FACT SHEET

UNITED STATES DEPARTMENT OF AGRICULTURE

FARM SERVICE AGENCY

Page 1

January 2013

Actively Engaged in Farming and Payment Limits

Overview

For more than 20 years, Congress 

and the U.S. Department of Agriculture (USDA) have worked to ensure 

that farm program benefits only go 

to farmers who are actively engaged 

in farming. The American Taxpayer 

Relief Act of 2012 extends the required implementation of the actively 

engaged and payment limitation 

provisions of the 2008 Farm Bill for 

the 2013 program year.

The Food, Conservation, and Energy 

Act of 2008 (2008 Farm Bill) requires program participants to meet 

specific provisions to receive farm 

program benefits. Here is a summary 

of those provisions: The American 

Taxpayer Relief Act of 2012 extends 

the required implementation of the 

actively engaged and payment limitation provisions of the 2008 Farm Bill 

for the 2013 program year.

Actively Engaged in Farming

To be eligible for payments and 

benefits under specified programs, all 

program participants, either individuals or legal entities, must provide 

significant contributions to the 

farming operation to be considered 

as “actively engaged in farming.” 

Contributions can consist of capital, 

land, and/or equipment, as well as 

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; as 

well as 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 $40,000. 

Exceptions to the General Requirements

Landowners may be considered 

“actively engaged in farming” if 

they contribute the owned 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.

Spouses may both be considered 

“actively engaged in farming” if one 

spouse makes all of the requisite and 

at-risk contributions. 

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 cashrented 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.

Payment Limitations 

Direct Attribution

The 2008 Farm Bill, as amended, 

establishes a maximum dollar 
FACT SHEET

Actively Engaged in Farming and Payment Limits January 2013

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 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 is crediting 

payments made to 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 

Table 1.

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 Table 1, 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 Table. 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.

More Information

To find more information about 

FSA programs, contact your local FSA office or USDA Service 

Center, or visit the FSA online at 

www.fsa.usda.gov. 

The U.S. Department of Agriculture 

(USDA) prohibits discrimination in all 

of its programs and activities on the 

basis of race, color, national origin, age, 

disability, and where applicable, sex, 

marital status, familial status, parental 

status, religion, sexual orientation, 

political beliefs, genetic information, 

reprisal, or because all or part of an 

individual’s income is derived from any 

public assistance program. (Not all 

prohibited bases apply to all programs.) 

Persons with disabilities who require 

alternative means for communication 

of program information (Braille, large 

print, audiotape, etc.) should contact 

USDA’s TARGET Center at (202) 720-

2600 (voice and TDD). 

To file a complaint of discrimination, 

write to USDA, Assistant Secretary 

for Civil Rights, Office of the Assistant Secretary for Civil Rights, 1400 

Independence Avenue, S.W., Stop 9410, 

Washington, DC 20250-9410, or call 

toll-free at (866) 632-9992 (English) or 

(800) 877-8339 (TDD) or (866) 377-

8642 (English Federal-relay) or (800) 

845-6136 (Spanish Federal-relay). 

USDA is an equal opportunity provider 

and employer.

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Table 1

Program Payment Limitations in Dollars

Program Payment Type Limitation (In Dollars)

2009 – 2013

Commodity programs

Direct payments on covered commodities except peanuts 40,000/1

Direct payments on peanuts 40,000/1

Counter-cyclical and Average Crop Revenue Election 

(ACRE) payments on covered commodities except peanuts

65,000/2

Counter-cyclical and ACRE payments on peanuts 65,000/2

Price support programs No limits

Conservation programs

Conservation Reserve Program (CRP) annual rental payment 50,000

Environmental Quality Incentives Program (EQIP) (all 

contracts for FY 2009-13).

300,000

Cost Conservation Stewardship Program (CSTP) (all 

contracts for FY 2009-13)

200,000

Grassland Reserve Program (GRP) 50,000

Wetlands Reserve Program (WRP) 50,000

Wildlife Habitat Incentives Program (WHIP) 50,000

Disaster and Livestock assistance programs

Noninsured Crop Disaster Assistance Program (NAP) 100,000

Supplemental Revenue Assistance Payments (SURE)

program, Livestock Indemnity Program (LIP), Livestock 

Forage Program (LFP) and Emergency Assistance for 

Livestock, Honey Bees and Farm-Raised Fish (ELAP)

100,000

Tree Assistance Program (TAP) 100,000

Other programs

Trade Adjustment Assistance (TAA) 10,000 /3

1. If the person or legal entity has a direct or indirect interest in payments earned on a farm that 

is in ACRE, this limitation will reflect a 20 percent reduction in direct payments on each farm 

that is participating in ACRE.

2. Under ACRE, this amount will be a combined limitation for counter-cyclical and ACRE 

payments. If a person or legal entity has a direct or indirect interest in payments earned on a farm 

participating in ACRE, this limitation will reflect an increase for the amount that the direct 

payments were reduced.

3. TAA payments and counter-cyclical payments received by a person or legal entity for the 

same program or fiscal year are limited to combined total of $65,000 if counter-cyclical 

payments are received for covered commodities or peanuts; or a total of $130,000 if countercyclical payments are received for both covered commodities and peanuts.

FACT SHEET

Actively Engaged in Farming and Payment Limits January 2013

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