2014 Farm Bill

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UNITED STATES DEPARTMENT OF AGRICULTURE

FARM SERVICE AGENCY FACT SHEET December 2015

Payment Eligibility and Payment Limitations

OVERVIEW

Congress and the USDA have established 

requirements to ensure that farm program 

payments only go to farmers who are actively 

engaged in farming. The Agricultural Act of 2014 

(the 2014 Farm Bill) extends the actively engaged 

and payment limitation requirements for the 2014 

through the 2018 program years. To be eligible for 

payments, the 2014 Farm Bill requires program 

participants to meet specific requirements.

ACTIVELY ENGAGED IN FARMING

To be considered as “actively engaged in 

farming,” all participants, whether an individual 

or a legal entity (partnerships, corporations, etc.), 

must provide significant contributions to the 

farming operation. Contributions consist of capital, 

land, and/or equipment, and active personal labor 

and/or active personal management. The 

management contribution must be critical to the 

profitability of the farming operation and the 

contributions must be at risk.

ADDITIONAL PAYMENT ELIGIBILITY 

REQUIREMENTS

Each partner, stockholder or member with an 

ownership interest must contribute active personal

labor and/or active personal management to the 

farming operation on a regular basis. The 

contribution must be identifiable and 

documentable, and separate and distinct from the 

contributions made by any other partner, 

stockholder or member. If any partner, stockholder 

or member with an ownership interest fails to 

meet this requirement, program payments will be 

reduced by the corresponding share held by that 

partner, stockholder or member. There is an 

exception allowed for legal entities, such as 

corporations, if total direct payments received both 

directly and indirectly, by the legal entity and its 

members do not exceed $125,000.

ADDITIONAL PAYMENT ELIGIBILITY 

PROVISIONS FOR JOINT OPERATIONS 

AND LEGAL ENTITIES COMPRISED 

OF NON-FAMILY MEMBERS OR 

PARTNERS, STOCKHOLDERS OR 

PERSONS WITH AN OWNERSHIP 

INTEREST IN THE FARMING 

OPERATION

Effective for the 2016 and subsequent crop and 

program years, non-family general partnerships 

and joint ventures must document the actions of 

the members who make significant contributions 

of management to the farming operation, defined 

Note: On Dec. 15, 2015, the U.S. Department of Agriculture (USDA) changed the “actively engaged 

in farming” requirements of certain farm program eligibility provisions. These changes and the 

information in this fact sheet are applicable to the 2016 and subsequent program years. Farms 

that produce fall-seeded crops for the 2016 crop year have until the 2017 program year to comply.

The changes apply only to farming operations conducted by general partnerships and joint ventures 

comprised of non-family members, and payment eligibility for 2016 and subsequent crop years for 

Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) Programs, loan deficiency payments 

(LDP) and marketing loan gains (MLG) realized via the Marketing Assistance Loan Program.

For information on whether these changes to the “actively engaged in farming” requirements affect you 

or your current farming operation, please read Frequently Asked Questions found on pages 5-7 of this 

fact sheet. This fact sheet is provided for informational purposes only, other restrictions may apply. For 

full details, consult with your local USDA Farm Service Agency (FSA) office. To find your local FSA 

office, visit http://offices.usda.gov.
FACT SHEET

Payment Eligibility and Payment Limitations December 2015

as 500 hours of specific management activities per 

year, or 25 percent of the total management time 

necessary for the success of the farming operation. 

Most farming operations conducted by non-family 

general partnerships and joint ventures will be 

limited to only one member who can meet actively 

engaged in farming requirements and qualify for 

payments based solely on the documented 

contribution of active personal management. 

Operations that can demonstrate that they are 

large OR complex farming operations, according 

to newly established standards, may be allowed 

an additional manager. Similar, an operation that 

can demonstrate that it is a large AND complex 

farming operation may qualify a third manager 

for payment, but only if all three managers can 

document substantial management contributions 

to the farming operation. Compliance with these 

changes, along with all other payment eligibility 

requirements, affect the eligibility for 2016 and 

subsequent crop years for ARC and PLC Programs, 

LDPs and MLGs realized via the Marketing 

Assistance Loan Program. Farming operations that 

produce fall-seeded for the 2016 crop year have 

until the 2017 program year to comply.

EXCEPTIONS TO THE GENERAL 

REQUIREMENTS

Landowners may be considered “actively engaged 

in farming” if they contribute the land to the 

farming operation and in return, receive rent or 

income for the use of the land. The landowner’s 

share of the profits or losses from the farming 

operation must also be commensurate with the 

landowner’s contributions to the farming operation 

and the contributions must be at risk.

If one spouse has been determined “actively 

engaged in farming,” the other spouse will be 

considered to have made a significant contribution 

of active personal labor or active personal 

management toward meeting the requirements of 

“actively engaged in farming.”

