By DOUG SCHMITZ
Iowa Correspondent

WASHINGTON, D.C. — U.S. Sens. Chuck Grassley (R-Iowa) and Tim Johnson (D-S.D.) have introduced a bill that would lower the per-farm cap on commodity program payments, ease eligibility and ensure payments get to farmers in financial need.

“America’s farmers produce the food that feeds our families,” Grassley said of the Rural America Preservation Act of 2011, which the two senators introduced on June 9. “This bill helps ensure that our farmers are able to provide a safe, abundant and inexpensive food supply for consumers around the world, while maintaining the farm safety net that allows the small- and medium-sized farmers to get through the tough times.”

Under the Grassley-Johnson act, the direct payment cap would be lowered from $40,000 to $20,000 for an individual or twice that for a married couple when both spouses are actively engaged in the farming operation – which would require them both be actively engaged as was the standard before 2008.

Although current law attempts to target payments to working farmers, in the final report of the USDA Payment Limitation Commission and as demonstrated by the 2004 Government Accountability Office (GAO) report, “the lack of a defined active management test in law and regulation is a major loophole facilitating huge payments,” the proposed bill states.

The bill would close these loopholes often used to maximize payments from the federal government, which would improve the standard the USDA uses to determine farmers who are actively engaged in their operations, Grassley said.

“Just as important as setting the payment limits, is tightening the meaning of ‘actively-engaged,’ a legal term in the farming business,” said Grassley, who previously co-chaired the U.S. Senate Agriculture Committee with Sen. Tom Harkin (D-Iowa). “Basically, people have to be actively engaged in the farming operation in order to qualify for farm payments.

“This is common sense. A person should be a farmer in order to receive farm payments. But too often people exploit current loopholes, and people wrongfully receive farm payments.”

According to the bill, the “measurable standard” by which the USDA determines who should receive farm payments would be updated, which would require that “management be personally provided on a regular, substantial and continuous basis through direct supervision and direction of farming activities and labor and on-site services.

“The combined labor and management standard is 1,000 hours annually or 50 percent of the commensurate share of the required labor and management,” the bill states. “Landowners who share rent land to an actively engaged producer remain exempt from the ‘actively engaged’ rules, provided their payments are commensurate to their risk in the crop produced.”

Current policy allows 10 percent of the nation’s largest farmers to receive 70 percent of the benefits of the farm program, which Grassley said puts “our safety net at risk by reducing urban support for the farm bill and creating upward pressure on land prices.” The bill would also specifically set a limit of $250,000 for married couples for farm payments in an attempt to better target farm program payments to family farmers.

“This bill will further refine the standard the Department of Agriculture uses to determine if a person is actively-engaged in farming,” Grassley said. “This will help make sure that farm payments only go to those who deserve them.”
Johnson said since farm programs are already going to be highly scrutinized as budget negotiators scour spending programs, “one certainly deserves to be, and that is payments of more than $250,000 to a farming operation.”
In addition, the bill would reduce these limits in varying amounts, depending on the farmer’s participation in the Average Crop Revenue Election (ACRE) – essentially setting the payment limitations at the effective caps, “less the reductions in direct payments and marketing loan gains,” the bill states.

“There’s no problem with a farmer growing his operation, but the taxpayer should not have to subsidize it,” Grassley said. “There comes a point where some farms reach levels that allow them to weather the tough financial times on their own. Smaller farms do not have the same luxury, but they play a pivotal role in producing this nation’s food. “I have been approached time and time again by farmers concerned about the next generation of farmers. It is important that we keep young people on the farm, so they can take the lead in producing our food when the older generation of farmers is ready to turn over the reins.”

Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition in Washington, D.C., said although the measure has failed to become law in the past because of “the power and influence mega-farms wield in Washington and within trade associations … times have changed, however, and fiscal pressures guarantee that commodity program policy is about to change.

“The only question is whether the cuts will be taken entirely out of the hides of rank-and-file farmers, or whether the nation’s largest operations will finally be asked to share in the sacrifice and contribute to deficit reduction.

“While the measure introduced today by Senators Grassley and Johnson is not all the reform that is ultimately needed,” he added, “it is the critical and fundamental starting point for any real reform.”

If passed, Grassley and Johnson estimated the new law would save the federal treasury more than $1 billion over 10 years.