FSA

NAP Insurance Program Changes

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The Farm Service Administration (FSA) recently announced changes to the Noninsured Crop Disaster Assistance Program (NAP).  But before discussing those changes, lets first discuss what NAP is.

Simply, NAP provides an insurance option for farmers who grow crops that are not eligible for crop insurance.  In fact, if a farmer can obtain crop insurance, including the Risk Management Agency’s multi-peril crop insurance (MPCI), NAP is unavailable.  NAP only covers those crops that are non-insurable and is intended to help farmers farm another year in the event of a catastrophic event.

So what are the changes?

Coverage Levels:

Previously, NAP would cover only 50% of a crop and then pay out up to 55% of the crop’s value.  Now, NAP includes a buy-up provision to cover up to 65% of a crop and pay out up to 100% of the crop’s value.

The 50% coverage cost remains at $250.  Any coverage beyond 50% requires the farmer to pay an additional formula-based premium, or 5.25 times the level of coverage.  The premium is capped at $6,562.00 and it applies towards an individual or entity’s $125,000 NAP payment limitation.

Beginning, Socially Disadvantaged, and Limited Resource Farmers:

First, the $250 service fee is waived for beginning and socially disadvantaged farmers.  This is an expansion of the fee waiver; previously, it applied only to limited resource farmers.  If a beginning farmer has paid the service fee for the 2015 crop year, a refund will be issued.

Additionally, beginning, socially disadvantaged, and limited resource farmers are now eligible for a 50% premium reduction when purchasing buy-up coverage.

Organic and direct market prices:

The state FSA office can provide farmers with the option of insuring crops at the organic market price, rather than conventional or direct-to-consumer price.  However, sufficient data must be available for FSA to establish those separate price points.

Other issues of potential interest:

The NAP changes include a sodsaver provision that is relevant to Nebraska farmers.  If NAP coverage is sought for newly broken cropland, the farmer must pay 200% of the normal premium, not to exceed $6,562.00.

Changes in “experience” requirement for FSA direct farm ownership loans

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Until recently, applicants for an FSA direct farm ownership loan had to prove they participated in the operations of a farm for at least three years.  Beginning farmers identified this eligibility requirement as a barrier to land access, as the requirement was not reflective of current realities for beginning farmers.  However, the eligibility requirement has changed.

Now, a beginning farmer may substitute one year of the three-year requirement with a formal farm apprenticeship, operation or management of a non-farm business, leadership or management experience while serving in any branch of the military, advanced education in an agricultural field, or significant experience in a farm-related career.

Hopefully, this change will allow more beginning farmers access to direct loans from FSA.  If you need any assistance, feel free to contact us — we’re happy to help!

 

Updates to FSA Microloan Program

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The microloan program, operated by the Farm Service Agency, has recent changes that many farmers will likely appreciate.

First, the loan limit is raised from $35,000 to $50,000.  This means that farmers or ranchers applying for a microloan can now access up to $50,000 for expenses such as:

  • Start-up costs;
  • Input costs (e.g. seed, fertilizer, chemicals, utilities);
  • Marketing and distribution costs;
  • Family living expenses;
  • Purchase of livestock, equipment, machinery or the like essential to the operation;
  • Minor improvements such as wells;
  • Tools;
  • Delivery vehicles; and
  • Irrigation

The above is a small sampling of possibilities to use with microloan funding.

Also of note, microloan funding to beginning and military veteran farmers does not count towards the total number of years a farmer can receive assistance through FSA’s direct loan program.  If you are not a beginning or military veteran farmer, the microloan counts towards the seven year limit in which a farmer can receive FSA direct loan assistance.

If you have any questions about microloans, please feel free to contact us.  We’re always happy to answer your questions!

FSA Youth Loans, Along With Changes to the Loan Program

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The Farm Service Agency has released a new Fact Sheet about updates to various loan programs under the new Farm Bill.  The changes in the Youth Loans are interesting and open the door to agricultural to many more individuals.

But before discussing the changes, what exactly are Youth Loans?  Youth Loans are loans to individuals to establish and operate moderate sized projects that produce income in connection with participation in programs such as 4-H, Future Farmers of America, or similar programs.  The project must be part of an organized and supervised program of work designed to provide practical business and education experience.  Furthermore, the project must be planned and operated with the help of an adviser from the organization and produce sufficient income to repay the loan.

You need to be between 10 and 20 years old to qualify for a Youth Loan.  The maximum loan amount is $5,000.  The loan can be used to purchase livestock, seed, equipment and supplies; buy, rent, or repair needed tools and/or equipment; and pay operating expenses for the project.

What are the latest changes?  First, Youth Loans no longer have a rural residency requirement.  This means that a person otherwise eligible for a Youth Loan but who resided in Omaha is now eligible for a youth loan to assist with agricultural projects or business.  With the growth of urban agriculture and interest in smaller operations, the elimination of the residency requirement is good news for encouraging even younger beginning farmers to enter the profession.

Second, debt forgiveness on Youth Loans will not prevent the borrower from receiving other federal loans.  Importantly, this includes federal student loans.  Further, if delinquent on a Youth Loan, a borrower is eligible for federal student loans.

