The U.S. Department of Agriculture (USDA) has finalized a rule to ensure that farm safety net payments are issued only to active managers of farms that operate as joint ventures or general partnerships, consistent with the direction and authority provided by Congress in the 2014 Farm Bill.
The action, which exempts family farm operations, closes a loophole where individuals who were not actively part of farm management still received payments.
The federal farm safety net programs are designed to protect against unanticipated changes in the marketplace for those who actively share in the risk of that farming operation, said Agriculture Secretary Tom Vilsack. To ensure that help goes to those who genuinely need it, such as America’s farm families, the Farm Bill authorized USDA to close a loophole and limit payments from those not involved on a daily basis in nonfamily farm management.
Since 1987, the broad definition of actively engaged resulted in some general partnerships and joint ventures adding managers to the farming operation, qualifying for more payments, that did not substantially contribute to management.
The rule applies to operations seeking more than one farm manager, and requires measurable, documented hours and key management activities each year. Some operations of certain sizes and complexity may be allowed up to three qualifying managers under limited conditions.
The changes apply to payments for 2016 and subsequent crop years for Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) Programs, Loan Deficiency Payments (LDP) and Marketing Loan Gains (MLG) realized via the Marketing Assistance Loan program.
As required by Congress, the new rule does not apply to family farms, or change regulations related to contributions of land, capital, equipment or labor.
The changes go into effect for the 2016 crop year for most farms. Farms that have already planted fall crops for 2016 have until the 2017 crop year to comply. For more details, producers are encouraged to consult their local Farm Service Agency office.
The announcement was made possible by the 2014 Farm Bill, which builds on historic economic gains in rural America over the past six years, while achieving meaningful reform and billions of dollars in savings for the taxpayer.
Since enactment, USDA has made significant progress to implement each provision of this critical legislation, including providing disaster relief to farmers and ranchers; strengthening risk management tools; expanding access to rural credit; funding critical research; establishing innovative public-private conservation partnerships; developing new markets for rural-made products; and investing in infrastructure, housing and community facilities to help improve quality of life in rural America. For more information, visit www.usda.gov/farmbill.
To learn more about Farm Service Agency, visit www.fsa.usda.gov.