Changing the Rules NE Farmer April 2010
Changing the Rules
The Farm Service Agency has recently updated its rules regarding payment eligibility. The rules contained a statement that all persons in a farm entity must contribute commensurate labor and or management. Then the VERY NEXT PARAGRPAH went on to give an example of an owner NOT providing labor or management but reduced payments by the percentage ownership of the non contributor. The FSA has allowed the reduction in payments.
This was cleared up in January by a declaration that ALL members must provide active personal management or labor and if they don’t the entity will have its payments reduced. However, an exemption for 2010 allows entities with inactive members to get full payments so long as at least 50% of the owners provide labor and management AND the total payment is under the cap for a payment limitation.
Who does this effect? It effects organizations set up with a family member that doesn’t actively contribute to the operation of the farm. In many cases, this family member was added to the farm entity structure in order to maximize farm payment caps. These organizations will have to buy out the inactive member in order to keep payments maximized.
It does present a wrinkle for estate planning. Farm families should be cautious about gifting partial interests in land to the next generation if the next generation is not interested in farming, particularly in situations were the government payment is a key component of cash flow.
HSUS versus Agriculture
The war against agriculture continues. Battlefront- Ohio. As a preemptive strike to Human Society of the United States’ stated desire to end animal production as an industry, Ohio set up a Livestock Care Standards Board to ensure the public that farmers don’t mistreat their business assets, livestock. Now, ag groups are fighting over how to fund the board. Proposals include a per ton feed assessment and a feed inspection fee increase. Groups are concerned the assessment may drive out meat packing plants and farmers out of Ohio. Organic farmers think they should be exempted from any regulation because they have their own standards. Others are worried that the board will not understand how livestock is raised. The preemptive strike may turn into a self inflicted wound before the board is event established.
Meanwhile, HSUS pushed forward with its own ballot initiative in Ohio to limit livestock husbandry practices.
What’s in a Name
Groups of farmers who raise livestock have banded together in organizations labeled producer groups for a long time. Pork Producers, Dairy Producers, Goat Producers, if you look hard enough, you will find a producer group. Do farmers produce or to they raise, grow and nurture animals? Production has an industrial sound to it. Most livestock farmers raise an animals, they do not produce pork, beef or dairy They raise hogs, cattle and milk cows for a living. Perhaps a nomenclature adjustment is in order?