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Texas FSA director explains farm law changes

Juan Garcia, a 30-year veteran with USDA, was named Texas state executive director of the Farm Service Agency (FSA) last summer and faces the daunting challenge of ushering in significant changes in farm programs mandated by the 2008 farm bill.

And he’s working without a state committee to help manage appeals.

“We don’t have a committee named yet,” Garcia told participants in a Texas Dispute Resolution Mediation training session in Salado. “I have made a few decisions on payment limitations disputes and have about 20 to 25 pending. Some prefer to wait until a committee is seated before continuing the process.”

Garcia said farm legislation passed in 2008 includes “a lot of new programs that will take a while to come to fruition.”

He discussed some of the more significant changes.

“Actively engaged has been changed,” he said. If a wife worked off the farm and the husband provides most of the management and labor his contributions apply to his spouse.

Garcia said direct attribution for payment eligibility now requires a Social Security number. “This is a big change. In the past, a corporation could be considered for payment in addition to the farmer.”

He said a lot of changes were instituted to prevent abuse of the system.

He said with several entities or stockholders, each participant “must have input into the operation and it must be documented and verifiable. Not all stockholders need to be equal, however. Labor and management counts as input.”

He said it will be difficult for limited partnerships to qualify unless the limited partner owns the land.

Adjusted Gross Income restrictions have changes, including the time frame for determination, which now is considered “three taxable years preceding the most immediate preceding taxable year. For 2009 — use 2005, 2006, and 2007.”

Limits are lower. “If average adjusted gross non-farm income is greater than $500,000, the person or legal entity is not eligible for DCP or ACRE, SURE, ELAP, LFP, NAP, TAP or price support programs (LDP, MAL gains).”

If adjusted gross farm income exceeds $750,000 the person or legal entity is not eligible for direct payments. If AGI exceeds $1 million, the legal entity is not eligible for conservation program benefits “unless 66.66 percent or more of the AGI is from farming, ranching or forestry operations,” Garcia said.

He said direct payments and counter cyclical payments are available to farms with crop bases. “Direct payments are set for the life of the farm legislation. Counter cyclical payments depend on markets. Peanuts and cotton are the only crops eligible for counter cyclical payments this year,” Garcia said. “Peanuts are not likely to get them; cotton probably will.”

Payments this fall will be based on 2008 production.

Garcia said the Average Crop Revenue Election Program (ACRE) represents a new safety net feature. “Quite a few farmers in the Midwest have signed up,” he said, “but only 746 Texas farmers signed up for ACRE. Most of those came in toward the end of the sign-up period. A Texas AgriLife Extension calculator helped farmers make the decision.”

Garcia said the basics of ACRE include: No counter cyclical payments, 20 percent reduction in direct payments, 30 percent reduction in marketing assistance loan rates. ACRE is by farm number for planted crops, and landowners have to agree to enroll.

ACRE also requires participants to enroll for the life of the farm bill. “Once in ACRE, always in ACRE,” Garcia said.

For ACRE to be activated, two triggers must click, a qualifying reduction in farm yield and a qualifying reduction in state yield.

“It’s easier for farmers to decide how the program will benefit them if they produce only one crop. It’s more difficult to project income with multiple enterprises,” Garcia said.

He said some FSA analyses showed some cotton farmers would benefit from ACRE.

Garcia said loan activity for Texas FSA loans showed a big increase for 2009. Direct operating loan amount rose from $34,458,445 in 2008 to $73,440,606 in 2009. The number of loans increased from 676 to 1,151. He said only 10 percent of those applying for FSA loans were denied.

Farm loan program changes helped secure some loans, he said. “Maximum loan limit increased from $200,000 to $300,000 for both operating and farm ownership loans. The waiver of limitation on number of years that a borrower is eligible to receive guaranteed loan assistance on operating loans was extended through Dec. 31, 2010.”

He said changes in the conservation loan and loan guarantee program, beginning and socially disadvantages farmers/rancher contract land sales program, and equine eligibility for emergency loans have not been published.

He said the down payment loan program includes socially disadvantaged and beginning farmers and ranchers. Interest rate is the greater of the DFO rate minus 4 percent or 1.5 percent.

The Maximum loan amount is from $100,000 to 45 percent of the following: purchase price, appraised value or $500,000.

Repayment term was 15 years, but has been increased to 20 years and down requirement has dropped from 10 percent to 5 percent.

Garcia said officials have concerns with changes in the Conservation Reserve Program, especially with the reduced maximum enrolled acreage, down from 34.7 million to 32 million acres in 2010.

“Approximately 3.9 million acres expire in 2009 (last month). A lot of acreage expiring in Texas is in the High Plains and is highly erodible. Folks are wondering what to do with that land. We’re starting educational programs for landowners to show what they can do with acreage coming out of CRP.”

He said some options include continuous CRP enrollment, enrolling in the Grassland Reserve Program or participating in the State Acres for Wildlife Enhancement. Other options include taking land out of CRP and using the direct and counter cyclical program for income, enrolling in ACRE, using the Noninsured Crop Assistance Program (NAP) or the Supplemental Revenue Assistance Program (SURE), or the Livestock Forage Program (LFP).

NAP is for crops on which farmers can’t obtain risk management crop insurance: hay, melons, vegetables, etc. Participation in NAP is required to maintain eligibility for SURE or LFP. Garcia said SURE is revenue based and is the successor to ad hoc disaster programs. Eligibility also is based on disaster designation.

LFP eligibility is based on drought condition. A Livestock Indemnity Program “will compensate producers for livestock death losses in excess of normal mortality that occur due to adverse weather. The program limits include a timeline, on or after Jan. 1, 2008 and before Oct. 10, 2011.

Livestock producers who lost animals to storms such as Hurricane Ike may be eligible.

Garcia said the Obama administration is working to implement programs that were passed last year. “They also want to revamp the image of USDA across the country. I think the changes will be good ones,” he said.

Garcia said 93,000 Texans received program benefits in the last fiscal year.


TAGS: Legislative
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