A new rule proposed by the USDA would limit joint ventures and general partnerships to a maximum of three people who can collect crop subsidies by declaring they are farm managers. The proposal is open for public comment until May 26. The 2014 farm law empowered the USDA to write stricter rules about who is “actively engaged” in farming, but it exempted family farms, which constitute 97 percent of the 2.1 million farms in the country. Non-family farms, such as joint ventures and general partnerships, make up 3 percent of total farms and 16 percent of agricultural sales, according to USDA’s farm typology.
Under the proposed rule, which would take effect with the 2016 crops, non-family joint partnerships and general partnerships must show that a “manager” provides at least 500 hours of substantial management per year, or 25 percent of the management that is critical to the success of the operation. Many operations would be limited to one manager, said the USDA, but up to three people would qualify for subsidy payments on large and complex operations. “This helps close a loophole that has been taken advantage of by some larger joint ventures and general partnerships,” said Agriculture Secretary Tom Vilsack in a statement.
Operations can maximize crop subsidy payments by increasing the number of people eligible for them. There are per-person payment caps for crop subsidies.
The proposal amounts to “very little in the way of real reform,” said the National Sustainable Agriculture Coalition, a small-farm group and long-time advocate of stricter subsidy rules. NSAC says lax subsidy rules allow big farms to bankroll money and out-bid their small and medium-sized neighbors for land and equipment. “We will continue to encourage that reform be comprehensive and across the board, applying to all farms,” NSAC said. Iowa Sen. Charles Grassley, who tried to limit farms to one manager apiece, said the USDA proposal was “a small step in the right direction” but ought to apply to all farms.
In general, people are eligible for farm subsidies if they provide land, capital or equipment and either labor or management. To satisfy the labor requirement, someone must work 1,000 hours, or 50 percent of the time needed by the farm. For years, there was no firm definition of the management contribution.
In a 2013 report, the Government Accountability Office cited a general partnership “consisting of 11 members, several of whom appeared to have little involvement in farming operations, that received $1 million in farm program payments on its 11,900 cropland acres in 2001.” GAO did not specify if it was a family or non-family partnership.
The 27-page text of the proposed rule is available here.