Farm Bill: Beginning Farmer/Rancher (BFR) Program

Although not in final version, the Risk Management Agency, a division of the USDA has released several new products that will be implemented starting with the 2015 crop year. The first topic that we will discuss is the Beginning Farmer/Rancher (BFR) program.

To be a Beginning Farmer/Rancher for crop insurance purposes, an individual must not have actively operated and managed a farm or ranch in any county, in any state, with an insurable interest in a crop or livestock as an owner-operator, landlord, tenant, or sharecropper for more than five crop years, excluding any crop year the BFR was under the age of 18, in post-secondary studies or on active duty in the U.S military. Any insurable interest means any interest as an individual or as a substantial beneficial interest in another person who has an insurable interest in any crop or livestock, regardless of whether such crop or livestock was insured or whether the person had participated in a USDA program.



The benefits include:

1.      Exemption from paying the administrative fee for catastrophic and additional coverage policies.

2.     Additional 10 percentage points of premium subsidy for additional coverage policies that have premium subsidy.

3.     Use of the production history of farming operation that the BFR was previously involved in the decision making or physical activities.

4.     An increase in the substitute Yield Adjustment, which allows the BFR to replace a low yield due to an insured cause of loss, from 60 to 80 percent of the applicable transitional yield.  



  

Key information includes:

1.     The individual must not have actively operated and managed a farm or ranch in any county with a bona fide insurable interest in any crop or livestock as an owner operator, landlord, tenant or sharecropper for more than 5 years.

2.     Only an individual person can be a BFR. However, primary entitites other than individuals can receive BFR benefits as long as all individuals comprising the entity qualify and certify for BFR.

3.     An insurable interest in any crop or livestock includes substantial beneficial interst in another person who has an insurable interest in any crop or livestock.

4.     The BFR may exclude any year the BRF was under the age of 18, in post-secondary studies (limited to 5 crop years) or on active duty in the U.S. military  from the 5 crop years.

5.     Applies to any crop or livestock on a nationwide basis, not crop/county.

6.     Insured may also obtain New Producer status on a county/crop basis if applicable.

7.     Insured must request and certify BFR status by the insured’s applicable sales closing date by completing the BFR application. BFR will only be applied to those crops with a sales closing date after the certification date.

8.     Initial application will be used in subsequent years.

9.     When an insured is a BRF and plant on native sod resulting in a reduction t the premium subsidy, the additional premium subsidy for BFR is applied prior to the reduction of subsidy due to planting on native sod.

10.  BFR previously involved in a farming/ranching operation may use the production history of the previous insured’ when the BFR was previously involved in the farming/ranching operation decision making or physical activities to produce the crop or livestock.

11.  If the insured is insuring the landlord/tenant share, then both the landlord/tenant must be qualified as BFR’s and any applicable production history should also be considered.

12.  Prevented Planting does not count against BFR history when all acreage was prevented from planting.

13.  Remaining years of BFR benefits will be determined by the primary or SBI with the fewest years of eligibility.

These are just a few highlights of the BFR program. As always consult with your Crop Insurance agent for further clarification and or modifications to the program. All information was derived from RMA’s white paper discussing the BFR policy.