The Food, Conservation and Energy Act of 2008 that U.S. farmers will be hitched to for the next five years has something old, something new, something borrowed and certainly something to make a few farmers blue.

Here are key provisions of the 2008 farm bill developed by the National Cotton Council for a series of informational hearings on the new farm bill.

Direct payment reductions — For 2009, 2010 and 2011, the payment acres for direct payments will be reduced to 83.3 percent of base and restored to 85 percent of base for 2012.

Countercyclical payments — Producers may request partial payment up to 60 days prior to end of the marketing year. For 2008, 2009 and 2010, first partial is made after first 180 days of marketing year and final payment is made beginning Oct. 1. Partial may be up to 40 percent of projected final for 2008, 2009 and 2010 crops.

Direct payments — Producers may request up to 22 percent of direct payment in 2008, 2009, 2010 and 2011 in any month beginning Dec. 1 of calendar year before harvest. For 2008, the Secretary shall make payment as soon as possible.

Payment acres — No payments made to operators on a farm with less than 10 total base acres. Base acres will be reduced on a farm which has been subdivided for non-farm uses.

Revenue program option — Beginning in 2009 in return for accepting a 20 percent reduction in direct payments and a 30 percent reduction in loan rate, producers may make an irrevocable election to enroll all covered commodities and peanuts in state-level revenue countercyclical program called Average Crop Revenue Election.

For producers with qualifying losses, the program makes payments on a portion of planted acres based on the difference between 90 percent of the product of a state average yield factor times the national season average price for the previous two years for the commodity and the actual state revenue for the commodity. Enrollment is for entered year of election through 2012 crop.

Planting flexibility — Retains prohibition on planting fruits and vegetables on payment acres. Establishes planting flexibility pilot program on 75,000 acres in seven states.

Loan repayment rate — Repayment rates for commodities with posted county prices will be calculated using a 30-day average of market prices for the commodity prior to the loan redemption, or request for loan deficiency payment. The secretary of agriculture is given authority to modify temporarily the repayment rate in the event of a severe disruption to marketing, transportation or infrastructure.

Payment eligibility and limitations (beginning with the 2009 crop). This section contains perhaps the most significant changes from the 2002 farm bill, but at least farmers will have a year to figure out its impact. These changes could have a greater adverse impact on divorced or single farmers with large acreages.

• The 3-entity rule is terminated and direct attribution applies to all commodity program payments.

• Spouses may qualify as “person” eligible to receive payments. A spouse of an actively engaged spouse is automatically credited with making a significant contribution of labor and management. A spouse is defined as a “family member.”

• No limitations on marketing loan gains/loan deficiency payments.

• Direct payment limit is $40,000 per person

• Countercyclical payment is $65,000 per person.

Income means test (beginning with the 2009 crop)

• A farmer is not eligible for any commodity program payments if in the three previous years he earned an average of more than $500,000 a year in adjusted non-farm income. In addition, a farmer is not eligible for direct payments if in the three previous years, he earned an average of more than $750,000 in adjusted farm, ranch and forestry income.

• If an individual or entity earned an average of more than $1 million in adjusted non-farm income or more than $1 million in adjusted gross income (if less than 66.66 percent is from farming, ranching or forestry) that individual or entity is ineligible for conservation program payments for the year. This does not apply to easement programs.

Crop insurance — Raises fee for catastrophic coverage to $300 per crop per county.

Permanent disaster program — Establishes a revenue based, whole farm permanent disaster program to partially cover losses due to weather-related causes.

Conservation Reserve Program — Allows up to 32 million acres in the conservation reserve at any one time in fiscal 2010-12.

Wetlands Reserve Program — Establishes a maximum enrollment of 3.041 million acres. Re-established the WRP baseline at $1.4 billion. Changes appraisal process to better reflect land and easement values. Establishes new payment schedule to WRP easements

Environmental Quality Incentives Program — Increases EQIP funding by $3.4 billion. Allows the secretary of agriculture to give priority to EQIP applications that are for water conservation or certain irrigation practices. Creates a new payment limitation of $300,000 but allow a waiver to raise the limitations to $450,000 if the project has special environmental significance.

Conservation Stewardship Program (formerly Conservation Security Program) — Provides $1.1 billion in new funds with an enrollment goal of 12.769 million acres each fiscal year, Oct. 1, 2008, through Sept. 30, 2017. Creates a payment limit of $200,000 for all contracts entered into during any five-year period. Expands eligible land to private forests.

Wildlife Habitat Incentives Program — Extends WHIP for the life of the bill. Creates payment limitation of $50,000 per year.

Selected tax provisions

• Effective for payments made after Dec. 31, 2007, CRP payments to retired or disabled individuals are to be treated as rental payments for tax purposes and are therefore excluded from self-employment taxes and will not reduce the individual’s social security or disability payments.

• Extends through Dec. 31, 2009, the enhanced tax deduction for contributions of conservation easements which allows all taxpayers to deduct up to 50 percent of their adjusted gross income and carry forward the deduction for up to 15 years and allows farmers and ranchers to deduct up to 100 percent of their AGI for donation of conservation easement.

• Effective for expenditures paid or incurred after Dec. 31, 2008, establishes a tax deduction for the cost of actions to implement site-specific management measures included in recovery plans under the Endangered Species Act.

• Effective for taxable years after Dec. 31, 2009, improves “Aggie Bonds” by increasing loan limit from $250,000 to $450,000 and indexing for inflation. Eliminates dollar limitation in the definition of “substantial farmland.” Aggie Bonds are tax-exempt bonds issued by state and local governments to provide low interest loans to first-time farmers and ranchers.

• Effective for taxable years after Dec. 31, 2009, limits amount of farming losses that a taxpayer who receives a direct or countercyclical payment or CCC loan may use to offset non-farm business income to the greater of $300,000 or net farm income the taxpayer has received over the last five years.

• Effective for taxable years after Dec. 31, 2007, modifies the farm optional method so that electing taxpayers may be eligible to secure four credits of Social Security benefit coverage each taxable year and makes similar modification to non-farm optional method.

• For all commodity loans repaid after Jan. 1, 2007, CCC must issue a Form 1099-G to report a market gain associated with the repayment of a CCC loan whether with cash or CCC certificates.

Trade — Repeals GSM-103 and 1 percent cap on GSM-102 to comply with WTO ruling. (GSM-102 and GSM-103 programs underwrite credit extended by the private banking sector in the United States to approved foreign banks, allowing the U.S. banks to offer competitive credit terms). Authorizes $4 billion in credit guarantees.

Market Access Program — $200 million per year.

Research — Replaces Cooperative State Research, Education and Extension Services with new National Institute of Food and Agriculture.