With farmers up against tight margins and continuing to wait on a new Farm Bill, the Farm Assistance and Revenue Mitigation (FARM) Act has been introduced to Congress to help offset some of that financial pressure.
Authored by Rep. Trent Kelly (R-Miss.) on the House Ag Committee, the FARM act offers payment assistance to eligible farmers. Farm CPA Paul Neiffer dives into the details on the Top Producer podcast.
What Acres Are Eligible?
Neiffer says the way he understands the act is that all crops are eligible for payments. Those payments, however, are calculated in different ways. The eight major crops listed in the act (corn, soybeans, wheat, cotton, rice, sorghum, oats and barley) use one formula, with all other crops using a comparable estimate of gross returns:
He explains that unlike ARC and PLC payments, which are based solely on base acres, this act goes off of what you planted for 2024.
“If you planted 1,000 acres of corn in 2024 and 1,000 acres of soybeans, you’re going to be paid based on 1,000 acres of corn and 1,000 acres of soybeans. Plus, you’re going to then be eligible for an additional 50% of the acres that were prevented from being planted,” Neiffer says.
Calculate Your Payment
The FARM act is very specific on telling USDA how to calculate the payments for the eight major crops it lists:
(USDA’s Projected Cost of the Crop – National Projected Returns) x Eligible Acres x 60% = Total Payment.
Neiffer calculated estimates for what the payment per acre for each of these crops would be based on current prices and rounded to the nearest dollar:
• Corn: $103
• Soybeans: $48
• Wheat: $82
• Cotton: $208
• Rice: $74
• Sorghum: $85
• Oats: $181
• Barley: $3
Limitations
Neiffer shares three main limitations he sees in the FARM Act.
“There is a current per person per entity limitation of $175,000, so that’s higher than ARC or PLC,” he says. “If you’re a general partnership and have four equal general partners, your payment limit for that farm operation is $700,000. But if you’re an LLC or corporation with four equal owners, your payment limit is still $175,000.”
The Act also does not change the definition of equipment gain.
“Under the current rules, most farmers end up not qualifying as a farmer, because they can’t include any of their equipment gains from trading in farm equipment,” Neiffer explains. “USDA has dug in their heels, and they’ve gone out of their way not to change that definition.”
The last limitation involves the total amount of assistance that will be allocated.
“Ad hoc assistance of about $20 billion is what seems to be floating around Congress,” he says. “I would say that assistance for corn is probably $6 billion, and that’s by far going to be the largest payment soybeans might be next at $2 or $2.5 billion.”
Reception From the Ag Community
The response to the proposed FARM Act in the agriculture community has been positive, with large farm organizations such as the American Farm Bureau Federation, National Corn Growers Association and American Soybean Association in support of it.
“In my opinion, this is a very well thought out act,” Neiffer says. “I like the idea that they’re specifically telling USDA how to calculate this.”
Neiffer says he doesn’t expect the FARM Act to be passed as is, but there’s a good chance it will pass on similar terms.
“Based on my conversations with many outside of Congress, in the organizations and so on, I think this has a lot of bipartisan support,” he says. “If this is something you think is very good, I would certainly reach out to your representative and tell them you really are in favor of this FARM Act.”
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