GAO report says Congress needs to tighten farm payment loopholes

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Oct. 8, 2013 -A Government Accountability Office (GAO) report released by Sen. Chuck Grassley, R-Iowa, today states that changes are needed to the eligibility requirements for being “actively involved” in farming. 

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Sen. Grassley, who requested the report, said that the conferees to the farm bill should take notice of the report and take a hands-off approach to the provisions included in both the House and Senate bills.

“This is just one more reason that my payment limits provisions included in the Senate and House bills -- placing a hard cap on farm payments and closing loopholes that allow non-farmers to game the system -- should stay untouched,” Grassley said.

“The report shows that there is still far too much subterfuge of the actively engaged law,” he added in a statement. “For instance, taxpayers are footing the bill for farm payments to 11 active managers of one farm, who supposedly provide significant management experience, yet perform no labor.” 

The report reviewed the Farm Service Agency's compliance reviews of farming operation members' claimed contributions of active personal management and personal labor.  The GAO report also examined the Farm Service Agency's state offices' timeliness in completing and reporting compliance reviews and the results.  

Specifically, GAO recommended, “Congress should consider modifying the definition of significant contributions of management activities, either as it did in recent deliberations on reauthorizing the farm bill or in other ways designed to make contributions more clear and objective.”

Payment limit provisions in the farm bill supported by Grassley allow only one off-farm manager, which he said will help USDA prevent the general partnerships that have multiple non-farmers trying to qualify for farm payments by exploiting the management loophole.

GAO found that Farm Service Agency officials consistently said current ‘actively engaged' regulations are too vague to enforce in a meaningful way.

Also, farms organized as general partnerships receive the most in payments and have the highest percentage of members receiving payments based on ‘active personal management only.'  General partnerships with 11 or more individual members received 84 percent of their farm payments based on members contributing ‘active personal management only.'  

Grassley also highlighted an example in the report which found a farm in the Midwest that received roughly $400,000 in payments for 2012 was organized as a general partnership with six corporations and 11 individual members of the same family who ranged in age from 18-88.  Publicly available data indicated two of the individuals, including the 88 year-old, lived in South Florida and claimed ‘active personal management only' for eligibility purposes.  

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