October 18, 2011
On October 14th, Senators Charles Grassley and Tim Johnson submitted a letter to the chairs of the Joint Select Committee on Deficit Reduction (Super Committee), recommending the inclusion of their legislation that would generate upwards of $1.5 billion in savings through setting strict payment limits on all commodity farm programs, as well as closing the loopholes in current payment limitation law.
The legislation, the Rural America Preservation Act of 2011 (S.1161), initially introduced on June 9, 2011, places a hard cap of $250,000 per married couple ($125,000 per individual) on farm payments. Specifically, the bill will set limits of direct payments at $40,000; counter-cyclical payments at $60,000; and marketing loan gains (including forfeitures), loan deficiency payments, and commodity certificates at $150,000.
The bill also improves the standard which the Department of Agriculture uses to determine if farmers are actively engaged in their operations, closing the loopholes that make the current payment caps ineffective. Without closing the loopholes, any future payment caps would likewise be ineffective.
The letter notes that the actual level of the proposed caps will need to be refashioned once the Agriculture Committees and Super Committee decide on a revised commodity title and set of subsidy programs. The letter nonetheless stresses that “our main point is that setting a meaningful payment limitation and closing current loopholes in the law will provide savings and add integrity to the farm programs. No matter what decision the Joint Select Committee makes regarding commodity programs, we urge you to ensure payment limitations and closing of loopholes plays a meaningful part.”
In their joint press release, Senator Johnson said, “Particularly given the budget environment we’re in, it’s important that our farm programs are effectively targeted to those who need the assistance the most: the small and medium-sized family farmers. I hope that our bill can be incorporated into any recommendations made by the deficit reduction committee.”
Grassley added: “Our bill maintains the much needed safety net for farmers so we are assured that the American people will have a safe, abundant and inexpensive food supply….This is an easy way to save some additional funds in what’s a very difficult task.”