Is your farming operation an LLC, a corporation, a trust, or are you an individual?
Only you, as the manager of your operation can answer that question. Things to think about are where does the capital for your operation come from? Do you provide it personally or is it provided by an LLC or some other entity? When you receive payments do they go into your personal account, or are they deposited into the account for your corporation or trust? When it comes to the equipment you use in your operation, do you own it, does the partnership own it, or do you actually lease it from a person that works for you? If you were required to, could you provide invoices showing you lease the equipment at the usual and customary rate for our area? Do you provide all the labor and management or do you hire a portion of those tasks done by others? These questions can sometimes be very difficult to answer, but making sure your payment limitation is filed correctly in your FSA Office will be one of the most important things you do for your operation.
The payment limitation process determines who is eligible for payments and who is not. How you manage your operation determines how the FSA Office needs to pay you. The FSA staff does not ask these questions to invade your privacy.
We need to understand your operation so we can help you fill out your paperwork correctly. What may be the best arrangement for tax purposes, may not always fit FSA requirements for payment eligibility. Annually payment limitation forms for producers are spot checked in what is called an end of year review at the state office.
Producers are randomly selected for this review and must submit supporting documentation for the forms they have filed. We have no control over who is selected and who is not. For that reason we want to be sure all of our producers have all forms filed accurately. We truly appreciate your patience with our questions and our forms.
We know it is time consuming and aggravating at times, but the proper completions of these forms is a necessary evil to be eligible to receive USDA payments. If a producer is selected for review and it is determined that the producer has been paid incorrectly or under the wrong entity based on how he is running his operation all of the payments received could be in jeopardy.
Program payments that are subject to a payment limitation can not be provided until all required forms for an individual or entity are provided and necessary payment limitation and payment eligibility determinations have been made.
After the initial filing of payment limitation documents, producers are required to notify the county office of any changes in the farming operation that could affect a person, actively engaged in farming, or foreign person determination.
Entities earning payments subject to a limitation are required to provide the names and related information of the entity's members to the county committee. Members of the entity will be required to designate no more than three entities to earn payments. A producer who receives payment as an individual is permitted to designate two additional entities.
Eligibility determinations may be initiated by the county committee and are subject to an end-of-year review process.
The following payments apply to DCP for each contract year under the new Farm bill which comes through both direct and counter-cyclical payments. For all covered commodities, $40,000 for direct payments and $65,000 for counter-cyclical payments. The Environmental Quality Incentive Program (EQIP) has a $450,000 payment limitation. The Conservation Reserve Program (CRP) annual limit is $50,000 per person. Non-Insured Crop Disaster Assistance Program (NAP) annual limit $100,000. The Loan Deficiency Payment (LDP) /Market gain is $75,000.
Diana Strouse is the county executive director for the Huron and Erie County Farm Service Agency. For more information, call the agency at (419) 668-4113.