James Neill

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December 16, 2011
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FSA programs explained: Adjusted Gross Income requirements

"What is the income limitation that I may reach before I become ineligible for farm program payments?"

I can't say that anyone has ever asked me that question. This is probably because everyone that participates in the U.S. Department of Agriculture (USDA) farm programs has completed an Adjusted Gross Income (AGI) certification. However, since Congress passed the Consolidated and Further Continuing Appropriations Act that limits eligibility for Direct and Counter-Cyclical Program (DCP) direct payments to producers with an AGI of one million dollars or less, I felt that I should explain how your AGI may affect your eligibility for farm programs.

The 2008 Farm Bill initially created limitations on the amount of income that a person or an entity may receive from farming and nonfarm revenue sources and still be eligible for farm programs. The AGI utilized in determining eligibility is determined by averaging the past three year's average gross income. For example, a certification of AGI in 2011 is based off of an average of the 2007, 2008 and 2009 adjusted gross income.

In order to be eligible for DCP payments, ACRE payments, Marketing Assistance Loans, Loan Deficiency Payments, and Disaster Assistance Programs such as the Noninsured Crop Disaster Assistance Program, Livestock Indemnity Program and the Supplemental Revenue Assistance Payments Program, producers' cannot have an adjusted gross nonfarm income in excess of $500,000.

In order to be eligible for DCP direct payments, a producer cannot have an adjusted gross farm income in excess of $750,000.

For conservation programs, such as the Conservation Reserve Program (CRP) or the Environmental Quality Incentives Program (EQIP), a producer cannot have an adjusted gross nonfarm income that exceeds $1 million. The only exception to the rule applies to conservation programs in that a producer may exceed the $1 million nonfarm income if two-thirds or more of the total AGI is derived from farming, ranching or forestry.

Under the most recent change to the AGI limit, producers may not have a combined AGI of both farm and nonfarm incomes in excess of $1 million in order to be eligible for DCP direct payments. The change would affect a small number of producers that met the criteria of an AGI of less than $500,000 of nonfarm income and less than $750,000 in farm income, but have a total AGI of more than $1 million. For example, a producer with a nonfarm AGI of $400,000 and a farm AGI of $700,000 would have previously met the AGI criteria in order to be eligible for DCP direct payments. However, with the new rule, this producer will not be eligible for DCP direct payments in 2012 since their overall AGI is $1.1 million and in excess of the $1 million limitation.

Agricultural producers may notice this change on their AGI certifications for 2012. The change to the AGI rules currently affect only the 2012 program year.

james neill is the county executive director for the farm service agency in meade county, sd and can be contacted at james.neill@sd.usda.gov. questions about the farm program eligibility or any other farm service agency program should be directed to your local farm service agency service center.

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Tri-State Livestock News Updated Aug 14, 2012 04:07PM Published Dec 16, 2011 10:58AM Copyright 2011 Tri-State Livestock News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.