Minnesota Farm Service Agency (FSA) State Executive Director John Monson recently said that Minnesota farmers in 2005 produced a record crop of corn and soybeans. Due to the record yields and low market prices, Loans Deficiency Payments (LDPs) have increased causing many producers to reach the payment limitation of $75,000 for LDPs. Producers reviewing their operation structure need to consider the following information.

For an individual or entity to be considered a separate person, the individual or entity must: have a separate and distinct interest in the land or crop involved, exercise separate responsibility for this interest, and maintain funds or accounts separate from that of any other individual or entity for this interest.

Spouses may be considered as separate persons for payment limitation purposes if they request to be separate by the April 1 status date, and they meet the requirements to be considered separate persons.

Business practices and activities that may adversely affect the ability of an individual or entity to meet requirements to be considered a separate person include:

-common bank and loan accounts for multiple farming operations

-cross collateralization -the same assets, such as growing crops, program payments, crop and crop insurance proceeds, are pledged by multiple producers as security for a loan or multiple loans

-use of accounting ledgers rather than actual bank and supplier accounts

-farm operating loans are guaranteed or secured by assets of other farming .operations, individuals, and entities.

The status of an individual or entity on April 1 of the applicable crop, program, or fiscal year is the basis on which FSA person determinations are made for the applicable crop, program, or fiscal year.

Payment limitations, other than LDPs, include Direct and Counter Cyclical payment $40,000 for direct payments and $65,000 for counter-cyclical payments; CRP is $50,000; EQIP is $450,000 total (FY 2002 through FY 2007); and the Non-insured Crop Disaster Assistance Program is $100,000.

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