Food, Agriculture, and Energy Act of 2008
Wednesday, July 16, 2008
Contributed by: Courtney Goodman-Morris
The Food, Agriculture, and Energy Act of 2008 (2008 Farm Bill), was passed by Congress on May 15, 2008. President Bush vetoed the farm bill on May 21, 2008. However, the House and Senate voted to override the veto; therefore, the farm bill, excluding Title III, which deals with foreign trade of agricultural commodities and foreign food aid, is now law. The following is a summary of the 2008 farm programs.
Direct and Counter-cyclical Program and Average Crop Revenue Election
Under the bill, the Direct and Counter-cyclical Programs (DCP/CCP) were continued. Payment rates for direct payments remain the same as established under the 2002 farm bill. Target prices, used to determine if counter-cyclical payments are available in a crop year, were increased for some crops and remain unchanged for other crops. However, the target price for cotton was reduced. Advanced payments for the 2008 crop year will be issued as soon as regulations and procedures are in place. After 2008, advanced payments will be made in the month elected by the producer.
The bill also included a new program, the Average Crop Revenue Election (ACRE). Under the new program, producers will have a one-time irrevocable election beginning with the 2009 crop year to participate in ACRE in lieu of earning Counter-cyclical payments. If the producer elects to participate in ACRE, the producer's DCP payments will be reduced by twenty percent (20%) and the loan rate available to the producer will be reduced by thirty percent (30%). ACRE payments are available to a producer for individual losses when the actual State revenue for the crop year is less than the ACRE program guarantee for the crop year. The producer's losses are determined by the difference between the actual farm revenue and the farm ACRE benchmark revenue.
Dairy Programs
The Milk Income Loss Contract program (MILC) was extended under the 2008 farm bill. MILC will pay, for the 2008 crop year, 34% and 45% in crop years 2009 through 2012, of the difference between $16.94 per hundred weight and the monthly market price. Other dairy programs, including the Dairy Forward Pricing Program, Dairy Export Incentive Program, Dairy Indemnity Program and dairy price support through government purchase of cheddar cheese, butter and nonfat dry milk are continued.
Payment Eligibility and Limitation
Payment eligibility and limitation rules were modified in the 2008 farm bill. Payment limitations were set as follows: direct payments $40,000 and counter-cyclical payments $65,000. Loan Deficiency Program payments, like market loan gains, are no longer subject to payment limitations, but still require a payment eligibility (persons actively engaged in farming) determination.
As anticipated, Congress repealed the three entity rule. Program payments will now be attributed directly to an individual producer. This means that while an entity may earn payment, the payment will be attributed to the member's individual taxpayer ID and payment limitation. The entity itself will no longer be considered a separate person for payment limitation purposes.
Other provisions, such as cash-rent tenant requirements and actively engaged in farming requirements remain mostly unchanged. However, under the 2008 farm bill, if one spouse is determined actively engaged in farming, the other spouse shall be determined to have met the requirements as well. The Adjusted Gross Income requirements were modified as well. A person shall not be eligible for program payments if the person's average adjusted gross nonfarm income exceeds $500,000. A person shall not be eligible to receive direct, counter-cyclical payments and/or ACRE payments if the person's average adjusted gross farm income exceeds $750,000. For CRP and EQIP the average adjusted gross income limitation was set at $1,000,000. However, if 66.66 percent of the average adjusted gross income is from farming and ranching, the limitation requirement is waived.
Conservation Reserve Program
The Conservation Reserve Program (CRP) was continued. Congress capped the acreage available to 2 million acres for FY2010-2012. For FY2008 and 2009, the cap is 39.2 million acres. Managed haying and grazing, with payment reduction is authorized. Further, the Secretary of Agriculture was given the authority to determine the number and location of wind turbines and payment reduction.
This is a brief overview of the commodity, administrative and conservation provisions. Please call us if you have any questions regarding these or other 2008 farm bill programs.
This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.
