Ag Update: 4 Notable Items for Farms and Ranches under USDA Farm Programs

Farm Program Updates: Suspension, Pending Deadline, Extension and New Program Announced by the USDA

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In an effort to provide additional support to farms and ranches due to the Coronavirus pandemic, the United States Department of Agriculture (USDA) recently made changes to some of its Farm Programs.  Below is a summary of notable impacts for agribusinesses.

  1. USDA Suspends Actions on Delinquent Borrowers

Farm Storage Facility Loan and Direct Farm Loan Program borrowers; Guaranteed Loan Program borrowers; financially distressed and delinquent borrowers

The USDA released a notice on January 26 that instructed Farm Service Agency (FSA) to temporarily suspend delinquent debt collections and foreclosures. The intention is to provide relief to distressed borrowers due to COVID-19. These suspensions are targeted for the Farm Storage Facility Loan program and the Direct Farm Loan Program.

There are also changes for lenders to offer customers participating in the Guaranteed Loan Program.

Suspensions will be in place for:

  • Non-judicial foreclosures
  • Debt offsets or wage garnishments
  • Referring foreclosures to the Department of Justice
  • Work with US Attorney’s Office on previously referred judicial foreclosures and evictions

USDA will also extend deadlines for loan services options for financially-distressed and delinquent borrowers.

Suspensions of these actions and extended deadlines will be in place while the national COVID-19 disaster declaration is in place.

 

  1. ARC/PLC Election and Enrollment Deadline is March 15

Upcoming deadline approaching – notable changes this year

The 2021 crop year ARC/PLC election and enrollment period is open currently until March 15.

ARC-Co or PLC must be chosen for each crop on every farm, ARC-IC will include all crops on a farm. The producer(s) on a farm will make the election. It is important to remember all producers with a share of the crop on the farm must unanimously make an election and sign off on that election for it to be valid.

There is no ramification if a new election is not made on the farm and the program choice will revert to what was elected on the farm during the 2019 election period. Also, unlike years past, if no election is made, there is not a year of ineligibility. However, there is no provision for a late filed election on a farm.

There are tools available to help make the ARC/PLC elections. We recommend:

Additional Considerations and Guidelines

The election is different from the enrollment, but these two action items are on the same form.

  • The form to elect/enroll ARC-IC is CCC-862 and
  • The form to elect/enroll ARC-Co or PLC is CCC-866.

Again, anyone with a greater than zero share in the crop produced on the ground must sign the forms. Landlords of cash rented ground do not need to sign the forms.

The enrollment period also ends March 15, but there is a late file provision that allows the enrollment to be made up through September 30 (in certain circumstances approved by the County Committee with the District Director or State Office Approval). Also, after elections, a change in producer or reconstitution of ground will not affect the election but may prompt the eligible producer for enrollment to be amended.

If changes are made that require an amended enrollment, producers will need to show leases on ground were effective after the election and the original enrollment was made. If the lease was made effective prior to the election or enrollment, the FSA could deem the original election and enrollment invalid.

 

  1. Marketing Assistance Loans Extended

The USDA has extended the Marketing Assistance Loan maturity date from nine months to 12 months

This applies to nonrecourse loans (except seed cotton and sugar). The extension will be applicable for October 2020 disbursed loans and remain in effect for all loans requested by September 30, 2021.

 

  1. New Quality Loss Adjustment Program

On January 5, the USDA announced the Quality Loss Adjustment (QLA) program

The QLA program will assist producers that suffered quality losses to crops because of eligible natural disasters in 2018 and/or 2019, such as:

  • Drought
  • Excessive moisture
  • Flooding
  • Hurricanes
  • Snowstorms
  • Tornadoes
  • Typhoons
  • Volcanoes
  • Wildfires

QLA Program Guidelines

  • The producer’s county must have suffered a declared ‘Presidential Emergency Disaster’ or ‘Secretarial Disaster’ due to one of the qualifying events. Check the link to see if your county/counties qualify for the program: https://www.farmers.gov/recover/whip-plus/eligible-counties.
  • To be an eligible producer, you must prove that the qualifying event caused a 5% or more decrease in quality of your crop. You must also have a crop that can be covered by federal crop insurance or Noninsured Crop Disaster Assistance Program (NAP). You will be required to purchase insurance on the crop for the next two crop years.
  • There is a $125,000 limit for each year, 2018 and 2019. Producers are subject to a $900,000 average AGI or 75% or income from farming/ranching.
  • Sign-up ends March 5,

Most producers are familiar with the WHIP+ program for yield losses. The QLA program is designed to complement that program, and reimburse producers for quality losses on the crop.

Questions about the QLA program? Contact K·Coe Isom’s Farm Program Services team, visit https://www.farmers.gov/quality-loss, or contact your local FSA office.

 

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Matthew Farrell

Farm Program Services