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RELEASE: End of Payment Limitations Would Pave Way for Further Farm Consolidation

April 16, 2018


Contact: Reana Kovalcik
National Sustainable Agriculture Coalition
202-547-5754, rkovalcik@sustainableagriculture.net

End of Payment Limitations Would Pave Way for Further Farm Consolidation
House Draft Farm Bill proposes to eliminate annual subsidy caps, opening subsidy floodgates

Washington, DC, April 16, 2018 – Included in the draft farm bill presented by House Agriculture Committee Chairman Mike Conaway (R-TX) last week were several provisions that would reverse decades of precedent, and usher American agriculture into a new era of unlimited farm subsidies for the nation’s largest mega-farms. As part of its ongoing analysis of the Chairman’s draft bill, the National Sustainable Agriculture Coalition (NSAC) reviewed these provisions and found that they would promote land and economic consolidation, with the primary beneficiaries being the largest, wealthiest farm operations.

“Where payment limits should be set and how they should be structured are debated every farm bill cycle,” said Greg Fogel, Policy Director for NSAC. “Never before, however, has there been such a brazen attempt to undo years of statute for the benefit of the nation’s largest farm operations. This radical proposal would turn what is intended to be a safety net into an unlimited give away, placing family farms at a disadvantage and stunting the growth of new farm businesses by bidding up the price of already scarce farmland.”

During the 2014 Farm Bill debates, both the House and Senate chose to adopt historic reforms and close payment limit loopholes to make the rules effective and enforceable. Sadly, the leadership of the Agriculture Committees chose to circumvent that bipartisan and bicameral provision, and instead chose to make only minor adjustments tightening the rules for mega-farms organized as general partnerships and joint ventures

Though limitations adopted in the final 2014 Farm Bill were far from game changing, they did make at least some effort to level the playing field for family farmers and reduce abusive subsidy schemes used to circumvent the law. The Conaway proposal makes a complete 180° turn from these reform efforts, and effectively ensures that payment limitations will never actually apply to anyone who cares to avoid them.

Key provisions in the draft bill on subsidy payment limitations include:

  • Exempting most corporate farms from being limited to a single payment limitation. Under current law, payment limits apply to payments received directly or indirectly by individuals and corporations. The Conaway bill would exempt LLCs and Subchapter S corporations, meaning 10 percent or more of the nation’s commodity farms would eligible for unlimited subsidy payments overnight, and that number would surely grow as more farms reorganize to take advantage of the change.
  • Making it easier for multiple mega-farms with a large number of passive partners that are organized as general partnerships to reorganize as “family farms” by adding cousins, nieces and nephews to the list of eligible family members that already includes siblings, children, and grandparents, thereby undoing even the modest reform made in the 2014 Farm Bill for any farm business that cares to reorganize in that fashion.
  • Entirely removing payment limitations from marketing loan gains and loan deficiency payments. Under current law, all forms of commodity program benefits are subject to the payment limitation. Under the Conaway provision, there would be no limit at all on marketing loan gains or loan deficiency payments.
  • Rolling out the red carpet to the wealthiest producers by exempting partnerships, joint ventures, LLCs and Subchapter S corporations from the adjusted gross income (AGI) means-testing provision. Under current law, any person or legal entity with an average adjusted gross income exceeding $900,000 (effectively $1.8 million for many couples) is ineligible for commodity or conservation payments. The Conaway provision would allow millionaires to organize their farming business as a partnership or corporation and be exempt from any means testing.

“Effective payment limit reform relies on tightening the definition of what constitutes farm management,” said Fogel. “Current rules are already so loose as to allow for rampant abuse of subsidy payments, which has resulted in shameful misuse of taxpayer dollars. For the Chairman to now take things even further by effectively eliminating both the payment limit and the AGI income test is unconscionable. It should not be too much to ask that beneficiaries of farm program subsidies undertake farm labor and management on at least a half-time basis. After all, the programs were created to help working farmers. It is painfully ironic given the current debate over work requirements in the Supplemental Nutrition Assistance Program (SNAP) that the same proposal would remove work requirements from the commodity program.”

NSAC urges the House Committee to reject in its entirety the proposed changes to payment limitation and AGI provisions in the Chairman’s mark.


About the National Sustainable Agriculture Coalition (NSAC)
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. Learn more and get involved at: https://sustainableagriculture.net

Categories: Commodity, Crop Insurance & Credit Programs, Farm Bill, Press Releases

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