Due to the confusing effect traditional oral cash rent situations have on eligibility for some USDA programs,  the Farm Service Agency and Risk Management Agency are proposing to issue regulations to deal with whether a lease is cash rent or a share lease situation.  In December, the USDA re-opened the comment period on this issue, with a new closing date of January 17, 2008.

The goal of the comment period is to help establish a standardized treatment of leases containing variable or flexible provisions under various programs administered by FSA and RMA.  As issue is eligibility for program payments, disaster assistance, and crop insurance.  Current program rules do not prevent tenants and landowners from taking advantage of various types of leases to adjust to changing market conditions. However, the agreement between the parties, which has sometimes been an oral agreement, rather than a written lease agreement, determines whether the parties have created a "cash-rent" or "share-rent" agreement for USDA program purposes.  This is significant due to the various programs' concern with allocation of production risk. 

According to a USDA press release on the comment period, Mark Keenum, Under Secretary for Farm and Foreign Agricultural Services,  states: "Improved commodity prices are effecting the financial arrangements made between landowners and farmers leasing land to grow crops.  By reviewing our current rules, we hope to provide producers with the ability to adjust their lease agreements to take advantage of changing market conditions while also letting USDA have the controls needed to ensure that program integrity is maintained as required by applicable statutes." 

Before taking any action, FSA and RMA will solicit public comments on the current rules governing "cash-rent" and "share-rent" provisions, especially examining variable and flexible leases.

Details on submitting comments can be found at www.regulations.gov.