July 2, 2014

The Risk Management Agency (RMA) released an interim rule Monday, June 29 that allows USDA to move forward with a series of crop insurance provisions in the 2014 Farm Bill. The interim rule will immediately go into effect, but a 60 day comment period will be available for public comments. Potential corrections to the rule due to comments may be published if needed. Comments can be submitted to www.regulations.gov by Sept. 2, 2014. All comments will be considered when the rule is made final. More information is available on the RMA website at www.rma.usda.gov.

The interim rule includes the following provisions:

1. Beginning Farmers and Ranchers (BFR) – establishes crop insurance benefits for beginning farmers and ranchers by increasing the premium subsidy available by 10 percentage points, allows the use of yield history from any previous farm or ranch operation in which they had decision making or physical involvement, and replaces a low yield in their actual production history with a yield equal to 80 percent of the applicable t-yield. The provision also waives specific administration fees for BFR.

To qualify as a beginning farmer or rancher, a producer must not have actively operated and managed a farm or ranch in any county, in any state, with an insurable interest in any crop or livestock as an owner-operator, landlord, tenant, or sharecropper for more than five crop years. This will exclude any crop year when the beginning farmer or rancher was under the age of 18, enrolled in post-secondary studies or on active duty in the U.S. military.

To apply for BFR benefits, individuals can contact their crop insurance agent. A BFR application will need to be completed and any crop years an individual wishes to exclude from consideration of BFR status must be shown in acceptable documentation. Those include when an individual was under the age of 18, enrolled in post-secondary studies (not to exceed 5 crop years) or on active duty in the U.S. military.

2. Conservation Compliance – this provision links the eligibility for premium subsidy paid by FCIC to compliance with the Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) provisions of the Food Security Act of 1985.

To be eligible for premium subsidy paid by FCIC, an insured must:

  • have a completed certification of compliance, form AD-1026, with the HELC and WC provisions on file with FSA by June 1;
  • be in compliance with a conservation plan approved by NRCS for all highly erodible land;
  • not plant an agricultural commodity on a wetland converted after February 7, 2014; and
  • not have converted a wetland for the purpose, or to have the effect, of making the production of an annually planted agricultural commodity possible on such converted wetland after February 7, 2014.

USDA will determine an insured’s eligibility for premium subsidy paid by FCIC at a time that is as close to the beginning of the next reinsurance year (July 1) as practical. The determination will be based on FSA and Natural Resources Conservation Service determinations regarding compliance with the HELC and WC provisions, as recorded in FSA’s automated system.

A certification of compliance, form AD-1026, must be filed with FSA by June 1 prior to the beginning of the reinsurance year (July 1). Insureds who do not have a certification of compliance will be ineligible for premium subsidy, unless they can demonstrate they are a beginning farmer or rancher who has not previously had an insurable interest in a crop or livestock and they began farming for the first time after the beginning of the reinsurance year but prior to the sales closing date. In addition, an insured who is in violation of the HELC or WC provisions will be ineligible for premium subsidy, unless specific exemptions apply. As stated on the RMA website, no premium subsidy will be withheld until at least the 2016 reinsurance year.

3. Enterprise Units on Irrigated and Non-Irrigated Acres – this allows a producer to separate irrigated and non-irrigated enterprise units within counties. Both the irrigated and non-irrigated acres must each separately qualify for enterprise units. Enterprise units by irrigated and non-irrigated practice will be available for any crop in which enterprise units are allowed through the actuarial documents, Crop Provisions, or Special Provisions. According to an RMA briefing, the provision will be available for 2015 spring crops.

This change allows producers to have two enterprise units for a crop in a county—one for irrigated production and one for non-irrigated production. Previously, only a single enterprise unit—covering all production of a crop in a county—was allowed.

If insureds do not qualify for separate irrigated and non-irrigated enterprise units, there are two options based on the timing of the determination:

  • if the determination is made on or before the acreage reporting date, insureds may have one enterprise unit comprise of all irrigated and non-irrigated acreage in the county of the crop, if they qualify, or basic or optional units depending on which unit structure the insureds reported on the acreage report; or
  • if the determination is made after acreage reporting date, the policy allows insureds to have one enterprise unit comprise of all irrigated and non-irrigated acreage in the county of the crop if they meet the qualifications or a basic unit will be applied.

Producers will not necessarily receive the same enterprise unit subsidy rate as before. RMA will publish new subsidy rates for practice-specific enterprise units that will be generally lower than for the enterprise units that cover all production regardless of practice.

4. Coverage Levels by Practice –this provision allows a producer to elect a different level of coverage for a commodity by irrigated and non-irrigated acres. Both the irrigated and non-irrigated acres must each separately qualify for enterprise units. This provision also allows a producer to elect different crop types for different coverage levels, where applicable. The provision was not going to be implemented until the 2016 crop year, but RMA announced in a briefing the change will be available for 2015 spring crops.

5. APH Adjustments – allows insureds to elect to exclude any recorded or appraised yield for any crop year in which the per planted acre yield in the county was at least 50 percent below the simple average of the per planted acre yield during the previous 10 consecutive years. A crop year determined eligible for exclusion in a county will also be eligible for exclusion in any contiguous county. Elections to exclude yields, by eligible crop year, by irrigated and non-irrigated acreage will be specified in the actuarial documents.

If there is not adequate production information to make a separate determination by irrigated and non-irrigated practice of whether a county’s yield is below 50 percent of the average of the previous 10 years, RMA will use all available data to determine which years may be excluded from a producer’s APH. If there is not adequate data to make the determination by practice, RMA will consider other options such as pooling data across practices.

According to RMA, past years of production experience will be eligible for an APH adjustment, and the provision will be retroactive from the date of implementation. Production data availability and intensive data analysis may limit FCIC’s ability to authorize exclusions of yields for all APH crops in all counties. Actuarial documents will specify when insureds may elect to exclude any recorded or appraised yield.

As posted on the RMA Interim Rule FAQ website, the APH adjustment will not be ready for the 2015 crop year, given the current time and resource constraints.

The Texas Wheat Producers Association, in coordination with other state wheat organizations and the National Association of Wheat Growers, has reached out to legislators and RMA officials to urge speedy implementation of this issue and will be submitting comments requesting the provision be made available for the 2015 crop year.

6. Correction of Errors – allows for the correction of errors in information obtained from the producer within a reasonable amount of time and consistent with information provided to other agencies of the Department of Agriculture subject to certain limitations for maintaining program integrity. This section also provides for the payment of debt after the termination date in accordance with procedures and limitations established by the FCIC, if a producer inadvertently fails to pay a debt and has been determined to be ineligible to participate in the Federal crop insurance program. This section also provides for the payment of debt after the sales closing date in accordance with procedures and limitations established by FCIC.

For a list of FAQ pertaining to this rule or the above provisions, visit http://www.rma.usda.gov/help/faq/farmbill_interim.html

 

 

 
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