Sharecroppers may be considered “actively 

engaged in farming” if the sharecropper makes a 

significant contribution of active personal labor 

to the farming operation and in return receives a 

specified share of the crop(s) produced on the farm. 

The sharecropper’s share of the profits or losses 

from the farming operation must be commensurate 

with the sharecropper’s contributions and the 

contributions must be at risk.

A cash-rent tenant will be ineligible to receive 

payments on the cash-rented land unless the tenant 

makes a significant contribution of active personal 

labor. If the cash-rent tenant does not provide labor, 

he or she must make a significant contribution of 

both active personal management and equipment to 

the farming operation. All other “actively engaged 

in farming” requirements apply as well.

FOREIGN PERSONS

Foreign persons, other than registered aliens, are 

not eligible to receive any program benefits 

including commodity loans, unless that person 

provides a significant contribution of capital, land 

and active personal labor to the farming operation.

NOTIFICATION REQUIREMENTS

Every legal entity earning payment subject to these 

rules must report to their local FSA committee the 

name and social security number of each person 

who owns, either directly or indirectly, any interest 

in such legal entity. The legal entity is also required 

to inform all members of the rules regarding 

payment eligibility and payment limitation.

DIRECT ATTRIBUTION

The 2014 Farm Bill establishes a maximum 

dollar amount for each program that can be 

received annually, directly or indirectly, by each 

person or legal entity. Such limitations on 

payments are controlled by direct attribution. 

Program payments made directly or indirectly to a 

person are combined with the pro rata interest held 

in any legal entity that received payment, unless 

the payments to the legal entity have been reduced 

by the pro rata share of the person.

Program payments made directly to a legal entity 

are attributed to those persons that have a direct 

and indirect interest in the legal entity, unless the 

payments to the legal entity have been reduced by 

the pro rata share of the person. Payment 

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attribution to a legal entity is tracked through four 

levels of ownership. If any part to the ownership 

interest at the fourth level is owned by another 

legal entity, a reduction in payment will be applied 

to the payment entity in the amount that represents 

the indirect interest of the fourth level entity in the 

payment entity.

COMMON ATTRIBUTION

Common attribution means crediting payments 

made to a person or legal entity collectively to one 

limitation due to a unique or specific relationship 

between the persons or legal entities. Common 

attribution applies to a minor child and a parent or 

legal guardian; and a parent organization over a 

secondary organization when the parent 

organization exercises control over the secondary 

organization.

OWNERSHIP INTEREST FOR DIRECT 

ATTRIBUTION 

For the purposes of the direct attribution of 

payments, ownership interest that a person or legal 

entity holds in a legal entity on June 1 of the 

current year is used. Direct attribution of payments 

is not applicable to cooperative associations of 

producers. The payments will instead be attributed 

to the members of the association that produced the 

commodities marketed by the association on behalf 

of the members.

MINOR CHILD RULES

June 1 of the current year is the date a child is 

considered to be a minor for payment attribution 

purposes. Payments received both directly and 

indirectly by a minor child are attributed to the 

parent or legal guardian.

PAYMENT LIMITS

Person - Payments made directly or indirectly to a 

person cannot exceed the annual amounts specified 

in the table on page 4.

Joint Operations and General Partnerships - 

Payments made directly or indirectly to a joint 

operation such as a general partnership, cannot 

exceed, for each payment specified in the table on 

page 4, the amount determined by multiplying the 

maximum payment amount specified for a program 

by the number of persons and legal entities that 

comprise the ownership of the joint operation. 

Payments to the joint operation will be reduced 

by an amount that represents the direct or indirect 

ownership in the joint operation by any person or 

legal entity that has reached the maximum 

limitation.

Legal Entities - Payments made directly or 

indirectly to a legal entity cannot exceed the annual 

amounts specified in the table on page 4. 

Payments made to a legal entity will be reduced 

by an amount that represents the direct or indirect 

ownership in the legal entity by any person or legal 

entity that has reached the maximum limitation.

_________________________________________

In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, 

the USDA, its Agencies, offices, and employees, and institutions 

participating in or administering USDA programs are prohibited 

from discriminating based on race, color, national origin, religion, 

sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income 

derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program 

or activity conducted or funded by USDA (not all bases apply to 

all programs). Remedies and complaint filing deadlines vary by 

program or incident.

Persons with disabilities who require alternative means of communication for program information (e.g., Braille, large print, 

audiotape, American Sign Language, etc.) should contact the 

responsible Agency or USDA’s TARGET Center at (202) 720-2600 

(voice and TTY) or contact USDA through the Federal Relay 

Service at (800) 877-8339. Additionally, program information may 

be made available in languages other than English.

