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True To The Letter?


In working for proper implementation of the 2008 farm law, the NCC submitted comments to USDA's interim rule on regulations governing farm program payment limitations and payment eligibility.

What primary concerns did the National Cotton Council comments convey?

Although the 2008 farm law made several important changes to payment eligibility and payment limitation provisions, including instituting a system of direct attribution of payments, reducing and tightening the adjusted gross income means test and ending the discriminatory treatment of spouses, the NCC comments focused on changes in the regulations that were not included or required by the 2008 bill.

The interim regulations introduced significant new requirements for producers to be considered to be “actively engaged” in farming – none of which were mandated by the statute. The interim regulations introduce vague standards that could be implemented differently across the country. Among other things, the regulations introduce a new requirement that all members of a farming entity must make a regular, identifiable, documentable, separate and distinct contribution of active personal labor or active personal management. The regulation also contains unreasonable restrictions on farm financing, which could prohibit any guarantee, cosigning or backing of a loan by any person, legal entity or joint operation that has an interest in the underlying farming operation. The proposed changes ignore the economic and legal realities of how these farming entities operate.

The regulation introduces new “actively engaged” requirements for participation in certain conservation programs, even though this is not included in the law. The interim rule also narrowly construes the spousal eligibility amendments, effectively continuing a level of discrimination against spouses in family farming operations, treating spouses unfairly if the farming operation is structured as a corporation or a limited liability company. The new rule requires an increase of 20 percent or more of base acreage involved in a farming operation in order for such a change to be considered bona fide and substantive. Under this provision, an increase of 3,000 percent in base acreage would only support the addition of one person or legal entity to a farming operation, unless the state Farm Service Agency office is convinced, based on unspecified criteria, that the increase supports additional persons or legal entities. In its comments, the NCC urged the USDA to correct these and other deficiencies in the interim regulations.

How should cotton producers proceed in the meantime?

For the 2009 crop, sign-up ends on June 1 and if enrolling in the Direct and Countercyclical Program, producers may request a 22 percent advance in the direct payment. Producers are urged to make any necessary farming operation plan changes as soon as possible. Also of note is that the ACRE program reduces the direct payment by 20 percent and the loan by 30 percent. Enrollment in ACRE is “whole farm” and is irrevocable – but ACRE sign-up is delayed until later this spring so there is more time to make that decision.

Jay Hardwick is a Newellton, La., cotton producer currently serving as chairman of the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming page.

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