May 27, 2015
Washington, DC, May 27, 2015 – The National Sustainable Agriculture Coalition (NSAC) urged the U.S. Department of Agriculture (USDA) to undertake a major overhaul of its “actively engaged in farming” draft rule to create fair and effective limitations on the subsidies taxpayers provide to commodity farms. Fair and effective enforcement of the farm bill’s payment limitations would aid family farmers, remove barriers to new farming opportunities for young farmers, improve the vibrancy of the rural economy, and save the taxpayers money.
The actively engaged in farming rules determine eligibility for commodity subsidies. USDA’s draft rule would create an ineffective and unfair two-tier system of payment limit provisions. The rules would provide mega farms with a tantalizing choice between annual payments of up to a million dollars or more, or, in the alternative, even larger subsidy payments limited only by the size of the primary beneficiary’s extended family.
“The proposed rule is a classic example of policy written for the agricultural one percent,” said Ferd Hoefner, NSAC’s Policy Director. “We are urging USDA to rethink its priorities.”
In contrast to the largesse of the proposed rule, NSAC’s comments support applying a single payment limit to each farming operation, regardless of the operation’s size or business structure. The NSAC recommendations would effectively cap payments at $125,000 per farm ($250,000 in the case of married couples), as stipulated by the 2014 Farm Bill, and apply that cap to both family farms and giant general partnerships whose structure includes partners and passive investors unrelated by blood or marriage.
“It is our hope that USDA will take President Obama’s past commitments to heart by revising the proposed rule so that that management decisions are made for business reasons rather than to capture additional government assistance,” said Hoefner. “Federal agricultural assistance should be targeted to working farm families and not be handed out in unlimited fashion to mega-farms and wealthy landowners and investors who spend more time managing their extensive assets than actually farming.”
The proposed rule amounts to very little real reform, missing the best chance yet for USDA to make good on President Obama’s number one agricultural policy platform proposal. In his Real Leadership for Rural America platform statement, then Candidate Obama promised to close the very subsidy loophole the USDA proposed rule would keep wide open.
The proposed rule would only apply the new draft payment eligibility requirements to farming entities (general partnerships and joint ventures) that include partners unrelated by blood or marriage. All other farms – the vast majority – would be subject to the current rules that contain no effective limits on payments.
The draft rule would also allow “large” and “complex” farms operated as general partnerships or joint ventures to receive additional payments not based on need, but based on size and “complexity”, two factors not contained in law and not in keeping with the historical goals of our farm programs, to provide modest assistance to help family farms weather years with sharp price or income declines.
The combination of the various additional payments in the proposed rule would allow the nation’s largest farms to obtain payments of $1 million or more a year, all courtesy of federal taxpayers. For those for whom that may not be enough, the proposed rule would allow those mega farms to reorganize as partnerships comprised solely of members of the extended family and thereby reap even higher payments.
NSAC supports the proposed rule’s efforts to strengthen the active personal management definition by including a quantifiable test and recordkeeping requirements.
“To its credit, USDA did take a stab in the draft rule at tightening the farm management definition, requiring recordkeeping, and adding a quantifiable test for management activities, and we support retaining and strengthening that part of the rule,” said Hoefner. “However, the rules failure to apply these improvements to the vast majority of farms means very little will change and payment limits will remain ineffective.”
NSAC’s comments on the proposed rules include detailed language recommendations for fixing the multitude of problems with the draft to create a fair and effective implementation of payment limits through reasonable actively engaged in farming rules.
At the very top of his farm and rural platform (Obama Biden: Real Leadership for Rural America), Candidate Obama wrote: “The lack of effective payment limitations has resulted in federal farm programs financing farm consolidation and the elimination of many mid-size family farms….Barack Obama and Joe Biden will close the loopholes that allow mega farms to get around the limits by subdividing their operations into multiple paper corporations. They will take immediate action to close the loophole by proposing regulations to limit payments to active farmers who work the land….Every President since Ronald Reagan has had the authority to close this loophole without additional action by Congress, but has failed to act.” (emphasis added)
During Debate on the last farm bill, NSAC supported, and bipartisan majorities in the House and Senate approved closing the loopholes in the “actively engaged” rules and tightening payment limitations. Early in 2014, however, during the waning minutes of behind closed doors negotiations of Agriculture Committee leaders, this bicameral and bipartisan farm bill reform was overturned, payment limits increased, and changes to the actively engaged in farming rules punted to USDA. This resulted in the proposed rule we are commenting on today.
The National Sustainable Agriculture Coalition has posted additional information and analysis of the proposed rule on its blog: Actively Engaged Proposed Rule
The National Sustainable Agriculture Coalition is a grassroots alliance that advocates for federal policy reform supporting the long-term social, economic, and environmental sustainability of agriculture, natural resources, and rural communities.