Does DCP Contract Need To Be Revised?

Does DCP Contract Need To Be Revised?

If there's a change to the successor-in-interest, your contract with USDA's Farm Service Agency needs to be revised.

FAQ: I've had a change in ownership of the farm since I signed my DCP contract this spring. Does a DCP contract need to be revised?

Answer: Provided by Beth Grabau, public information and outreach specialist at the USDA Farm Service Agency's state office in Des Moines. FSA farm program specialist Kevin McClure assisted her in answering this question.

Short answer is yes, you may need to revise your contract with USDA's Farm Service Agency if there has been a change in your "successor-in-interest." For example, if there is a death, sale of land, foreclosure, bankruptcy or a change from the originally approved shares on a DCP/ACRE contract.

After a CCC-509 or a DCP/ACRE contract has all of the required signatures and the contract is approved, changes could occur that would result in the need for the farm program contract to be revised. A revised contract is needed because another party is succeeding to the interest in the existing contract, a change in the successor-in-interest.

These changes that are considered to be a basis for a successions-in-interest include: a transfer or change in the interest of a producer on the farm, such as due to a farm program participant's death; sale of land; foreclosure, bankruptcy or involuntary loss of the farm; or a change is needed to reflect change from the originally approved shares on the DCP contract.

If a farm has an approved DCP/ACRE program contract when the transfer or change took place, this will result in the termination of the contract, and a refund of all direct, countercyclical and ACRE payments, as applicable, that have been issued for the farm. The contract termination will be effective on the date of the transfer or change. Successors to the interest in the farm or crops on the farm subject to the contract may enroll the farm in a new DCP or ACRE contract.

After a new DCP/ACRE program contract has been signed with all of the obligations under the contract assumed as well as the payments previously issued for the farm refunded to CCC, payments will be reissued to the successor-in-interest contract holders.

However, these new successors are not eligible for payments in any fiscal year if they are not an eligible producer or have requested a share of the DCP/ACRE contract that does not adequately reflect the share of the crop.

Only those specific participants whose shares have changed are required to sign a revised CCC-509. These signatures are to be obtained no later than September 30 of the applicable crop year.

Question: When do I need to notify FSA? What is the deadline for notifying my local office of succession? What happens if I don't report any of these changes?

After CCC-509 has been approved, the farm operator, producer, owner or participant needs to inform the local FSA office of changes by: August 1 of the applicable year, if the change requires a reconstitution; or by September 30, if the change does not require a reconstitution.

After a succession-in-interest contract has been generated by the local office, participants must get all necessary signatures on the new contract. If this does not happen, the farm will not be considered enrolled in the USDA farm program. This is why it's important that producers don't delay reporting the changes.

If the change on the farm requires that a succession to the DCP contract be completed, and the contract is not revised or the contract isn't signed by all those sharing in DCP contract by September 30, then no one is eligible for that year's payments for the farm and all payments under the contract must be refunded. That includes those who originally signed the contract and those who are yet to sign it.

Question: My landlord and I have already been paid for this year's DCP payment. Due to sale of the farm, there is a new owner. With this change and the changes in crop prices, my landlord is considering changing the shares. How do we reconcile the payments that have been issued?

The reconciliation of payments will be done by FSA. This will ensure that payments are credited properly to reflect on 1099's issued by our offices. So, if a new contract was approved, with changes to the shares or individuals, those who were paid are responsible for refunding the amount of the difference.

At times, a refund would not be required. That happens in cases where the payment could still be earned when the final payment is issued. FSA may not demand the refund at the time of share revision. But this delay in requiring the repayment, in no way means a refund of unearned advance payments will not be required.

If you have specific questions or need details on USDA farm programs, contact your local USDA Farm Service Agency or other appropriate USDA agency office. And be sure to read the regular column of "Frequently Asked Questions about the Farm Program" appearing in each issue of Wallaces Farmer magazine and at www.WallacesFarmer.com.

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