By Linda Smith, Farm Credit Services of America
The 2014 farm bill re-linked crop insurance and conservation compliance. You can still buy insurance if you are out of compliance, but you won’t get the crop insurance premium subsidy.
Monday, June 1, is the deadline for producers to file their AD-1026 form with their Farm Service Agency (FSA) office.
If you have filed AD-1026 in the past and no change has occurred on the farm, it is not necessary to file again. Otherwise, all affiliated persons or entities must file forms.
- When an individual seeks conservation compliance, an "affiliated person" generally includes the person’s spouse and minor children, a corporation in which they own more than 20% of the stock, and any other entity in which the individual has an interest as a member, partner, etc., if the affiliated persons have separate farming interests, explains Bruce Green, vice president of insurance operations at Farm Credit Services of America, which provides lending and crop insurance services to producers in Iowa, Nebraska, Kansas and Wyoming.
- An "affiliated person" of a corporation is any first-level shareholder with more than 20% of the stock, and first-level members of any other entity, if those persons have separate farming interests.
- In the case of a joint venture, Green says, the joint venture must complete form AD-1026 if the joint venture has an Employer Identification Number. In addition, members of the joint venture who have a separate farming interest must complete form AD-1026. All members of the joint venture must complete form AD-1026 if the joint venture does not have an Employer Identification Number.
“On a landlord/tenant policy, the tenant is required to have an AD-1026 on file even if the landlord already has one,” Green says. “Producers should contact their local USDA Service Center regarding their specific situation.”
USDA’s Natural Resources Conservation Service (NRCS) determines whether or not a farm is in compliance with regulations regarding highly erodible land and/or wetlands. FSA is responsible for determining eligibility for government programs, including the crop insurance premium subsidy; acts on requests for certain eligibility exemptions; and maintains the official determinations. RMA will contact FSA to determine compliance prior to July 1, the beginning of the next insurance year.
This process highlights how crucial it is that all paper work within various agencies at USDA is consistent. According to FSA’s Daniel McGlynn, a simple discrepancy in paperwork at FSA and RMA—such as using a middle initial on one form and not another—could flag a producer for additional scrutiny. Farm names and numbers and the people involved all should match. RMA uses the Tax Identification Number or TIN (or social security) from the named insured when checking FSA’s database to see who has/has not filed AD-1026. If a TIN is used for crop insurance that differs from that at FSA, it comes up as “not filed” and is not eligible for the premium subsidy.
Consider this situation: Brothers A and B do business with FSA as individuals using their SSNs. For crop insurance, they insure the same ground/crop using their corporation. In that case a conflict exists as to who actually has the interest in the land/crop. Either the FSA records or crop insurance policy must be updated to accurately reflect who has the interest in the land/crop.
The initial rules are in their comment period, and a number of questions remain unresolved at USDA, McGlynn points out:
- It has not been spelled out whether producers can cancel or reduce the crop insurance coverage they signed up for if they are informed of ineligibility after the crop insurance closing date.
- It is unclear whether producers qualify for the crop insurance subsidy if they buy land after the June 1 AD-1026 deadline, thereby not filing the form, but before the crop insurance sales closing date.
- If a new crop insurance policy or extension of where a policy is offered is announced, regulations currently don’t allow the producer to file the AD-1026 form after the June 1 deadline in order to qualify.
- The rules discuss producers who “began farming for the first time after June 1,” but clarification is needed about what that means.
Source: Farm Credit Services of America
Farm Credit Services of America, based in Omaha, Nebraska, is dedicated to serving the agricultural credit, risk management and financial needs of farmers and ranchers in Iowa, Nebraska, South Dakota and Wyoming. For more information on the Farm Credit System and other Farm Credit Associations visit www.farmcredit.com.