staff went into overdrive, and completed what is normally a nine-month signup period in only a couple of months.
With all the new programs, the year blew by us once the farm bill passed. It seems our farm programs move two steps forward and one back every week at FSA.
After several meetings on the new disaster programs, Congress passed a technical correction which definitely helped make the program more “farmer friendly,” but then we started over, trying to keep everyone informed of these major changes. It has certainly been a work in progress with many changes occurring.
It is always a challenge when beginning to implement a new farm bill. It will definitely be important for our farmers and ranchers to be aware of these changes, and come in and ask questions.
A brief glimpse of some of the changes in some of the farm programs:
The DCP program is very similar to the past. Signup began on Dec. 22. The DCP program provides payments on farms enrolled for the 2008-2012 crop years. There are two types of DCP payments, direct and counter-cyclical payments. Both are calculated using the base acres and payment yields calculated for the farm.
A few of the changes are as follows:
June 1 is the final date to enroll a farm for that fiscal year. There will no longer be a late sign up fee. If the June 1st deadline is missed the farm will not be enrolled for applicable year.
Direct payments—The advance payment is 22% in 2009-2011and will not be available in 2012. The percentage of payment acres for 2008 and 2012 it remains at 85% of base acres, but changes to 83.3% in 2009, 2010 and 2011.
Counter-cyclical—The advance payment is 40% paid 180 days after beginning of marketing year, except there are no advance CC payments available in 2011 & 2012.
Cash Lease/ Share Lease Combination—For 2009 through 2012, a lease that provides for the greater of the guaranteed amount or share of the crop or crop proceeds, shall be considered a cash lease if the lease provides for a guaranteed amount and a share of the crop.
Average Crop Revenue
Election Program (ACRE)
The optional ACRE program provides a safety net based on state revenue losses and acts in place of the price-based safety net of counter-cyclical payments under DCP. A farm’s payment is based on a revenue guarantee calculated using a five-year average state yield and the most recent two-year national price for each eligible commodity. For the 2009 crop, the two-year price average will be based on the 2007 and 2008 crop years.
An ACRE payment is issued when both the state and the farm have incurred a revenue loss. The payment is based on 83.3 percent (85 percent in 2012) of the farm’s planted acres times the difference between the state ACRE guarantee and the state revenue times the ratio of the farm’s yield divided by the state expected yield. The total number of planted acres for which a producer may receive ACRE payments may not exceed the total base on the farm. In exchange for participating in ACRE, in addition to not receiving counter-cyclical payments, a farm’s direct payment is reduced by 20 percent, and marketing assistance loan rates are reduced by 30 percent.
The decision to enroll in the ACRE Program is irrevocable. The owner of the farm and all producers on the farm must agree to enroll in ACRE. Once enrolled, the farm shall be enrolled for that initial crop year and will remain in ACRE through the 2012 crop year.
Payment eligibility, Limitations
There are major changes in the farm bill concerning payment eligibility. Many of the payment eligibility rules have changed. New eligibility forms and determination will need to be completed prior to any payments being made.
There are new Adjusted Gross Income requirements that have been lowered significantly. For commodity and disaster programs, the AGI limitation was reduced from $2.5 million AGI from all sources to a three-year average non-farm AGI of $500,000 such that a person or entity shall not be eligible for such programs if the non-farm AGI exceeds $500,000. Also, under the new regulations, an individual or entity must have a three-year average AGI less than or equal to $750,000 per year from farm income in order to qualify for direct payments issued under the Direct and Counter-cyclical Program.
For conservation programs, the average nonfarm AGI limitation is $1 million or less for eligibility. However, an individual or entity who has non-farm AGI in excess of $1 million remains eligible for conservation programs only if 66.66 percent or more of the total AGI is derived from farming, ranching and forestry operations. In addition, the AGI limitation for conservation programs may be waived on a case-by-case basis if it is determined that environmentally sensitive land of special significance would be protected.
Program payments are limited by direct attribution to individuals or entities. A legal entity is defined as an entity created under Federal or State law that owns land or an agricultural commodity, product or livestock. Through direct attribution, payment limitation is based on the total payments received by the individual, both directly and indirectly. Qualifying spouses are eligible to be considered separate persons for payment limitation purposes, rather than being automatically combined under one limitation.
Individuals and entities must be “actively engaged in farming” with respect to a farming operation in order to be eligible for specified payments and benefits. To be “actively engaged in farming,” the individual or entity must make significant contributions to the farming operation of: (1) capital, equipment, land, or a combination; and (2) personal labor or active personal management, or a combination.
Under rules in effect since 1988, not every member of an entity had to contribute active personal labor or management. The interim final rule requires each partner, stockholder or member with an ownership interest to make a contribution of active personal labor or active personal management. The contribution must be regular and substantial, and documented as well as separate and distinct from any other member’s contribution. The rule limits the ability of passive stockholders to continue to realize benefits from the entity.
Under the interim final rule, the addition of individuals or entities to an existing operation to qualify for additional payments is more restrictive than under previous regulations. The prior rule in effect since 1988 said the acquisition of new cropland to the farming operation of at least 20 percent qualifies for the increase of an unlimited number of new persons and/or legal entities as eligible for payment. The rule changes the 20 percent increase requirement from cropland to base acres and only allows for the addition of one new person to the operation.
Reflecting back on 2008, agriculture had a good year. Looking forward to 2009, life at FSA will be a challenge.