FSA notice: Wages, dividends to qualify as farm income, changing AGI calculation
Without fanfare, the Agriculture Department’s Farm Service Agency last week announced that it will allow certain wages and dividends that had not been considered farm income to be considered farm income in the calculation of a farmer’s adjusted gross income.
Paul Neiffer, an agribusiness accountant and business adviser, wrote on Agweb that “This likely will allow many more farm operations to fully qualify for CFAP [Coronavirus Food Assistance Program] and MFP [Market Facilitation Program] payments that may have had limits placed on it in the past due to one or more owner’s being over the $900k AGI limit.”
Under USDA rules, farmers with an average adjusted gross income (AGI) that exceeds $900,000 are eligible for CFAP and MFP payments as long as more than 75% of the income is from farming. This change would have the effect of making more of the farmer’s income coming from farming.
Neiffer said farmers who had been denied payments should contact their local FSA office to determine if they are now eligible.
Joseph Glauber, the former Agriculture Department chief economist who is now a senior research fellow at the International Food Policy Research Institute, told The Hagstrom Report in an email that he also believes it will allow more producers to qualify for payments.
“USDA has received a lot of criticism over the fact that only half of the CFAP payments have been made,” Glauber said. “That is true even for the non-specialty crops.”
In the notice, FSA said “Previously, income from wages or dividends received from a legal entity were not considered income from farming, ranching, or forestry activities. Some corporate businesses use wages or dividends to distribute profits to the members, partners, or stockholders holding an ownership interest in the legal entity.”
This notice, FSA said, provides an “updated definition of ‘average farm AGI’ to include wages and dividends from a legal entity when the wage or dividend is derived from a legal entity engaged in farming, ranching, and forestry activity,” and says the updated definition of “average farm AGI” that includes wages and dividends “is applicable for program year 2020 and subsequent years.”
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