Dec. 16, 2015
The USDA issued its long-anticipated final rule guiding eligibility for farm program payments, which the agency said is "consistent with the direction and authority provided by Congress in the 2014 farm bill."
But in the process, the final rule generated a backlash from the National Sustainable Agricultural Coalition, which represents the interests of smaller family farms.
Among other things, USDA said the rule ensures the farm safety-net payments are "issued only to active managers of farms that operate as joint ventures or general partnerships." As required by Congress, the new rule does not apply to family farms, or change regulations related to contributions of land, capital, equipment, or labor.
"The federal farm safety-net programs are designed to protect against unanticipated changes in the marketplace for those who actively share in the risk of that farming operation," Agriculture Secretary Tom Vilsack said in a release.
"To ensure that help goes to those who genuinely need it, such as America's farm families, the Farm Bill authorized USDA to close a loophole and limit payments from those not involved on a daily basis in non-family farm management."
The rule applies to operations seeking to have more than one farm manager, and requires measureable, documented hours and key management activities each year. Some operations of certain sizes and complexity may be allowed up to three qualifying managers under limited conditions.
The changes apply to payments for 2016 and subsequent crop years for Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, Loan Deficiency Payments (LDP) and Marketing Loan Gains (MLG) realized via the Marketing Assistance Loan program. Farms that have already planted fall crops for 2016 have until the 2017 crop year to comply.
Ferd Hoefner, policy director of the National Sustainable Agriculture Coalition (NSAC), says the rule "includes all of the ingredients to close loopholes" but "would not be applied in a meaningful way."
For example, an operation seeking to qualify more than one farm manager could qualify up to three other farm managers and their spouses for farm program payments of $125,000 each - plus the farm operator and his or her spouse, he explained.
"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," Hoefner noted in a statement.
"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.
"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, who expressed frustration with the Obama administration for not fulfilling a top rural campaign pledge.
"We agreed 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."
Sen. Charles Grassley, R-Iowa, who had pushed for provisions that would have established a farm payment cap of $250,000 and tightened loopholes that have allowed some non-farmers to game the system, said the rule released by USDA is a "first step."
"While this rule still isn't as stringent as the reforms approved by both bodies of Congress through my payment limit amendment, it represents a good faith effort by the department to make the farm bill more defensible, despite the indefensible loopholes left open by the conference committee" in Congress, Grassley said in a statement.
"Meaningful and enforceable limits on farm subsidies are the right thing to do. Taking steps to end farm payments to people who don't farm is good for agriculture going forward and helps begin to bring the program back to its original intent."
Grassley also warned against reopening the farm bill in the appropriations process and reviving a process of issuing commodity certificates, which could lead to "unlimited subsidies" to farmers.
He said this would create "long-term consequences for agriculture and puts at risk the positive step this final rule takes."