The USDA Farm Service Agency is highlighting the expanded payment limitations and eligibility provisions affecting their program payments. We caught up with Richard Fordyce, Under Secretary for Farm Production and Conservation, to learn more.
“You know, the One Big Beautiful Bill, it’s now been almost a year since that was signed into law, but as you know, because we’ve talked about this before, you know, there were a lot of that really changed how we deliver farm programs. You know, primarily those safety net programs, ARC and PLC. And so as we kind of ticked off and we just kept going down all those different provisions to get them implemented, kind of the bow on the package, in my mind, was implementing the higher payment limits that were in the One Big Beautiful Bill, and then the payment eligibility piece. First of all, very quickly on the pay limit, for a number of years, and I was trying to think actually how far back the $125,000 pay limit’s been with us, but it’s been a while, that payment limit has now been raised to $155,000. And I think what’s important, so maybe Congress doesn’t have to go back and revisit this, is that $155,000 is indexed for inflation every year. So on an annual basis, we’ll look at whatever the inflation factor is and apply that to the payment limit,” said Fordyce.
“The payment eligibility piece is a little complicated, and there are days, Dale, I will admit I understand it, and then there are days when I’m kind of sometimes scratching my head, but really to simplify it, partnerships, general partnerships, joint ventures, they were treated differently when it came to payment limits that would pass through to members of those entities. So those were allowed, but LLCs and S-corps were basically excluded from being able to, if that farming entity qualified for an additional pay limit or more payment higher than the pay limit, there was not an ability for that additional pay limit to pass through the entity and touch another member. And so the One Big Beautiful Bill allows that now, treats LLCs and S-corporations the same as it’s treating some of these other business entities for adding the opportunity for additional pay limit. The one thing that is a caveat to that, though, is that the member, in order to be eligible through this pass-through entity provision, the member has to be actively engaged in that farm. So they either have to be providing labor capital management or equipment. So they have to be actively engaged. They have to provide two of those four things to qualify as being actively engaged,” said Fordyce.
“The local expert is going to be in that local county office. They’re going to be able to inform you about what the pay limit, the new provisions for pass-through entities, and then, you know, when you need to update that business structure.
So they’re going to know all that stuff. They’re going to know way more about it than I am. So anyway, yeah, that’s the advice I would give,” said Fordyce.
Audio Reporting by Dale Sandlin for Southeast AgNet.