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Published February 15, 2011, 11:47 AM

Stuck in base case

THIEF RIVER FALLS, Minn. — A Pennington County, Minn., farmer says Farm Service Agency unfairly has taken away some of his crop acre bases because of the way the agency handled Conservation Reserve Program contracts 11 years ago.

By: Mikkel Pates, Agweek

THIEF RIVER FALLS, Minn. — A Pennington County, Minn., farmer says Farm Service Agency unfairly has taken away some of his crop acre bases because of the way the agency handled Conservation Reserve Program contracts 11 years ago.

Lyle C. Olson, 55, says crop payment bases that were transferred to him when a landlord enrolled land in the CRP in 1999. Now, those bases are being returned to that landowner and taken from him. He says if the FSA ruling stands, he’ll lose direct payments on the farm that his son, Krist, 26, is taking over.

Olson thinks the issue could have implications for millions of acres of acres that have been in the CRP and whether government payments for “base acres” that were truly forfeited, or now can be retrieved from other owners who reconstituted them into other farms. He says the issue goes to whether those reconstituted acres will lose payments and no longer have the same value.

The same official who was his FSA county executive director when the matter began is now the state official telling him the issue can’t be appealed through normal channels and that his option for now is to have it “reviewed” by the National Appeals Division.

He says FSA officials have told him that 300 farmers in Minnesota may have had similar base reconstitutions. State FSA officials are studying this and whether those people, too, could lose their base acres.

“We’re trying to resolve the matter; it’s not final,” says Glen Schafer, FSA executive officer for Minnesota, referring to Olson’s particular situation. “We hope to have a positive resolution to the greatest extent possible.”

Starting from first

Olson’s situation started more than 10 years ago.

In 1999, Olson was in his mid-40s and had been renting 200 acres from a neighbor, Hal Wally, who decided to put the rented land in the CRP. At the time, Olson says FSA officials told Wally and others in the county and state they — under the 1996 farm bill, in effect at the time — would permanently lose production bases for any land put into the CRP. Schafer then was the FSA executive director for Minnesota’s Pennington County.

The 200-acre Wally land had been part of 1,060 acres that Olson farmed. At the time, Wally agreed to transfer the wheat base for those acres to Olson who would “reconstitute” it into a combined farm.

All was well until 2009, when the CRP contract expired and Wally planned to take the 200 acres out of the CRP and convert them back to grain production. But Wally discovered there was no base on it, because he’d transferred the base to Olson, which meant he wouldn’t get any farm program payments on the 200 acres.

According to Olson, Wally contacted Wally Sparby, an agricultural legislative representative for Rep. Collin Peterson, D-Minn. Sparby is a former state legislator, a former FSA county executive director for Pennington County and was state FSA director for much of the Clinton administration years. Sparby bypassed county and state officials and took Wally’s CRP complaint to FSA officials in Washington as a “congressional inquiry.” Brandon Willis, FSA deputy administrator, made the decision that bases indeed could go back to landowner Wally.

Olson says in the 2002 farm bill, Congress said that CRP bases were “recoverable,” but only if the landowner had formally given them up to the agency through the Form 505. He was told there was no evidence Wally had signed such a form or otherwise formally given up his base acres. Willis determined they could go back to him.

Giving up bases

Olson learned of the situation Feb. 3 and was told he’d meet with state and regional FSA officials Feb. 9 in Thief River Falls. They told him that Schafer, who now is the top assistant to the state executive director, had decided the issue was “non-appealable” under normal county and state methods, but that decision may be reviewed at the NAD level.

“We’re still working on it; it’s not final,” Schafer reiterates.

Olson thinks he isn’t getting full appeal rights because the issue went straight to Washington, but Schafer says that’s not necessarily the case.

Olson’s says he was told his only option now would be to ask for a review by the National Appeals Division, which is a part of USDA but separate from FSA and other agencies. Olson says he asked whether, if he couldn’t appeal the issue at the county and state level, whether officials at that level could write a “letter of support” for his NAD actions and was told no.

The way Olson sees it, he’ll unfairly lose 111 base acres in the deal. He thinks Sparby’s action unintentionally had the effect of taking away his right of appeals at levels where Olson thinks he may have prevailed. The FSA officials say the signup in 2002 had a 30-day appeal time limit, and that may apply to Olson.

Olson says that if he’d known he could have lost his wheat base acres, he would have converted the land to oilseeds several years ago so that he could keep an oilseed base on them. He says the wheat base is worth about $3,500 a year in direct payments. The oilseed base would be about two-thirds of that amount, but it would be better than losing his base completely.

The FSA officials who met Olson Feb. 9 in Thief River Falls offered adjustments, but offered no significant change in net base acres.

Ironically, Olson had signed a Form 505 in a separate but related issue.

Reason: The reconstitution resulted in Olson having more base acres than he had actual cropland, he says. In January 2000, Olson updated his base acres to reflect current production to be eligible for the farm program. In that process, Olson was told he was not allowed to have more base than crop acres, so he voluntarily forfeited 111 acres of base by signing the Form 505, which made the move permanent for him.

Olson says he’s contacted Peterson’s office, as well as other Minnesota congressional offices, and that they are working for a resolution.

It is important to keep the bases intact, Olson says, because farm prices could go down and a government safety net would be more important.

“In the late 1980s and early 1990s, the bases (and associated price support payments) meant the difference between profit and loss,” he says.

In the past few years, Olson suffers from spine and cardiac problems, so he’s pressing the issue on behalf of his son, he says.