Farm Service Agency

Public Affairs Staff

1400 Independence Ave SW

Stop 0506, Room 3624-South

Washington, D.C. 20250-0506

Release No. 1528.07

WASHINGTON, Sept. 28, 2007 - The U.S. Department of Agriculture (USDA) today announced that it has issued an advance notice of proposed rulemaking regarding the treatment of lease agreements under various USDA programs. This advance notice allows agencies to seek early public input on a key issue.

The goal of this notice is to solicit comments on the feasibility of USDA's Farm Service Agency (FSA) and Risk Management Agency (RMA) establishing a standardized treatment of leases containing variable or flexible provisions under the programs administered by those Agencies.

"Improved commodity prices are effecting the financial arrangements made between landowners and farmers leasing land to grow crops," says Mark Keenum, Under Secretary for Farm and Foreign Agricultural Services. "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."

Current market trends and the increased use of flexible or variable cash leases have made it necessary to review the current regulations. At issue is whether regulations governing whether a lease is considered "cash-rent" or "share-rent" for a USDA program purpose need to be

revised or defined more specifically.

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.

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.