Source: USDA

USDA issued two press statements announcing signup for the 2009 Direct and Countercyclical Programs (DCP) and the expected publication in the Federal Register of the new rules for payment limitations and adjusted gross income the week of Dec. 22, 2008. Both regulations are now published as interim final regulations with a 30 day comment period.

Enrollment for the program for farms with base acres will begin Dec. 22 both online and at local USDA service centers and will continue until June 1, 2009. June 1 is now a "hard" date and late enrollments are no longer allowed.

Producers who are eligible for the DCP Program will also be eligible to enroll in the Average Crop Revenue Election (ACRE) Program. The enrollment period for the ACRE Program will begin in the spring. Producers may first enroll in the DCP Program, elect to receive advance direct payments and then later modify their enrollment to include the ACRE program or they may wait and elect to enroll in DCP and ACRE at the same time in spring 2009. In exchange for participating in ACRE, in addition to not receiving counter-cyclical payments, a farm's direct payment is reduced by 20 percent, and marketing assistance loan rates are reduced by 30 percent.

The decision to enroll in the ACRE Program is irrevocable. The owner of the farm and all producers on the farm must agree to enroll in ACRE. Once enrolled, the farm shall be enrolled for that initial crop year and will remain in ACRE through the 2012 crop year.

The interim final regulation does qualify "flexible cash rental" agreements as a cash rental agreement, not a share agreement.

With the publication of the new payment limits regulations for commodity and disaster programs, the AGI limitation will be reduced from $2.5 million AGI 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 3-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.

The definition of income derived from farming, ranching and forestry operations was expanded to include, among other items, such items as the packing, storing and transporting of agricultural commodities; production of livestock products; farm-based production of renewable bio-energy; and in some instances, the providing of operational inputs to farmers, ranchers and foresters.

Individuals and entities must be "actively engaged in farming" with respect to a farming operation in order to be eligible for specified payments and benefits. To be "actively engaged in farming," the individual or entity must make significant contributions to the farming operation of: (1) capital, equipment, land, or a combination; and (2) personal labor or active personal management, or a combination. The interim final rule requires each partner, stockholder, or member with an ownership interest to make a contribution of active personal labor or active personal management. The contribution must be regular and substantial, and documented as well as separate and distinct from any other member's contribution. The rule limits the ability of passive stockholders to continue to realize benefits from the entity.

If you'd like to read the interim final regulations, click here or click here.