Good News for Many Farmers: USDA Amends Erred Regulation

Reading Time: 2 minutesLoveland, CO – November 18, 2020 – KCoe Isom, a national leader in food and agricultural consulting and accounting services, applauded the decision today by the U.S. Department of Agriculture to amend its recent “Payment Limitations and Payment Eligibility” regulation.  The action will immediately correct an error in the regulation which made USDA rules inconsistent with federal law and would have forced hundreds of multigenerational family farming businesses to restructure in order to maintain participation in farm safety net programs. Upon release of the initial USDA regulation, K·Coe Isom’s farm program specialists immediately recognized that the August rule would have:

• created financial incentives to push founders out of the farming businesses they created;
• set up barriers to bringing the next generation of family farmers into the business; and
• allowed two farms with the exact same losses to receive different disaster payments, based on how their businesses are structured.

In response, K·Coe reached out to its family farming clients and encouraged them to advocate for the repeal of the new definition of the “active management” component of the regulation. K·Coe also wrote to USDA Secretary Sonny Perdue, highlighting the negative impact that the regulation would have on family farming operations.

“This regulation may have been well-intentioned but it would have seriously hurt thousands of farm families,” said Brian Kuehl, director of government and public affairs at K·Coe Isom.

As written, the regulation would have forced families to buy-out business owners who weren’t serving as managers of the farming operations at least 500 hours/year or providing at least 25% of the management in the farm. This would have disproportionately hurt semi-retired founders of family farms and next-generation farmers just getting started in the business. The buy-out wouldn’t have improved the productivity or profitability of the farm—it only would have forced businesses to use scarce capital and made them less able to handle existing industry challenges. USDA’s course correction aligns its regulations with the clear requirements of federal law.  The 2014 and 2018 Farm bills clearly and intentionally permit multi-generational family farms to fully qualify for the Department’s safety net programs. The USDA final rule, which returns farm program eligibility to the pre-August 24, 2020 status quo, was made public today.  It will go into effect upon publication in the federal register, which is expected on Friday, November 20.

“The regulatory fix was not a Republican or a Democratic thing,” said Matthew Farrell, Director of Farm Program Services at K·Coe Isom. “It’s just called ‘good government’ when agencies correct mistakes and comply with federal law.”

K·Coe’s Farm Program and Government and Public Affairs Teams will remain engaged on this issue to ensure that the incoming Biden-Harris Administration understand the non-partisan nature of this change.