Actively engaged. Those are just two small words, but they have the National Cotton Council and other farm organizations burning the midnight oil to try to make sure members remain eligible for farm programs.
As required by the Agricultural Act of 2014, USDA’s Farm Service Agency published a new rule for determining if persons are “actively engaged” in a farming operation, but the rule puts forth a number of new requirements that could prove problematic, says Gary Adams, president and CEO of the NCC.
At the time Dr. Adams spoke on implementing the new farm bill at the Agricultural Council of Arkansas board meeting last month, the National Cotton Council and other farm organizations were preparing comments on the proposed rule. The comments were due May 26.
“Through their proposed rule, USDA is responding to directives in the farm bill, specifically to focus on what constitutes a significant contribution of active personal management,” says Adams. “The farm bill also directs USDA to consider setting limits on how many persons can qualify with that provision of providing only management.
“A few things to be aware of: This has to be a farm operation that consists solely of family members to be exempt from these regulations. But also be aware that when we talk about family members, the definition that applies is lineal family connections – essentially coming from great-grandfather, grandfather, father, son.”
The proposed rule would apply to general partnerships and joint ventures that include non-family members.
“Basically, they’re talking about limits of having up to three non-family managers within an operation,” says Adams. “To get up to three you have to meet certain criteria of having a sufficiently large, sufficiently complex farming operation.
“Some of the terminology about what constitutes complex is a little bit ambiguous. There are acreage numbers about what constitutes a large farming operation by the definition of USDA (2,500 acres). But basically they’re trying to come up with a definition of how you meet that management only provision.”
The rule requires additional reporting and documentation of the operation that includes a third non-family manager as an entity for payment limit purposes. “When you add a third manager, those reporting requirements apply to all managers in the operation,” said Adams. “It even puts some restrictions on a minimum number of hours (500) to meet those criteria.”
The Council and other farm organizations have a number of concerns they’re “pushing back on” about the proposed rule, including:
It’s impractical to apply an arbitrary limit to the number of managers required to meet the new definition of management.
Consider more flexibility for family operations that lose family exemption due to family member providing the lineal linkage exiting the operation.
Ensure the family operation exemption is fully executed by USDA.
Define “significant contribution of management” based on necessary activities or responsibilities without requiring a restriction on the number of hours.
For more on the USDA proposed rule on actively engaged provisions of the new farm bill, visit http://www.fsa.usda.gov/FSA/newsReleases?area=newsroom&subject=landing&topic=ner&newstype=newsrel&type=detail&item=nr_20150323_rel_0074.html