Monday, October 01, 2007

Cash Lease, Share Lease, Allocating Risk

A USDA press release of Friday:
The Agriculture Department today announced that it has issued an advance notice of proposed rulemaking seeking public comment on the treatment of lease agreements under various USDA programs. Mark Keenum, USDA's under secretary for farm and foreign, Agricultural Services, said "by reviewing our current rules, we hope to provide producers with the ability to adjust their lease agreements to take advantage of changing market conditions while also letting USDA have the controls needed to ensure that program integrity is maintained as required by applicable statutes."

At issue is whether regulations governing whether a lease is considered "cash-rent" or "share-rent" for a USDA program purpose need to be revised or defined more specifically. The goal is to solicit comments on the feasibility of USDA's Farm Service Agency (FSA) and Risk Management Agency (RMA) establishing a standardized treatment of leases containing variable or flexible provisions under the programs administered by those agencies.
I personally suspect the resolution will be like the long-time concern over FSA and RSA having different crop reporting dates. As far as I know, the differences have not all been resolved. I think crop insurance requires an "insurable interest" while FSA requires a "producer" to be someone who shares in the crop, or the risk of producing the crop (except for people like seed corn producers).

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