In a small step toward reform, the government will not allow more than three people per operation to collect crop subsidies by saying they are farm managers. The new USDA regulation will apply to large farms – over 2,500 acres – that operate as joint ventures or general partnerships, about 4 percent of the 2 million farms in the country. It does not apply to family farms, which are the vast majority of U.S. farms. The USDA estimates the rule will save $106 million through 2018, and that 3,200 operations could lose eligibility.
Reformers had a more ambitious goal when the 2014 law was being written: to allow only one manager per farm for all types of operations as a way to focus federal support on farmers rather than investors, absentee landlords and city cousins with little connection to the land. Despite early success, they faced adamant opposition. The USDA rule was in line with with the token change that was allowed into the farm bill.
“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,” said Ferd Hoefner of the National Sustainable Agriculture Coalition, an advocate for small farmers. Iowa Sen. Chuck Grassley, a primary proponent of payment-limit reform, said the USDA made a good-faith effort “to make the farm bill more defensible, despite the indefensible loopholes left” by the small group of lawmakers who wrote the final version of the law.
Under the new rule, people must keep records that show they performed at least 500 hours or 25 percent of management to qualify as the second or third manager on a large farm. A list of critical management activities, such as hiring and managing farm labor and arranging financing or marketing crops, was included in the USDA rule, which takes effect with 2016 crops. Growers who already planted crops for 2016 harvest, such as winter wheat, have until the 2017 crop year to comply.
When the USDA proposed the rule in March, Agriculture Secretary Tom Vilsack said it would “limit farm program payments to individuals who are not engaged in management of of the farming operation on non-family farms. This helps close a loophole that has been taken advantage of by some larger joint ventures and general partnerships.”
In some cases, the USDA has allowed “farming operation members to make contributions of management without visiting the operation, enabling individuals who live significant distances from an operation to claim such contributions,” said the General Accountability Office in a 2013 report that called for changes in the definition of who is “actively engaged” in farming and thus qualifies for subsidies. In other instances, many family members have been listed as managers.
To be “actively engaged,” a person must provide land, capital or equipment, and personal labor or management, according to the USDA. The broadly written definition was among the reasons that reformers say farm-payment limits are nearly toothless.