There is little bite in the weak limits the government imposes on farm subsidy payments, and now reformers say the limits will become toothless under provisions in the Republican-drawn farm bill in the House. “A new era of unlimited subsidies for the nation’s largest mega-farms,” said a small-farm advocate, while the Environmental Working Group (EWG) said the provisions would make it easier for city cousins to collect USDA payments.
The subsidy provisions are overshadowed by the bill’s proposal to require as many as 8 million “work-capable” people to work at least 20 hours a week to qualify for food stamps. People who fail to meet that threshold will be assigned to job-training programs and workfare for an equivalent number of hours to keep benefits. The states would get $1 billion a year to run the job-training and employment services. While that’s triple the current funding, skeptics say it’s too little to effectively handle the estimated 3 million people who would need a slot.
During work on the 2014 farm law, Congress initially voted for tighter eligibility rules for farm subsidies. The tighter rules were watered down during final negotiations over the bill. Reformers and budget hawks, who had hoped for progress this year, were startled by “the brazen attempt,” as the National Sustainable Agriculture Coalition (NSAC) phrased it, to turn “a safety net into an unlimited giveaway, placing family farms at a disadvantage and stunting the growth of new farm businesses by bidding up the price of already-scarce farmland.”
Iowa Sen. Chuck Grassley, who has fought for years to focus the farm program on small and family-size farms, said the House bill “appears to include a long list of provisions that either eliminate subsidy limits or create new loopholes that make it easier for people who don’t work on farms to receive up to $250,000 in farm subsidies in a single year,” to the detriment of beginning farms and taxpayers. “Providing additional assistance in excess of the hundreds of thousands of dollars [that] established farmers are already eligible for at the expense of young farmers who will be the future of rural America is wrong,” he said.
At issue are Sections 1603 and 1604 of the farm bill, which would include first cousins, nieces, and nephews on the list of family members eligible for payments, exempt more corporate farms from being limited to only one payment, and effectively remove a prohibition on commodity or conservation payments to the wealthiest operations.
The provisions are not as far-reaching as critics claim, responded an aide to Agriculture Committee chairman Michael Conaway. For example, the aide said, while the list of family members would be expanded, cousins, nieces, and nephews would still have to meet the test of being “actively engaged” in farming to qualify for subsidies.
To be “actively engaged” in farming, an individual must provide land, capital, or equipment for the farm and perform active labor or management. There is no real definition of what constitutes management on family farms. Some large operations evade payment limits by declaring family members or business partners to be farm managers. Grassley tried in the 2014 farm bill to limit eligibility to one manager in addition to the long-standing eligibility of the farmer and spouse. The four negotiators who wrote the final version of the law changed the proposed provision into instructions for the USDA to look at tighter rules for non-family farms, which exempted 96 percent of U.S. farms. The USDA issued a rule in 2015 that allows up to three people to collect subsidies on farms operating as joint ventures or limited partnerships.
The Conaway aide said the proposed changes to rules on payments to corporate farms would mean equal treatment of all corporate structures, so that each member of the entity is eligible for payments and is subject to the ban on payments to people with more than $900,000 in adjusted gross income. “We have had several examples of operations that incorporated as an LLC … and bankruptcy ensued as a result of the entire operation being limited to one $125,000 payment limit rather than one for each person actively engaged in the farming operation,” said the aide.
The NSAC’s analysis said the new exemption for LLCs and Subchapter S corporations would mean that “10 percent, or more, of U.S. commodity farms would be eligible for unlimited subsidy payments.”
The EWG said its analysis of federal data found that 17,836 residents of the 50 largest U.S. cities received a total of $63 million in farm subsidies in 2015 and 2016. “Earlier this year, President Trump proposed denying farm subsidies to millionaires and limiting subsidies to one person per farm. But rather than tightening restrictions on farm subsidies, the bill that will be debated by the House Agriculture Committee this week will create new loopholes, further fueling the concentration of subsidies among the largest and most successful farms,” said the EWG.