[Code of Federal Regulations]
[Title 7, Volume 7]
[Revised as of January 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR795.16]

[Page 502]
 
                          TITLE 7--AGRICULTURE
 
                            CHAPTER VII--FARM
                SERVICE AGENCY, DEPARTMENT OF AGRICULTURE
 
PART 795--PAYMENT LIMITATION--Table of Contents
 
Sec. 795.16  Custom farming.

    (a) Custom farming is the performance of services on a farm such as 
land preparation, seeding, cultivating, applying pesticides, and 
harvesting for hire with remuneration on a unit of work basis, except 
that, for the purpose of applying the provisions of this section, the 
harvesting of crops and the application of agricultural chemicals by 
firms regularly engaged in such businesses shall not be regarded as 
custom farming. A person performing custom farming shall be considered 
as being separate from the person for whom the custom farming is 
performed only if:
    (1) The compensation for the custom farming is paid at a unit of 
work rate customary in the area and is in no way dependent upon the 
amount of the crop produced, and (2) the person performing the custom 
farming (and any other entity in which such person has more than a 20-
percent interest) has no interest, directly or indirectly, (i) in the 
crop on the farm by taking any risk in the production of the crop, 
sharing in the proceeds of the crop, granting or guaranteeing the 
financing of the crop, (ii) in the allotment on the farm, or (iii) in 
the farm as landowner, landlord, mortgage holder, trustee, lienholder, 
guarantor, agent, manager, tenant, sharecropper, or any other similar 
capacity.
    (b) A person having more than a 20-percent interest in any legal 
entity performing custom farming shall be considered as being separate 
from the person for whom the custom farming is performed only if:
    (1) The compensation for the custom farming service is paid at a 
unit of work rate customary in the area and is in no way dependent upon 
the amount of the crop produced, and (2) the person having such interest 
in the legal entity performing the custom farming has no interest, 
directly or indirectly, (i) in the crop on the farm by taking any risk 
in the production of the crop, sharing in the proceeds of the corp, 
granting or guaranteeing the financing of the crop, (ii) in the 
allotment on the farm, or (iii) in the farm as landowner, landlord, 
mortgage holder, trustee, lienholder, guarantor, agent, manager, tenant, 
sharecropper, or in any other similar capacity.