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Deadline Looms: Conservation Compliance Date for 2016 Crop Insurance

May 28, 2015

Monday, June 1, is the deadline for producers to file their AD-1026 form, confirming conservation compliance, with their FSA office. Failure to be in compliance with conservation requirements, including missing the AD-1026 deadline, means the operation is ineligible for a crop insurance premium subsidy in 2016. Producers can still purchase insurance if they pay the full premium.  

If they have filed AD-1026 in the past and no change has occurred on the farm, it is not necessary to file again. Otherwise, all affiliated persons or entities must file forms.

  • When an individual seeks conservation compliance, generally an "affiliated person" includes the individual’s spouse and minor children, a corporation in which they own more than 20% of the stock, and any other entity in which the individual has an interest as a member, partner, etc., if the affiliated persons have separate farming interests.
  • An "affiliated person" of a corporation is any first-level shareholder with more than 20% of the stock, and first-level members of any other entity, if those persons have separate farming interests.
  • In the case of a joint venture, the joint venture must complete form AD-1026 if the joint venture has an Employer Identification Number. In addition, members of the joint venture who have a separate farming interest must complete form AD-1026.  All members of the joint venture must complete form AD-1026 if the joint venture does not have an Employer Identification Number.
  • On a landlord/tenant policy, the tenant is required to have an AD-1026 on file even if the landlord already has one. Producers should contact their local USDA Service Center regarding their specific situation.

NRCS determines whether or not a farm is in compliance with regulations regarding highly erodible land and/or wetlands. FSA is responsible for determining eligibility for government programs, including the crop insurance premium subsidy; acts on requests for certain eligibility exemptions; and maintains the official determinations, which are to be recorded in geographic information system and automated farm and tract records, although determinations may not include all of a producer’s land. RMA will contact FSA to determine compliance prior to July 1, the beginning of the next insurance year.

This process highlights how crucial it is that all paper work within various agencies at USDA is consistent. According to FSA’s Daniel McGlynn, a simple discrepancy in paperwork at FSA and RMA—such as using a middle initial on one form and not another—could flag a producer for additional scrutiny. Farm names and numbers and the people involved all should match. RMA uses the Tax Identification Number or TIN (or social security) from the named insured when checking FSA’s database to see who has/has not filed AD-1026. If a TIN is used for crop insurance that differs from that at FSA, it comes up as “not filed” and is not eligible for the premium subsidy.

Consider this situation: Brothers A and B do business with FSA as individuals using their SSNs. For crop insurance, they insure the same ground/crop using their corporation. A conflict exists as to who actually has the interest in the land/crop. Either the FSA records or crop insurance policy must updated to accurately reflect who has the interest in the land/crop.      

The initial rules are in their comment period, and a number of questions remain unresolved at USDA, McGlynn points out:

  • It has not been spelled out whether producers can cancel or reduce the crop insurance coverage they signed up for if they are informed of ineligibility after the crop insurance closing date.
  • It is unclear if producers qualify for the crop insurance subsidy if they buy land after the June 1 AD-1026 deadline, thereby not filing the form, but before the crop insurance sales closing date.
  • If a new crop insurance policy or extension of where a policy is offered is announced, regulations currently don’t allow the producer to file the AD-1026 form after the June 1 deadline.
  • The rules discuss producers who “began farming for the first time after June 1,” but clarification is needed about what that means.

Conservation Client Gateway

USDA this week announced it has launched a new online service center for conservation compliance business with NRCS. It does not affect filing AD-1026 at FSA. At www.nrcs.usda.gov/clientgateway, farmers, ranchers and landowners can securely:

  • Request NRCS technical and financial assistance;
  • Review and sign conservation plans and practice schedules;
  • Complete and sign an application for a conservation program;
  • Review, sign and submit contracts and appendices for conservation programs;
  • Document completed practices and request their certification;
  • Request and track payments for conservation programs; and
  • Store and retrieve technical and financial files, including documents and photographs.

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