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USDA Defines Actively Engaged
Tuesday, March 24, 2015 12:18PM CDT

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- USDA is moving ahead with authority under the 2014 farm bill to limit farm-program payments for people called farm managers who are not actively engaged in real farm management or operations.

Under the 2014 farm bill, family operations are exempted from these changes in actively engaged rules. Only farm businesses defined as "non-family joint ventures" or general partnerships are affected.

In an announcement Tuesday, USDA stated that farm managers who are in non-family joint ventures or general partnerships must now prove they are contributing at least 500 hours of farm management work per year, or at least 25% of the time necessary for the farm to operate. This likely means many operations that fit the definition of non-family joint venture or general partnership will be limited to one farm manager who can receive a commodity-program payment.

These actively engaged rules will affect producers starting in 2016 who are enrolled in Agricultural Risk Coverage, Price Loss Coverage, marketing loans and loan-deficiency payments.

"We want to make sure that farm program payments are going to the farmers and farm families that they are intended to help. So we've taken the steps to do that, to the extent that the Farm Bill allows," said Agriculture Secretary Tom Vilsack. "The farm bill gave USDA the authority to limit farm program payments to individuals who are not actively engaged in the management of the farming operation on non-family farms. This helps close a loophole that has been taken advantage of by some larger joint ventures and general partnerships."

Large, complex business operations may be able to demonstrate the need for up to three farm managers eligible for farm-program payments "only if they can show all three are actively and substantially engaged in farm operations."

The current definition of "actively engaged" for managers allows people with little to no contributions to farm management decisions to collect farm-program payments if they are classified as farm managers, and for some operations there were an unlimited number of managers that could receive payments, USDA stated.

Farm-program payments are capped at $125,000 for an individual producer who has a three-year average adjusted gross income under $900,000.

USDA is sending the proposed rule to the Federal Register with a public comment period ending May 26.

Chris Clayton can be reached at chris.clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(AG/SK)


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