What is the impact of new payment-limit proposals at the farm level?

By Sara Wyant

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, May 9, 2012 -An attorney who specializes in farm payment limit/eligibility law calls the changes included in the Senate Agriculture Committee's version of a new farm bill “absurd” and “ridiculous,” but he's certain that most of his clients would not lose their eligibility if the changes become law.

Robert Serio, of Clarendon, Ark., said that reforms aimed at closing a loophole that lets some big farms collect multiple payments worth millions of dollars through passive investors ignore the reality of how commercial-scale farms operate.

“What they're trying to do is get rid of anybody that's not on the farm . . . With most of my clients, we can beat that,” Serio said during an interview with Agri-Pulse. He's helped farmers navigate complicated USDA rules on payment limits since 1986 and currently has clients in 27 states. “I represent as many farmers in the Midwest as I do here in the South,” Serio insisted.

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The Senate Ag panel's bill limits payments to no more than one farm manager per farm operation, and requires all others involved to provide labor in order to qualify for payments. The goal, according to a summary of legislation posted on the committee's website, is to “ensure that payments go to those farmers with an active stake” in the operation. The measure also limits payments received by a qualified individual or legal entity to $50,000. Payments to peanut farmers are limited to $50,000, with the same amount for one other covered commodity.

Serio said the proposed changes would likely disqualify partners who contribute marketing advice and other specialized services essential to maximizing a farm's productivity and profits. “What they're trying to do is eliminate the way businesses operate,” he argued.

The payment limit language was slipped into a package of amendments agreed to by Chairwoman Debbie Stabenow and Ranking Member Pat Roberts only a few hours before the April 26 markup. It appeared to catch southern members of the committee off-guard.

“I did not know about the inclusion in the managers' amendment of the change in the definition of actively engaged in farming,” Georgia Republican Saxby Chambliss complained. “This is a huge change that's going to impact every single farm in America because it's going to change who does quality and who doesn't.”

The provision also would limit farm program payments received by an individual or legal entity to $50,000 per year and contains a $750,000 adjusted gross income test for farmers and non-farmers alike.

Longtime payment limit reformer Chuck Grassley, an Iowa Republican, called the changes “historic,” praising Stabenow for providing the “most cooperation I've ever had in the 10 or 15 years that I've been working on the issue.”

Grassley wants “little bitty farmers,” said Ted Glaub, owner of Glaub Farm Management headquartered in Jonesboro, Ark. Glaub, who offers a variety of farm property services to individual farm owners, trusts, corporations, and investors across Arkansas, Mississippi, Missouri, and Tennessee, estimated that more than half of the land in the Mississippi River Delta is farmed by someone other than the landowner. “This is all about the midwesternization' of agriculture in the south,” he said.

According to Ferd Hoefner, director of policy at the National Sustainable Agriculture Coalition, repealing the so-called farm management “test” would make it easier for USDA's Farm Service Agency to enforce rules governing eligibility for payments.

“Back in the day when USDA actually tried to bring payment limitations cases, they would ‑ nine times out of 10 ‑ lose because you'd reach the point in the litigation where a farmer's lawyer would say ‘but your own regulations say management means anything,” Hoefner said. “This is going to be much more enforceable.”

Serio said he expects the reforms would prompt landowners to switch to cash-rental agreements, while Glaub predicted some large farm operators and landowners in his territory would simply choose to forgo the payments and put all their chips into subsidized crop insurance, which has no similar eligibility restrictions.

“If you take out all the big money coming into a farm and the landowner has to do a cash rent, what's the economic incentive to improve a farm?” Glaub asked.


Original story printed in May 9th, 2012 Agri-Pulse Newsletter.

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