Small businesses come in all different shapes and sizes. A farm is just as much a small business as a retail outlet or a restaurant. The one difference that a farmer must face very year are regulations and weather conditions that can change their income outlook. That’s why farm subsidies have been put into place. The first farm subsidies were put into place during the Great Depression to make sure that the country would have enough food.
Today’s farm subsidies are a little different. Farm bills have been passed for many different reasons over the years. Sometimes it is to conserve the environment, while at other times they have been used to promote a specific crop like corn. No matter what the purpose of the farm bill may be, they all have one thing in common: they provide farm subsidies.
If you want to know how to apply for a farm subsidy, the first step you’ll need to take is to determine if your property has qualified under the current bill. Not all subsidies are renewed annually, so this is a process that will need to be renewed annually. Here are the steps you’ll need to take.
1. Contact your local Farm Service Agency.
The FSA will have information about the programs that are in your community. Most subsidies have two requirements that must be met before they’ll be awarded: you must be actively farming the land and you must have a certain amount of acreage. Just beginning a farm in this fiscal year may not be good enough to land a subsidy. It is not uncommon for the FSA to require copies of your tax returns to prove that you are a farmer. Larger farms are going to receive more subsidies, if approved, than smaller farms.
There may also be some farm subsidies available from your local Soil and Water Conservation District. If you are applying for your first farm subsidies, it is often a good choice to check with both agencies to see what is available. This information may also be available through online resources that each agency provides.
2. Since not all subsidies are the same, you’ll need to choose which one you want.
Although not every community qualifies for the three primary subsidies that are generally available, most of them do. That means the average farmer is going to need to choose the subsidy that they wish to pursue.
Conservation Reserve Program subsidies.
This program is designed to help conserve farmland in the United States by restoring the soil. Farmers who take advantage of this subsidy agree not to plow or till their soil in exchange for rental payments from the US government. It is not uncommon for farms to be on this program for more than 10 years. Farmers must take their fields out of production to qualify.
Counter Cyclical Payment subsidies.
This program helps to supplement the income of farmers who are growing crops every year. Crops are a commodity that is regularly traded, so prices can drop quickly. If prices were to drop at harvest time, a farmer could wind up losing everything. These subsidies are designed to pay the farmer a price difference should the retail prices fall too far.
Some farmers opt to take the emergency subsidies instead so that they have something to fall back upon should the unthinkable happen. These subsidies help to pay for crops, livestock, and even land that is damaged or lost because of natural events, like flooding or a tornado. Drought is sometimes included on this list as well.
3. You may be eligible for direct payments.
Some farms qualify for the direct payment subsidies instead. This payment is given to farmers year after year in the same amount, no matter what circumstances occur. Whether prices rise or fall or the economic climate hits another recession like in 2008, there is no change at all to the amount that is paid in this program. On good years, a farmer could consider this a bonus check. On a bad year, it’s a lifeline.
4. You have to grow your crops to government standards.
If you have been approved for a farm subsidy, then the next step in the process is growing your crops. The government has set specific standards that must be followed for a subsidy to be granted. For the farmer, this may mean using pesticides that they normally wouldn’t want to use on their land. If there are subsidies in place for livestock, then a typical requirement would be to use antibiotics on the animals.
5. Farm subsidies are also considered taxable income.
These subsidies are not grants for farmers. It is money that counts as part of their income for the year. Farmers must include the amounts that were received on their tax returns or face steep penalties.
6. Prepare for regular inspections.
Although there is often no requirement for a farm to be inspected to see if it is in compliance of subsidy requirements, it may happen. This is even more likely if this is the first farm subsidy for which you have applied. The FSA or your local conservation district may wish to see if your farm land is suitable for the subsidy. If they approve, then you’re ready to get farming. If not, they may have a list of recommended changes that you would need to make and then you could reapply for a subsidy. You may also have inspectors looking at how you plant, grow, and harvest crops to ensure you are meeting standards.
The standards for a farm subsidy can change annually because the laws that authorize the payments are passed annually. If you qualify this year for a subsidy, follow all of the terms and conditions that are set forth and then remember to reapply the next year once the new bill is authorized. In doing so, you will be able to keep the subsidies for your farm coming in.