On June 29, 2020, the Risk Management Agency (RMA) issued Product Management Bulletin: PM-20-044, announcing changes to the Multi-County Enterprise Unit Pilot Endorsement (Endorsement) and issued the Endorsement as revised. https://www.rma.usda.gov/Policy-and-Procedure/Bulletins-and-Memos/2020/PM-20-044; https://www.rma.usda.gov/-/media/RMAweb/Policies/Multi-County-Enterprise-Unit/2021/Multi-County-Enterprise-Unit-Pilot-Endorsement.ashx. RMA stated that the changes will provide greater flexibility for policyholders that elect enterprise units for both irrigated and non-irrigated practices and discover they do not qualify on or before the acreage reporting date. In the Endorsement, RMA added provisions that state that if the producer elects separate enterprise units for both irrigated and non-irrigated acreage on or before the acreage reporting date and discovers that they do not separately qualify for enterprise units, the producer may elect:
- One enterprise unit for the practice that qualifies and basic or optional units for the practice that does not qualify as reported on the acreage report;
- One enterprise unit for both the irrigated and non-irrigated practices as long as they qualify for a single enterprise unit as reported on the acreage report; and
- Basic or optional units for both irrigated and non-irrigated practices if they qualify and report on the acreage report.
ANALYSIS – Since units are elected by the acreage reporting date, it seems like this change would have no meaning because producers would likely know their unit structure by the acreage reporting date. However, once separate enterprise units are elected, this election remains in effect for subsequent crop years unless changed by the producer before the sales closing date. Therefore, it is possible that planting on different acreage or having a different mix of irrigated and non-irrigated acreage in any give crop year would cause the producer to no longer qualify for separate enterprise units for both practices. Previously, the producer’s only election was one enterprise for both practices if they qualified or basic or optional units for both practices. This change allows the producer to still have an enterprise unit for the practice that qualifies.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.