Remember to Certify Conservation Compliance for Crop Insurance Program By Premium Billing Date

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Tilling field with tractor.  Image is by United Soybean Board

As many of you who have purchased crop insurance since the passage of the 2014 Farm Bill already know, conservation compliance has been relinked with the crop insurance subsidy. This relinking means that many producers who traditionally have not participated in farm bill programs (such as Price Loss Coverage or Agriculture Risk Coverage) were not required to certify conservation compliance.


Under the 2014 Farm Bill, producers who skip the other farm safety net programs offered by USDA’s Farm Service Agency (FSA) but still take out crop insurance will still need to complete and file FSA’s current Highly Erodible Land Conservation and Wetland Conservation Certification (Form AD-1026). Farmers without an AD-1026 on file will be ineligible for many USDA programs, including the premium support paid by the Federal Crop Insurance Corporation.  The AD-1026 will need to be on file with FSA for a reinsurance year on or before the premium bill date for the producer’s crop insurance policy in order to comply with the crop insurance program.

What is Conservation Compliance?

Conservation compliance is concerned with producing an annual crop on highly erodible land and conversion and production on wetlands.  These two aspects of conservation compliance have been required since the 1985 farm bill.  In previous farm bills, conservation compliance was traditionally linked to participating in commodity programs, such as the former Direct and Counter-Cyclical programs.  Conservation compliance had previously been a part of the crop insurance program but was removed in the 1996 farm bill to encourage more producers to purchase crop insurance.  The 2014 farm bill relinked the two after fears that a push towards a more crop insurance-based farm safety net could lead to marginal lands being put into production without requiring compliance.

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Conservation practices in a field.  Image by Chesapeake Bay Program

Looking at the two aspects of conservation compliance, highly erodible land compliance provision (often referred to as “sodbuster”) requires a producer to have an approved conservation plan in order to produce a crop on highly erodible land or not produce a crop on land classified as highly erodible between 1980 and 1985.  A producer would also need an approved conservation plan to produce on highly erodible land in 1990 regardless of when the land was put into production.  The sodbuster provision is the easier of the two aspects to stay in compliance with because a producer just needs to follow the approved conservation plans on highly erodible land.

The second aspect is the wetlands conservation compliance provision (often referred to as “swampbuster”) which requires a producer to refrain from producing a crop on a converted wetland.  If the conversion happens after February 7, 2014 (the date the 2014 farm bill was enacted), then the producer will be ineligible to receive the premium subsidy for future crop years.  But the producer could potentially remain eligible if it is determined that fewer than 5 acres were converted and the producer pays 150 percent of the cost to mitigate the wetlands conversion to a USDA fund used to restore wetlands.

What Happens If You Violate the Swampbuster Provision?

If you are found to violate the swampbuster provision, you will have 1 year to begin a mitigation plan to remedy the violation.  This 1 year will begin after all administrative appeals have taken place.  If the mitigation plan is not initiated within the 1-year period, then you will be ineligible for the premium subsidy for all following years – meaning you are still eligible to buy crop insurance, but you will pay 100% of the premium.

What Happens If a Crop Does Not Currently Have a Crop Insurance Policy?

If a commodity is not currently covered under the crop insurance program but becomes eligible in the future, then the 2014 farm bill ineligibility will only apply to wetland conversions taking place after the policy becomes available.  The new farm bill appears to simplify many aspects of the wetlands conversion analysis.  Here producers found in violation will be given 2 years, after a final determination and the appeals process has run its course, to implement a mitigation plan.  If not the producer does not implement the mitigation plan within 2 years, then the producer will be ineligible in future years for the premium subsidy.

How Do You Show Compliance?

Much like for former federal farm programs such as the Direct Payment Program, you will need to file an AD-1026 with FSA each year, self-certifying that you are in compliance with the two provisions.  USDA’s Risk Management Agency (RMA) has changed the deadline for filing the AD-1026 with the county FSA office from June 1 to on or before the premium billing date of the producer’s crop insurance policy.

Conclusion

Producers relying on crop insurance must now consider conservation compliance.  Most producers will already have a conservation plan in place and will not need to worry about the sodbuster provision.  The potential is for the swampbuster provision to cause issues for producers in future crop years.

For more information on conservation compliance, click here .

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