On March 12, 2019, RMA issued Manager’s Bulletin: MGR-19-004, that revised the definition of beginning farmer and rancher under the Whole Farm Revenue Protection (WRFP) policy beginning with the 2019 and succeeding years. The 2018 Farm Bill enacted on December 20, 2018, revised the definition of beginning farmer or rancher for the Whole Farm Revenue Protection (WRFP) policy in section 522(c)(7) of the Federal Crop insurance Act (Act) (as redesignated). Section 522(c)(7)(F) of the Act now defines a beginning farmer or rancher as ” Notwithstanding section 502(b)(3), with respect to plans described under this paragraph, the term ‘beginning farmer or rancher’ means a farmer or rancher who has not actively operated and managed a farm or ranch with a bona fide insurable interest in a crop or livestock as an owner-operator, landlord, tenant, or sharecropper for more than 10 crop years. As of the August 31, 2018 contract change date for the WFRP policy, beginning farmer and rancher was defines as “An individual who has not actively operated and managed a farm or ranch in any state, with an insurable interest in a crop or livestock as an owner-operator, landlord, tenant, or sharecropper for more than five policy years, as determined in accordance with FCIC procedures.”
MGR-19-004 allows the 2018 Farm Bill definition of beginning farmer and rancher to apply to all WFRP policies with a sales closing date after December 20, 2018. MGR-19-004 also states that this new definition is applicable to any use of the term beginning farmer and rancher in the WFRP policy (see https://www.rma.usda.gov/-/media/RMAweb/Policies/Whole-Farm-Revenue-Protection/2019/Whole-Farm-Revenue-Protection-Pilot-Policy-19-0076.ashx)or the WFRP Handbook (see https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Coverage-Plans—18000/Whole-Farm-Revenue-Protection—18160/2019-18160-WFRP-Pilot-Handbook.ashx?la=en). MGR-19-004 states that the new definition also applies to procedures in the 2019 General Standards Handbook used to determine beginning farmer and rancher eligibility for the purposes of WFRP. Producers are to identify themselves and provide verification not later than July 15, 2019 to receive the benefits for the 2019 policy year.
ANALYSIS – The sales closing date for 2019 is January 31, 2019 for most producers on a calendar or early fiscal year tax filing. On its face, it appears that MGR-19-004 changes the WFRP policy after the August 31, 2018 contract change date for the 2019 policy year. Historically, RMA does not make changes to any policy after the contract change date because that is the date the policy provisions are legally set for the purposes of insurance. Further, the contract change date is the last date policy changes can be made under the Standard Reinsurance Agreement. Even when there has been statutory changes to policies, they have generally been made effective after the next contract change date. The bulletin does not explain its rational basis for allowing these changes to the WFRP policy to be made after the contract change date. Allowing changes after the contract change date can make RMA vulnerable to legal challenges.
The other concern is that this bulletin is not part of the policy. Under WFRP, “policy” is defined as “The agreement between you and us to insure all insurable revenue on the farm operation, and consisting of the application accepted by us, these Basic Provisions, the Special Provisions, any other applicable endorsements or options, the actuarial documents and the applicable regulations published in 7 CFR chapter IV.” MGR-19-004 states that the new definition is applicable to the 2019 WFRP policy but a review of the Basic Provisions and Special Provisions in the actuarial information browser, published at https://webapp.rma.usda.gov/apps/actuarialinformationbrowser/, do not show any revisions were made to the definition of beginning farmer and rancher. It is unclear that the policy change made through MGR-19-004 is enforceable.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.