To file a program discrimination complaint, complete the USDA 

Program Discrimination Complaint Form, AD-3027, found online 

at http://www.ascr.usda.gov/complaint_filing_cust.html and at any 

USDA office or write a letter addressed to USDA and provide in 

the letter all of the information requested in the form. To request 

a copy of the complaint form, call (866) 632-9992. Submit your 

completed form or letter to USDA by:

1) mail: U.S. Department of Agriculture Office of the Assistant

 Secretary for Civil Rights 1400 Independence Avenue, SW

 Washington, D.C. 20250-9410;

2) fax: (202) 690-7442; or

3) email: program.intake@usda.gov.

USDA is an equal opportunity provider, employer, and lender.

FACT SHEET

Payment Eligibility and Payment Limitations December 2015

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FACT SHEET

Payment Eligibility and Payment Limitations December 2015

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This table contains the annual payment limitations for a person or legal entity for programs that 

are subject to the provisions of the 2014 Farm Bill.

Program Payment Type

Limitation Amount

2014 Through 2018

Commodity Programs

PLC, ARC, LDP and MLG payments - other than peanuts $125,000

PLC, ARC, LDP and MLG payments - peanuts $125,000

Cotton Transition Assistance Program (CTAP) $40,000 1/

Conservation Programs

Conservation Reserve Program (CRP) - annual rental payment 

and incentive payment

 $50,000 2/

Emergency Conservation Program (ECP) - per disaster event $200,000

Emergency Forest Restoration Program (EFRP) - per disaster 

event

 $500,000

Conservation Stewardship Program (CSP) $200,000 3/

Environmental Quality Incentives Program (EQIP) $450,000 4/

Agricultural Management Assistance (AMA) $50,000 5/

Disaster Assistance Programs

Emergency Assistance for Livestock, Honeybees and 

Farm-Raised Fish Program (ELAP), Livestock Forage Disaster 

Program (LFP) and Livestock Indemnity Program (LIP)

 $125,000 6/

Noninsured Crop Disaster Assistance Program (NAP) $125,000

Tree Assistance Program (TAP) $125,000

Other Programs

Trade Adjustment Assistance for Farmers (TAAF) $10,000

1/ CTAP is only available in the 2014 and 2015 program years.

2/ CRP contracts approved prior to Oct. 1, 2008, may exceed the limitation, subject to 

payment limitation rules in effect on the date of contract approval.

3/ The $200,000 limitation is the total limit under all CSP contracts entered into subsequent 

to the enactment of the 2014 Farm Bill during fiscal years 2014 through 2018.

4/ The $450,000 limitation is the total limit under all EQIP contracts entered into 

subsequent to the enactment of the 2014 Farm Bill during fiscal years 2014 through 2018.

5/ The $50,000 limitation is the total limit that a participant may receive under the AMA 

program in any fiscal year.

6/ Total payments received under LIP, LFP and ELAP may not exceed $125,000. A 

separate limitation applies to TAP payments.
FACT SHEET

Payment Eligibility and Payment Limitations December 2015

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USDA Announces Changes to Actively Engaged in Farming Definition

Frequently Asked Questions

December 2015

Q: What is “actively engaged” in farming?

A: To receive certain farm program payments, a person or legal entity must be “actively engaged in 

farming,” which is defined as making significant contributions of (1) land, capital, or equipment, and 

(2) personal labor, active personal management, or a combination of personal labor and active personal 

management.

For farming operations that are legal entities, such as corporations and limited liability companies, adding 

an additional member to the entity does not affect the number of payment limits available; it simply 

increases the number of members that can share a single $125,000 payment limit, should such a limit be 

reached. But for general partnerships and joint ventures, adding another member to the operation can 

provide an additional $125,000 payment limit if the new member meets the other eligibility requirements, 

including being determined as actively engaged in farming.

Q: Why did the U.S. Department of Agriculture (USDA) revise this rule?

A: The changes are consistent with provisions enacted by Congress in the 2014 Farm Bill, which are the 

first changes made by Congress to the definition since it was established in 1987. The changes apply to 

general partnerships and joint ventures. The definition is designed so that only farming operations and its 

members who are “actively engaged in farming” (including active management) are eligible for farm 

program payments.

Q: Who is affected by the new changes to “actively engaged”?

A: The new requirements apply to approximately 3,200 nonfamily farming general partnerships and joint 

ventures seeking to qualify more than one farm manager based solely on providing management or a 

combination of management and labor. For a member of such a farming operation, the active 

management now has a recordkeeping requirement, and a measurable standard in hours, or a percentage 

of the management needed annually for the entire farming operation. Under certain circumstances relating 

to farm size and complexity, no greater than three active managers may be allowed. Passive management, 

such as attendance of board meetings or conference calls, will not be considered as contributions of 

management. The rule does not change existing regulations regarding contributions of land, capital, 

equipment, or labor, or to landowners with a risk in the crop, or to spouses. Farming operations operated 

by entities other than general partnerships or joint ventures will not be affected.

