The Van Trump Report

CFAP 2 and Final USDA Changes to Farm Operator Rules

U.S. producers have $13 billion in new coronavirus aid headed their way using funds added to the Commodity Credit Corp. under the CARES Act last Spring. The second round of aid falls under the Coronavirus Food Assistance Program, dubbed CFAP 2. Congress had authorized additional borrowing authority for the USDA for the purpose in coronavirus-relief legislation passed earlier this year and the second round has been widely anticipated. It’s not clear when the USDA will release details.

The USDA also recently made changes to rules regarding who is eligible for payments under some crop subsidy programs enacted under the 2018 farm bill. One of those allows first cousins, nieces, and nephews of farm operators to be defined as “family members” which could allow them to qualify for additional payments. Another major change is a requirement that anyone collecting payments as a farm manager perform a minimum of 500 hours of active management annually, or at least 25% of the farms total management work needed. The person is also required to provide management on a regular, continuous and substantial” basis.

Ag groups welcome the changes as a step in the right direction in closing loopholes on who is eligible for crop subsidies, which till now was only loosely defined as someone “actively engaged” by providing land, equipment, or capital to an operation and performing labor or management, or both. Proponents of tightening the rules allege that the previous rules have allowed the subsidy system to be exploited by routing payments to individuals that contribute little to farming operations. At the same times, there are concerns they could be problematic for family operations, which make up the overwhelming percentage of farms in America.    

Brian Kuehl, government and public affairs director for KCoe Isom, which provides accounting services to the food and agriculture industry, said in a statement that “the rule will provide significant direction to farming operations and includes clarifications that help FSA regulations match the current business of farming. On first read, however, we are concerned that portions of the rule relating to member contributions could have an adverse effect on family farming operations and place undue burden on those businesses.”

The issue lies with the rule broadening the management requirements to family members. For instance, a family of five could not each perform 25% of management operations while smaller farms may not meet the total cumulative number of hours that would be required under the new rules, which is 500 hours each. That could mean some family members would not qualify for additional payment limits.

In addition to the management and family guidelines, the new regulations also makes final a series of changes to payment limitations from the 2018 farm bill, including: (1) removing application of payment limits from Marketing Assistance Loans (MAL), Marketing Loan Gains (MLG) and Loan Deficiency Payments (LDP); (2) removing application of the payment limit for the Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish Program (ELAP; (3) increasing the limit for noninsured crop disaster assistance program (NAP) payments for buyup coverage; and (4) increasing the Emergency Conservation Program (ECP) limit to $500,000 per disaster event. The changes are highlighted in the table below, courtesy of the folks over at Farmdocdaily. They have a good rundown on the payment details HERE if you’d like more information.

The rule also defines when FSA and the Natural Resources Conservation Service can waive the $900,000 income limit for people who sign conservation contracts with USDA. The waiver is limited to contracts on “environmentally sensitive land of special significance.” (Sources: AgInsider, Agri-Pulse, University of Illinois, Progressive Farmer)

Leave a Comment

Your email address will not be published. Required fields are marked *