December 15, 2015
December 15, 2015, Washington, DC – Today USDA preserved access to unlimited subsidies for the biggest commodity farms in the country. The final rule on commodity program payment limitations – making it possible for mega farms to draw over a million dollars annually in taxpayer-funded subsidies – will appear in tomorrow’s Federal Register.
In writing the final rule to implement the 2014 Farm Bill, the Obama Administration chose to accommodate mega farms instead of choosing a path to real reform. This was the second bite at the apple for the Obama Administration. They issued a previous final rule on payment limitations in 2010 to implement the 2008 Farm Bill. That rule, like this one, kept payment limit loopholes in place, allowing big farms to easily avoid the statutory subsidy cap intended to limit subsidy abuse that gives the biggest farms unfair advantages in the marketplace. The new rule goes a considerable step further, however, by directly writing the loopholes into regulation.
“In 2008, candidate Obama said he would ‘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’,” noted Ferd Hoefner, NSAC Policy Director. “Unfortunately, President Obama has chosen not to take this needed action, leaving family farmers at a competitive disadvantage and taxpayers on the hook for excessive subsidies.”
“According to USDA, the new rule affects less than four percent of farm operations,” Hoefner continued. “By leaving the loophole door wide open for the other 96 percent, USDA has issued an invitation to farm reorganizations undertaken to maximize subsidies beyond the payment limit. Even for those farms who choose to keep their business structures organized as part of the four percent, the new rule provides for a limit over $1 million a year for the largest farms. This is the antithesis of reform.”
To its credit, the proposed rule tightens the farm management definition, requires recordkeeping to back up management claims, and adds a quantifiable test for farm management. These steps could become key ingredients for real reform if any future Administration should decide to enforce the payment limit and actually close the loopholes.
“Despite these attempts at key aspects of reform, the final rule is fatally flawed and will result in very little change to the status quo other than mega farms scrambling to reorganize to ensure their business structure fits within the changing landscape of sanctioned loopholes,” concluded Hoefner. “We agree with former Candidate Obama that closing these subsidy loopholes is long overdue. Unfortunately, President Obama has chosen not to make that a reality, and we will now have to wait for a future Administration to fulfill his campaign promise.”
The payment limit and “actively engaged in farming” debate has broad popular appeal. Bipartisan majorities in Congress approved closing the loopholes in the “actively engaged” rules and tightening payment
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.
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