Q: Are general partnerships and joint ventures totally comprised by family members exempt from 

this rule?

A: A farming operation with all members as family members is not subject to the provisions of this rule. 

This rule did not change the definition of “family member.” A family member is “a person to whom 

another member in the farming operation is related as a lineal ancestor, lineal descendant, sibling, spouse, 

or otherwise by marriage.” FSA handbooks clarify that family members include a great grandparent, 

grandparent, parent, child, including legally adopted children and stepchildren, grandchild, great 

grandchild, or a spouse or sibling of family members.
FACT SHEET

Payment Eligibility and Payment Limitations December 2015

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Q: “Actively engaged” affects payments from what programs?

A: By law, the “actively engaged” requirement applies to payment eligibility for the Agriculture Risk 

Coverage (ARC) and Price Loss Coverage (PLC) Programs, loan deficiency payments and marketing loan 

gains realized via the Marketing Assistance Loan program. For most farming operations, the new changes 

apply to eligibility for 2016 crop, program, or fiscal year payments. For farming operations that have 

already planted fall crops for the 2016 crop year, the changes will not apply until 2017. USDA data 

estimates approximately 3,200 operations may be affected by this change.

Q: What is “active personal management”?

A: “Active personal management” means personally providing and participating in management 

activities critical to the profitability of the farming operation and performed under one or more of the 

following categories:

(1) Capital (which includes: arranging financing and managing capital; acquiring equipment; 

acquiring land and negotiating leases; managing insurance; and managing participation in USDA 

programs);

(2) Labor (which includes hiring and managing of hired labor); and

(3) Agronomics and marketing (which includes: selecting crops and making planting decisions; 

acquiring and purchasing crop inputs; managing crops and making harvest decisions; and pricing 

and marketing of crop production.)

Q: What is “significant contribution of active personal management”?

A: “Significant contribution of active personal management” means active personal management 

activities performed by a person or member, with a direct or indirect ownership interest in the farming 

operation, on a regular, continuous, and substantial basis to the farming operation, and meets at least one 

of the following:

(1) Performs at least 25 percent of the total management hours required for the farming operation on 

an annual basis; or

(2) Performs at least 500 hours of management annually for the farming operation.

Q: What is a “significant contribution of active personal labor”?

A: The definition of a “significant contribution of active personal labor” is not changed by this 

rulemaking. “Significant contribution of active personal labor” means active personal labor activities 

performed by a person or member, with a direct or indirect ownership interest in the farming operation, 

on a regular, continuous, and substantial basis to the farming operation, and meets at least one of the 

following:

(1) Performs at least 50 percent of the total labor hours required for the farming operation on an 

annual basis; or

(2) Performs at least 1,000 hours of labor annually for the farming operation.
FACT SHEET

Payment Eligibility and Payment Limitations December 2015

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Q: What changed based on the comments?

A: A number of commenters provided that an equitable, measurable standard of significance should be 

one that combines both labor and management contributions due to the difficulty at times of deciding 

whether an activity or action is labor or management. In response, FSA clarified the current rule to 

address the issue when a person contributing both labor and management. The new standard for the 

combination of labor and management establishes minimum hourly requirements based on the existing 

hourly standard of labor of 1,000 hours and the new hourly standard of active personal management of 

500 hours.

As examples:

 If a person is contributing mostly management with a minimum number of hours of labor, then 

that person must contribute a minimum of 550 hours combined of management and labor;

 If a person is contributing mostly labor and with a minimum number of hours of management, 

then that person must contribute a minimum of 950 hours combined of management and labor;

and

 Other combinations of management and labor would require between 600 and 900 hours 

combined of management and labor.

Combination of Active Personal Labor and Active Personal Management

Minimum Requirement for a Significant Contribution

(in hours)

Management contribution 

in hours

Labor contribution 

in hours

Meets the minimum threshold for 

significant contribution, in hours

475 .............................. 75............................... 550

450 .............................. 100............................. 550

425 .............................. 225............................. 650

400 .............................. 250............................. 650

375 .............................. 375............................. 750

350 .............................. 400............................. 750

325 .............................. 425............................. 750

300 .............................. 550............................. 850

275 .............................. 575............................. 850

250 .............................. 600............................. 850

225 .............................. 625............................. 850

200 .............................. 650............................. 850

175 .............................. 675............................. 850

150 .............................. 800............................. 950

125 .............................. 825............................. 950

100 .............................. 850............................. 950

75 ................................ 875............................. 950

50 ................................ 900............................. 950

25 ................................ 925............................. 950

Q: When is this rule effective?

A: 2016 crop year for most farming operations. For farming operations that have already planted fall 

crops for the 2016 crop year, the rule will be effective 2017.

For more details or to learn more, contact your local Farm Service Agency office.