When changes in farm ownership or operation take place, a farm reconstitution is necessary. The reconstitution — or recon — is the process of combining or dividing farms or tracts of land based on the farming operation.
To be effective for the current fiscal year, farm combinations and farm divisions must be requested by Aug. 1 of the FY for farms subject to the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) program. A reconstitution is considered to be requested when all of the required signatures are on FSA-155 and all other applicable documentation, such as proof of ownership, is submitted.
Total Conservation Reserve Program (CRP) and non-ARC/PLC farms may be reconstituted at any time.
The following are the different methods used when doing a farm recon:
• Estate Method — the division of bases, allotments and quotas for a parent farm among heirs in settling an estate
• Designation of Landowner Method — may be used when (1) part of a farm is sold or ownership is transferred; (2) an entire farm is sold to two or more persons; (3) farm ownership is transferred to two or more persons; (4) part of a tract is sold or ownership is transferred; (5) a tract is sold to two or more persons; or (6) tract ownership is transferred to two or more persons. In order to use this method, the land sold must have been owned for at least three years, or a waiver granted, and the buyer and seller must sign a Memorandum of Understanding
• DCP Cropland Method — the division of bases in the same proportion that the DCP cropland for each resulting tract relates to the DCP cropland on the parent tract
• Default Method — the division of bases for a parent farm with each tract maintaining the bases attributed to the tract level when the reconstitution is initiated in the system.
Market Assistance Loans (MAL) and Loan Deficiency Payments (LDP)With most of the harvest behind us, producers may want to consider taking a market assistance loan on their harvested grain.
The 2018 Farm Bill extends loan authority through 2023 for Marketing Assistance Loans and Loan Deficiency Payments.
MALs and LDPs provide financing and marketing assistance for wheat, feed grains, soybeans, and other oilseeds, pulse crops, rice, peanuts, cotton, wool and honey. MALs provide producers interim financing after harvest to help them meet cash flow needs without having to sell their commodities when market prices are typically at harvest-time lows. A producer who is eligible to obtain a loan, but agrees to forgo the loan, may obtain an LDP if such a payment is available. FSA will be accepting requests for 2020 MALs and LDPs for all eligible commodities after harvest. Requests for loans and LDPs shall be made on or before the final availability date for the respective commodities.
Commodity Daviess County Loan Rate Final Availability Date
• Wheat $3.33/bushel March 31, 2021
• Corn $2.37/bushel May 31, 2021
• Soybeans $6.41/bushel May 31, 2021
Commodity certificates are available to loan holders who have outstanding nonrecourse loans for wheat, upland cotton, rice, feed grains, pulse crops (dry peas, lentils, large and small chickpeas), peanuts, wool, soybeans and designated minor oilseeds. These certificates can be purchased at the posted county price (or adjusted world price or national posted price) for the quantity of commodity under loan, and must be immediately exchanged for the collateral, satisfying the loan. MALs redeemed with commodity certificates are not subject to Adjusted Gross Income provisions.
To be considered eligible for an LDP, producers must have form CCC-633EZ, Page 1 on file at their local FSA Office before losing beneficial interest in the crop. Pages 2, 3 or 4 of the form must be submitted when payment is requested.
Marketing loan gains (MLGs) and loan deficiency payments (LDPs) are no longer subject to payment limitations, actively engaged in farming and cash-rent tenant rules.
Adjusted Gross Income (AGI) provisions state that a producer whose total applicable three-year average AGI exceeds $900,000 is not eligible to receive an MLG or LDP. Producers must have a valid CCC-941 on file to earn a market gain of LDP. The AGI does not apply to MALs redeemed with commodity certificate exchange.
For more information and additional eligibility requirements, please visit a nearby USDA Service Center or FSA’s website fsa.usda.gov.
Important Dates to Remember in FSA• Nov. 26, 2020: FSA closed in observance of Thanksgiving Holiday
• Nov. 30, 2020: Deadline to report prevented planting of Wheat
• Dec. 11, 2020: Deadline to apply for Coronavirus Food Assistance Program 2.0
• Dec. 15, 2020: Deadline to report planted wheat and other fall seeded small grains