On Thursday, June 9, Senators Chuck Grassley (R-IA) and Tim Johnson (D-SD) introduced the Rural America Preservation Act of 2011, a bill designed to lower the per farm cap on farm commodity program payments, simplify eligibility, and ensure that payments flow to working farmers.
Senator Grassley has previously championed similar legislation, co-sponsored for many years by former Senator Byron Dorgan (D-ND) and in the last Congress by former Senator Russ Feingold (D-WI). The bill received strong bipartisan support in the Senate, winning the votes of a majority of Senators in 2002 and again in 2007. It did not become law, however.
The bill would lower the direct payment cap from $40,000 to $20,000 for an individual or twice that for a married couple where both spouses are actively engaged in the farming operation. The bill would also lower the cap on counter-cyclical payments from $65,000 to $30,000 ($60,000 for an actively engaged couple) and re-institute a cap on loan deficiency payments and marketing loan gains at $75,000 ($150,000 for an actively engaged couple). The combined cap on all payments for a married couple would be $250,000.
To receive farm payments, current law requires a contribution of 1,000 hours of labor on the farm or involvement in its management. However, the vague and largely unenforceable regulatory standard for “actively managing” farm operations has foiled lawmakers’ attempts to target payments to working farmers. This bill would clarify the definition of management to require ongoing and direct involvement in farm activities to stop the current evasion of payment limits. Closing the current management loophole is widely viewed by experts as the linchpin to any attempt to stop current abusive practices that allow mega farms to receive millions of dollars in taxpayer subsidies.
“There’s no problem with a farmer growing his operation, but the taxpayer should not have to subsidize it. There comes a point where some farms reach levels that allow them to weather the tough financial times on their own. Smaller farms do not have the same luxury, but they play a pivotal role in producing this nation’s food,” said Senator Grassley in his statement on the Senate floor Thursday.
Senator Johnson added, “Farm payments need to be targeted to those who need it, the small and mid-size family farmers in South Dakota and across the nation.”
NSAC Policy Director Ferd Hoefner added these thoughts: “In every survey and poll on this issue, the vast majority of farmers in all regions of the country support payment limit reform. The measure has failed to become law due to the power and influence mega farms wield in Washington and within trade associations. Times have changed, however, and fiscal pressures guarantee that commodity program policy is about to change. The only question is whether the cuts will be taken entirely out of the hides of rank and file farmers or whether the nation’s largest operations will finally be asked to share in the sacrifice and contribute to deficit reduction. While the measure introduced today by Senators Grassley and Johnson is not all the reform that is ultimately needed, it is the critical and fundamental starting point for any real reform.”
It’s not just the need for a hard cap on payments. Here’s 3 more areas that need to be addressed:
We need a meaningful adjusted gross income limit, suggest $40,000 individual/$80,000 combined — this is net of all farm expenses and depreciation — how can we continue to justify sending participatory payments to those whose net income substantially exceeds a liveable wage. If our income exceeds that level, we do not need to receive government support.
We need to address benefit received in the form of crop insurance subsidies, something that is essentially the same as a per-acre payment, regardless of size. The government is essentially assuming increasing levels of risk per farmer for larger farmers, thus subsidizing and encouraging the big to get bigger since the risk is subsidized. The subsidy needs to be limited and/or phased out similar to program payments.
We need to adjust the “base” acres on an ongoing basis. Currently, some farms with large historical base acres of certain crops receive program payments based on those old “fixed” base acres, even if those crops are no longer planted, or are grown in rotation with other crops. This may have been a good idea back in the 1940’s in order to encourage crop rotations, etc., yet now only represents a boon to those who control farm ground that retains a lucrative historical base. Would suggest that “base” acres represent an actual most recent 6-8 year rolling average of actual acres planted to each individual crop, starting with half the beginning base under the new system at the old base-acre level in order to create a phase-in period. This allows the base acres to represent what is actually happening over time, allows for annual adjustment automatically based on FSA reporting, and allows for cropland with no historically-established base to participate in the programs.