If you have any questions about Youth Loans or FSA loans in general, you are welcome to contact us!

 

 

Checking in on the FSA’s microloan program

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We’ve previously discussed the FSA’s microloan program, with its possibilities for beginning farmers.   With the end of the year approaching, there is now data concerning how many loans have been made, along with information on how many of the loans went to beginning farmers, veterans, or socially disadvantaged producers.

The National Sustainable Agriculture Coalition has an interesting article that delved into the microloan statistics.  Most pertinent for Nebraska and South Dakota producers is that both states have made microloans, just not to the extent of other states.  NSAC suggests multiple reasons: total number of producers, acreage size of operations, type of operations, FSA outreach and training on microloans, and other factors.

But what I find most interesting about the article is that promise that microloans hold for beginning farmers.  Of all microloans issued, 68% went to beginning farmers.  These microloans can (and did) cover many different operations, production methods, and producer needs.  Of particular import, the microloans covered these expenses without need to resort to higher-interest options such as credit cards, lines of credit, or high interest loans.  Less money paid in interest means more money for the operation and/or living expenses for the beginning farmer.

Ultimately, it is for the beginning farmer to determine whether microloans are a good fit for the operation and farming plans.  If you want someone to discuss your operation with and whether microloans are a good fit, you are welcome to contact us.  We’re happy to help!

Friday Facts, Fun and Food

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Another week down — the University of Nebraska – Lincoln’s Drought Monitor is showing the drought improving across Nebraska and South Dakota.  Now we just need some sunshine.

The University of Nebraska – Lincoln’s School of Natural Resources has a new temperature app called Climate App — it informs farmers of high and low temperatures, 7 day average soil temperatures, 1 day soil temperature, and 1 day precipitation total.

It is amazing that something as seemingly simple as corn cobs could be the future of more cost-effective biofuel production.

FSA County Committee Nominations begin June 17; the deadline is August 1.

Geotourism is on the rise, especially in rural areas.

June 8th is National Get Outdoors Day — I’m sure the farmers and ranchers reading this will not have a problem with getting outdoors that day.  The South Dakota Outdoor Expo is an official National Get Outdoors Day site; the Expo is at the State Fairgrounds in Huron on June 8-9 and a free event.

After you burn off some calories at National Get Outdoors Day, I can’t recommend these Chocolate Chip Brown Sugar Rolls enough.

Land access for beginning farmers

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By far, the topic of conversation among beginning farmers is access to land.  I’ve talked to many beginning farmers about this very topic.  How, I am asked, can I obtain access to land?

Before answering that question, we should start with what we know.  According to the Kansas City Federal Reserve, Nebraska agricultural land prices for irrigated land increased 32% and non-irrigated land increased 26.8% from the previous year.  Preliminary data on Nebraska cash rent values as of February 1, 2013 tell the same tale — cash rents are up statewide, depending upon the type of land,  from 19 to 30 percent.  (Keep in mind, however, that the preliminary data is broken down by region so the numbers vary more at that analysis level.)

With the above reality, how to obtain access to land?  I can’t promise the magic bullet, but I do have some ideas:

  • Take a long, hard look at your (proposed) operation and determine how much land you need, not how much land you want.  You may be able to lease smaller parcels and obtain the land your operation needs.  This may also include considerations of geography, i.e. whether you should move if you have the opportunity to secure land.  It will also include considerations of the type of land you need and housing possibilities.
  • Search for internships and other job opportunities to gain experience and network with other producers.  Internships and other opportunities are listed and/or promoted in various locations, including Beginning Farmers.
  • Consider leases, rather than ownership, especially when building your operation.  If you know an operator, present the operator with a business proposal to lease the property.  The proposal can include utilization of programs such as Nebraska’s Beginning Farmer Tax Credit.  More information about the Beginning Farmer Tax Credit is here.
  • There are several land-matching programs out there.  The Center for Rural Affair’s LandLink program is a nation-wide program where land owners with beginning farmers.  The Center also has a comprehensive list of other land-matching programs by state and region.
  • There are websites available which list agricultural land for sale.  A Google search will find numerous resources.
  • Keep in mind various financing strategies, both for your operation and real estate.  The Farm Service Agency has a variety of financing strategies for operating loans to real estate loans.

You don’t have to in your twenties to consider these strategies.  In fact, according to the latest research, many beginning farmers (those with ten years or less experience) are between the ages of 35 and 64.  There is no reason you cannot take some time to consider what you want to farm, how you want to farm, where you want to live, and craft a long-term strategy.

There are a lot of details in this post and Legal Aid of Nebraska is happy to help you with any questions about your particular operation.  Feel free to contact us!

Friday Facts, Fun and Food

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Looks like the weather cooperated for farmers this week.  As I drove across the state, it was great to see fields planted (or in the process thereof!).

CRP sign-up begins May 20 through June 14.  Contact your local FSA office for information.

Some changes are afoot with crop insurance for organic producers.

Meet the first approved microloan applicant, age 19.

Beef Tenderloin and Asparagus …. you really can’t go wrong here.