U.S. Senators Chuck Grassley (R-Iowa) and Tim Johnson (D-S. Dakota) have requested that the Congressional committee which is working to come up with ways to reduce the federal deficit impose limits on farm payments. The two farm-state senators say their plan would cut more than $1.5 billion from federal spending by including their legislation which would place a hard cap on farm payments at $250,000 per married couple ($125,000 per individual).
"Our bill maintains the much-needed farm financial safety net for farmers so we are assured that the American people will have a safe, abundant and inexpensive food supply. It also closes loopholes that have reduced urban support for the farm bill," Grassley says. "This is an easy way to save some additional funds in what's a very difficult task for the committee."
"Particularly given the budget environment we're in, it's important that our farm programs are effectively targeted to those who need the assistance most: small and medium-sized family farmers. I hope our bill can be incorporated into any recommendations made by the deficit reduction committee," says Johnson.
Improve standard USDA uses to determine farmers "actively engaged"
Grassley and Johnson introduced the legislation on June 9, 2011. The legislation would set a limit of $250,000 for married couples for farm payments in an attempt to better target farm program payments to family farmers. Specifically, the bill caps direct payments at $40,000; counter-cyclical payments at $60,000; and marketing loan gains (including forfeitures), loan deficiency payments, and commodity certificates at $150,000. The bill also improves the standard which the Department of Agriculture uses to determine farmers who are actively engaged in their operations.
Here is a copy of the text of the letter, dated October 14, 2011
The Honorable Patty Murray and the Honorable Jeb Hensarling, co-chairs, Joint Select Committee on Deficit Reduction, The Capitol, Washington, D.C.
Dear Senator Murray and Representative Hensarling:
We are truly in uncharted territory with the debt reduction process now before us. We are hard pressed to recall any process quite as unique as this one during our careers here in Congress. You and the rest of the Joint Select Committee have a big task in front of you, and surely there will be some difficult decisions made in the coming weeks.
With all the hard decisions before you, we are providing a proposal that should be a common sense change to agriculture policy. It is time for us to finally set hard payment limits on all commodity farm programs, as well as close the loopholes in current payment limitation law.
The specific changes we are proposing to the Joint Select Committee are contained in the bill we introduced, the Rural America Preservation Act of 2011 (S.1161). That bill would do the following:
It would establish caps of $20,000 on direct (fixed) payments, $30,000 on counter cyclical payments, and $75,000 on loan deficiency payments and marketing loan gains.
The combined limit for married couples would be $250,000. These limits would be reduced by varying amounts depending on the farmer's participation in ACRE, essentially setting the payment limitations at the effective caps, less the reductions in direct payments and marketing loan gains.
The amendment improves the "measurable standard" by which USDA determines who should and should not receive farm payments. It requires 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.
It would provide savings of approximately $1.5 billion.
While we support commodity programs that provide a needed safety-net for farmers, the programs should not help big farmers get even bigger. There's no problem with a farmer growing his operation, but the taxpayer should not have to subsidize it. Under current law, nearly 70 percent of commodity farm payments go to the largest 10 percent of farmers. There comes a point where some farms reach levels that allow them to weather the tough times on their own. Smaller farms do not have the same luxury. In addition, setting a measurable standard for management of a farming operation will help prevent abuse of farm programs that is present under current law.
These proposed changes to payment limitations will help us target farm payments to those who really need them, the small- and medium-sized farmers who need a safety-net to help them get through rough patches as they produce this nation's food.
We understand there may be proposals submitted to the Joint Select Committee that would fundamentally change the commodity farm programs. If one of these proposals is adopted by the Joint Select Committee, the language of our bill also would need to be revised to set a meaningful payment limitation for commodity programs. Whatever the result, our main point is that setting a meaningful payment limitation and closing current loopholes in the law will provide savings and add integrity to the farm programs. No matter what decision the Joint Select Committee makes regarding commodity programs, we urge you to ensure payment limitations and closing of loopholes plays a meaningful part.
We request the Joint Select Committee consider the policy reforms set out above, and if you have any questions, please contact us.
Charles E. Grassley Tim Johnson
United States Senator United States Senator