WASHINGTON – Farm subsidies are controversial, and even moreso when they’re going to people who don’t actually farm.
On Tuesday, the U.S. Department of Agriculture announced a proposed rule under the 2014 farm bill to limit payments to people classified as farm managers, but not actively engaged in managing a farm.
The term “actively engaged” has been around since 1987, and it’s defined broadly in the law. According to USDA some operations are able to have an unlimited number of farm managers who can get payments from farm safety net programs.
Now, USDA wants non-family joint ventures or partnerships to document that managers contribute 500 hours annually to managing the operation, or 25 percent of the “critical management time” that USDA deems necessary for a given farming operation’s success. USDA also says the proposed rule would limit many operations to a single farm manager eligible to receive farm safety net payments.
Iowa Senator Chuck Grassley has been vocal in his efforts to curb the abuse of farm subsidies, and says before it was gutted in the conference committee, he inserted an “actively engaged” amendment into the Senate version of the 2014 farm bill.
“[The amendment] was to put a $250,000 cap on what any one farmer could get from the farm program,” explained Grassley to reporters Wednesday. “Well, as I said, it was gutted in conference so we got very, very little of what I originally intended and probably amounts to somewhere between one and four percent of farmers could be affected by the new rules that the U.S. Department of Agriculture has adopted.”
However Grassley also stated that he believes USDA Secretary Tom Vilsack is moving in the right direction.
“I believe that Secretary Vilsack is trying to do everything he can within the law that we ended up passing,” Grassley said, “which isn’t a very good law for this specific issue. But I think he’s done a pretty good job of writing regulations.”
In a statement, Grassley elaborated that he estimates roughly ten percent of farmers receive about 75 percent of farm subsidies, and also cited a September 2013 Government Accountability Office report showing that even family farms claim farm subsidies inappropriately.
To hear more from Grassley about USDA’s proposed rules, click the audio player above this story. The full USDA press released is reproduced below.
USDA Implements 2014 Farm Bill Provision to Limit Payments to Non-Farmers
Department Proposes Changes to “Actively Engaged” Rule
WASHINGTON, March 24, 2015 – The U.S. Department of Agriculture (USDA) today announced a proposed rule to limit farm payments to non-farmers, consistent with requirements Congress mandated in the 2014 Farm Bill. The proposed rule limits farm payments to individuals who may be designated as farm managers but are not actively engaged in farm management. In the Farm Bill, Congress gave USDA the authority to address this loophole for joint ventures and general partnerships, while exempting family farm operations from being impacted by the new rule USDA ultimately implements.
“We want to make sure that farm program payments are going to the farmers and farm families that they are intended to help. So we’ve taken the steps to do that, to the extent that the Farm Bill allows,” said Agriculture Secretary Tom Vilsack. “The Farm Bill gave USDA the authority to limit farm program payments to individuals who are not actively engaged in the management of the farming operation on non-family farms. This helps close a loophole that has been taken advantage of by some larger joint ventures and general partnerships.”
The current definition of “actively engaged” for managers, established in 1987, is broad, allowing individuals with little to no contributions to critical farm management decisions to receive safety-net payments if they are classified as farm managers, and for some operations there were an unlimited number of managers that could receive payments.
The proposed rule seeks to close this loophole to the extent possible within the guidelines required by the 2014 Farm Bill. Under the proposed rule, non-family joint ventures and general partnerships must document that their managers are making significant contributions to the farming operation, defined as 500 hours of substantial management work per year, or 25 percent of the critical management time necessary for the success of the farming operation. Many operations will be limited to only one manager who can receive a safety-net payment. Operators that can demonstrate they are large and complex could be allowed payments for up to three managers only if they can show all three are actively and substantially engaged in farm operations. The changes specified in the rule would apply to payment eligibility for 2016 and subsequent crop years for Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) Programs, loan deficiency payments and marketing loan gains realized via the Marketing Assistance Loan program.
As mandated by Congress, family farms will not be impacted. There will also be no change to existing rules for contributions to land, capital, equipment, or labor. Only non-family farm general partnerships or joint ventures comprised of more than one member will be impacted by this proposed rule.
Stakeholders interested in commenting on the proposed definition and changes are encouraged to provide written comments at www.regulations.gov by May 26, 2015. The proposed rule is available at http://go.usa.gov/3C6Kk.
Today’s proposal was made possible by the 2014 Farm Bill, which builds on historic economic gains in rural America over the past six years, while achieving meaningful reform and billions of dollars in savings for the taxpayer. Since enactment, USDA has made significant progress to implement each provision of this critical legislation, including providing disaster relief to farmers and ranchers; strengthening risk management tools; expanding access to rural credit; funding critical research; establishing innovative public-private conservation partnerships; developing new markets for rural-made products; and investing in infrastructure, housing and community facilities to help improve quality of life in rural America. For more information, visit www.usda.gov/farmbill. To learn more about Farm Service Agency, visit www.fsa.usda.gov.