Cotton Links


Identifying Impact Of
New Farm Law


As if farmers don’t have enough decisions to make this year regarding their crop mix and how many acres to dedicate to each commodity, they also must determine what effect the new farm law will have on their individual operations.

In January, we asked our readers to vote on which of the four components listed will impact their operations the most: Lower Adjusted Gross Income (AGI) test, modified payment limitation rules, direct attribution of payments or the ACRE program option.

Thirty-eight percent of the respondents say modified payment limitation rules will affect them the most, while 26 percent think the lower AGI test will have the most impact. Direct attribution of payments and the ACRE program option accounted for 36 percent of the votes at 18 percent each.

In the Cotton Farming Web Poll, 64 percent of the respondents believe the modified payment limitation rules and the lower AGI test will impact them the most.

The comment period for these components of the new farm law was supposed to end on Jan. 28, 2009. However, Agriculture Secretary Tom Vilsack announced that he is extending the deadline to March 29, 2009, to allow invested stockholders further opportunity to comment.

To view the proposed rule, go to gpoaccess.gov/fr/retrieve.htm and search page 79267. If you want to move forward from that page, click the “next page” icon at the bottom right. Although the rules are already in place for 2009, farmers do have the opportunity to comment before the final rule is made for the 2010-2012 crop years.

In regard to the AGI test, for commodity and disaster programs, the Average Gross Income was reduced from $2.5 million from all sources to a three-year average non-farm AGI of $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 non-farm AGI limitation is $1 million or less for eligibility. 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.

If environmentally sensitive land is of special significance, these rules may be waived. However, be sure to check with the local Farm Service Agency to discuss your individual situation.

As for the Average Crop Revenue Election (ACRE) program, enrollment will begin in the spring. Producers eligible for the DCP will also be eligible for ACRE.

Following is a comment we received from a reader who voted in January. We appreciate the feedback. To avoid redundancy, we’re publishing his or her thoughts because they reflect the sentiments expressed by many others.

• “I feel Southern agriculture is not understood. We must have larger operations to buy today’s high-priced equipment. We also face higher input costs than our Northern neighbors, and our margins are less. With government support, it’s not possible to cashflow a farming operation when things do not go perfectly with the weather and the price.”

For a variety of reasons, some producers indicate that they will be making adjustments in their cotton production systems. If this is the case, we are asking which of the following areas will be the most affected and why: Planting date, use of residual herbicides, irrigation practices, harvest-related factors or something else.

To participate in this month’s Web Poll, go online at www.cottonfarming.com. The results of the March poll will be reported in the Cotton Farming May issue.

Web Poll Results

In January, we asked: Which of the following components of the new farm law will impact your operation the most?

• Lower Adjusted Gross Income test — 26 %

• Modified payment limitation rules — 38 %

• Direct attribution of payments — 18 %

• ACRE program option – 18 %

March Web Poll Question

If you intend to make adjustments in your cotton production system, which of the following areas would be the most affected and why?

(1) Planting date
(2) Use of residual herbicides
(3) Irrigation practices
(4) Harvest-related factors
(5) Other

Register your vote at www.cottonfarming.com.

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