--- kind: "section" citation: "7 U.S.C. § 7212" title: "7" title_heading: "Agriculture" number: "7212" heading: "Elements of contracts" release: "119-102" date: "2026-07-12" url: "https://uscodex.org/usc/7/7212" units: - "Chapter 100 — Agricultural Market Transition" - "Subchapter II — Production Flexibility Contracts" --- # §7212. Elements of contracts - (a) **Time for contracting—** - (1) **Commencement—** To the extent practicable, the [Secretary](/usc/7/7202.md?p=13) shall commence entering into [contracts](/usc/7/7202.md?p=3) not later than 45 days after April 4, 1996. - (2) **Deadline—** Except as provided in [paragraph (3)](#a-3), the [Secretary](/usc/7/7202.md?p=13) may not enter into a [contract](/usc/7/7202.md?p=3) after August 1, 1996. - (3) **Conservation reserve lands—** - (A) **In general—** At the beginning of each fiscal year, the [Secretary](/usc/7/7202.md?p=13) shall allow an eligible owner or [producer](/usc/7/7202.md?p=12) on a farm covered by a conservation reserve [contract](/usc/7/7202.md?p=3) entered into under [section 3831 of title 16](/usc/16/3831.md) that terminates after the date specified in [paragraph (2)](#a-2) to enter into or expand a [production flexibility contract](/usc/7/7202.md?p=3) to cover the [contract acreage](/usc/7/7202.md?p=4) of the farm that was subject to the former conservation reserve [contract](/usc/7/7202.md?p=3). - (B) **Amount—** [Contract payments](/usc/7/7202.md?p=6) made for [contract acreage](/usc/7/7202.md?p=4) under this paragraph shall be made at the rate and amount applicable to the annual [contract payment](/usc/7/7202.md?p=6) level for the applicable crop. For the fiscal year in which the conservation reserve [contract](/usc/7/7202.md?p=3) is terminated, the owner or [producer](/usc/7/7202.md?p=12) subject to the [production flexibility contract](/usc/7/7202.md?p=3) may elect to receive either [contract payments](/usc/7/7202.md?p=6) or a prorated payment under the conservation reserve [contract](/usc/7/7202.md?p=3), but not both. - (b) **Duration of contract—** - (1) **Beginning date—** The term of a [contract](/usc/7/7202.md?p=3) shall begin with— - (A) the 1996 crop of a [contract commodity](/usc/7/7202.md?p=5); or - (B) in the case of acreage that was subject to a conservation reserve [contract](/usc/7/7202.md?p=3) described in [subsection (a)(3)](#a-3), the date the [production flexibility contract](/usc/7/7202.md?p=3) was entered into or expanded to cover the acreage. - (2) **Ending date—** The term of a [contract](/usc/7/7202.md?p=3) shall extend through the 2002 crop, unless earlier terminated by the owner or [producer](/usc/7/7202.md?p=12). - (c) **Estimation of contract payments—** At the time the [Secretary](/usc/7/7202.md?p=13) enters into a [contract](/usc/7/7202.md?p=3), the [Secretary](/usc/7/7202.md?p=13) shall provide an estimate of the minimum [contract payments](/usc/7/7202.md?p=6) anticipated to be made during at least the first fiscal year for which [contract payments](/usc/7/7202.md?p=6) will be made. - (d) **Time for payment—** - (1) **In general—** An annual [contract payment](/usc/7/7202.md?p=6) shall be made not later than September 30 of each of fiscal years 1996 through 2002. - (2) **Advance payments—** - (A) **Fiscal year 1996—** At the option of the owner or [producer](/usc/7/7202.md?p=12), 50 percent of the [contract payment](/usc/7/7202.md?p=6) for fiscal year 1996 shall be made not later than 30 days after the date on which the [contract](/usc/7/7202.md?p=3) is entered into and approved by the [Secretary](/usc/7/7202.md?p=13) and the owner or [producer](/usc/7/7202.md?p=12). - (B) **Subsequent fiscal years—** At the option of the owner or [producer](/usc/7/7202.md?p=12) for fiscal year 1997 and each subsequent fiscal year, 50 percent of the annual [contract payment](/usc/7/7202.md?p=6) shall be made on December 15 or January 15 of the fiscal year. The owner or [producer](/usc/7/7202.md?p=12) may change the date selected under this subparagraph for a subsequent fiscal year by providing advance notice to the [Secretary](/usc/7/7202.md?p=13). - (3) **Special rule—** Notwithstanding the requirements for making an annual [contract payment](/usc/7/7202.md?p=6) specified in paragraphs [(1)](#d-1) and [(2)](#d-2), at the option of the owner or [producer](/usc/7/7202.md?p=12), the [Secretary](/usc/7/7202.md?p=13) shall pay the full amount (or such portion as the owner or [producer](/usc/7/7202.md?p=12) may specify) of the [contract payment](/usc/7/7202.md?p=6) required to be paid for any of fiscal years 1999 through 2002 at such time or times during that fiscal year as the owner or [producer](/usc/7/7202.md?p=12) may specify. ## Source credit (Pub. L. 104–127, title I, § 112, Apr. 4, 1996, 110 Stat. 899; Pub. L. 105–228, § 2, Aug. 12, 1998, 112 Stat. 1516; Pub. L. 106–78, title VIII, § 811, Oct. 22, 1999, 113 Stat. 1181.) ## Notes ### Editorial Notes ### Amendments 1999—Subsec. (d)(3). Pub. L. 106–78, in par. heading, struck out “for fiscal year 1999” after “rule” and, in text, substituted “any of fiscal years 1999 through 2002” for “fiscal year 1999”. 1998—Subsec. (d)(3). Pub. L. 105–228 added par. (3). ### Statutory Notes and Related Subsidiaries ### Production Flexibility Contract Payments Pub. L. 106–170, title V, § 525, Dec. 17, 1999, 113 Stat. 1928, as amended by Pub. L. 107–147, title IV, § 417(24)(A), Mar. 9, 2002, 116 Stat. 57, provided that: “Any option to accelerate the receipt of any payment under a production flexibility contract which is payable under the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7201 et seq.), as in effect on the date of the enactment of this Act [Dec. 17, 1999], shall be disregarded in determining the taxable year for which such payment is properly includible in gross income for purposes of the Internal Revenue Code of 1986 [26 U.S.C. 1 et seq.].” Pub. L. 105–277, div. J, title II, § 2012, Oct. 21, 1998, 112 Stat. 2681–902, provided that: In General.—The options under paragraphs (2) and (3) of section 112(d) of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7212(d)(2) and (3)), as in effect on the date of the enactment of this Act [Oct. 21, 1998], shall be disregarded in determining the taxable year for which any payment under a production flexibility contract under subtitle B of title I of such Act [7 U.S.C. 7211 et seq.] (as so in effect) is properly includible in gross income for purposes of the Internal Revenue Code of 1986 [26 U.S.C. 1 et seq.]. Effective Date.—Subsection (a) shall apply to taxable years ending after December 31, 1995.”