TN 10 (02-92)

RS 02505.115 Federal Agricultural Payment Programs (FAPP)


There have been many FAPP over the years. One of these is the Food Security Act of 1985 (P.L. 99-198). Programs under this act include:

  • Soil conservation program or conservation reserve program (under which payments that are frequently referred to as diversion payments, are made for removing land from production);

  • Whole herd dairy buy-out program (under which the dairyman agrees to dispose of the whole herd in return for FAPP payments);

  • Deficiency payments for wheat, honey, etc. These payments make up any deficiency between the prevailing market price and the price provided for in the agreement.


1. Payments

a. General Characteristics

  • May be in increments or one time;

  • Usually are reported as SEI unless certified as excludable by the Secretary of Agriculture.

b. Payment Types

Payment types are cash or farm commodity such as feed grain or other payment in kind.

2. Service

a. Amount Rendered

Only minimal services are required under FAPP agreements. These services have no effect on benefits.

b. Types Rendered

  • Planting cover crop such as grass, trees, legumes, etc;

  • Selling, transporting or, otherwise disposing of dairy herd

  • If payment is in farm commodity - transporting and placing in storage


Generally, services rendered and payments received which relate directly to FAPP do not cause a loss of benefits under the ET since the SEI exclusion provisions can be applied. See RS 02505.125 ff. regarding SEI exclusions.


1. Services Rendered Under FAPP

Regardless of when the FAPP agreement is entered into i.e., before or after the initial month of entitlement, apply the following rules:

  1. a. 

    Do not count hours worked which relate directly to FAPP when determining “substantial services” in a grace year;

  2. b. 

    Do not consider services rendered “significant” when applying SEI exclusion.

2. FAPP Payments - How Treated

  1. a. 

    FAPP Payments Reported as SEI in Initial Year of Entitlement

    • Count for ET purposes;

    • Consider if year can be a grace year and apply monthly test.

  2. b. 

    FAPP Payments Reported as SEI in Subsequent Years

    • Accept the beneficiary's allegations as to the amount of FAPP payments, unless there is reason not to. Ordinarily, do not develop offsetting expenses such as: seed and fuel costs for planting cover crop; transportation and storage costs of grain received as FAPP payment; etc., unless, after having given the beneficiary a full explanation of the SEI exclusion provision as required by RS 02505.140, there is an indication that the beneficiary has not taken offsetting expenses into account in the amount alleged, and benefits will be affected.

    • Exclude FAPP payments from gross income under the SEI exclusion rule regardless of whether the agreement is entered into before or after initial month of entitlement.

3. Exclusion From Earnings For Enforcement

When FAPP payments are reported as SEI, use the procedures in RS 02510.020 to ensure that the payments are not counted in the earnings enforcement operation.


Other Federal agricultural program payments, RS 01803.210

SEI-expenses deductible, RS 01803.218 Payment in-kind (PIK), RS 01402.020A.1.

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RS 02505.115 - Federal Agricultural Payment Programs (FAPP) - 01/10/2002
Batch run: 07/09/2013