Senator Grassley And Senate Colleagues Introduce Legislation To Cap Farm Program Payments, Close Loopholes

Date posted - February 12, 2013

Senator GrassleyWashington, DC — Senators Chuck Grassley, Tim Johnson, Mike Enzi and Sherrod Brown have introduced legislation that would place a hard cap on the farm payments an individual farmer can receive in a year and close long-abused and well-documented loopholes in the farm payment program.

Grassley staffers say the Farm Program Integrity Act of 2013 mirrors language that was included in the Senate-passed farm and nutrition bill in 2012. The legislation would establish a per-farm cap of $50,000 on all commodity program benefits, except those associated with the marketing loan program — that would be loan deficiency payments and marketing loan gains — which would be capped at $75,000. Thus the combined limit would be $125,000, or, for married couples, $250,000. The $50,000 cap would apply to whatever type of program is developed as part of the new Farm Bill.

Grassley says that it’s unacceptable that small- and medium-sized farmers get so little of the very program that was created to help them.

Beyond the hard caps on farm payments, The Farm Program Integrity Act of 2013 also includes a provision to begin closing the loopholes that allow people who aren’t involved in farming to collect farm payments.


What follows is information received directly from Senator Grassley’s Office:

The provision prevents non-farmers from being able to use the management loophole in current law. The bill would define clearly the scope of people who are able to qualify as actively engaged by only providing management for the farming operation. The bill will allow one off-farm manager, but only one. Landowners who share rent land to an actively-engaged producer remain exempt from the “actively engaged” rules provided their payments are commensurate to their risk in the crop produced. This provision will help the Department of Agriculture crack down on the general partnerships that have multiple non-farmers trying to qualify for farm payments by exploiting the management loophole.

Here is a link to the bill text.  Here is a copy of the text of Grassley’s statement on the Senate floor upon introduction of the bill today.  Video of Grassley’s remarks can be found here.

 

Prepared Floor Statement of Senator Chuck Grassley

The Farm Program Integrity Act of 2013

Tuesday, February 12, 2013

 

Mr. President, I rise today to talk about the farm bill; and then specifically about reforming payment limits for farm programs.

 

As one looks back to the fall of 2011, and the failure of what was referred to as the “Super Committee,” we saw many committees continue on with business as usual.  However, one committee took it upon themselves to continue efforts to tackle spending and propose meaningful cuts, the Senate Agriculture Committee.

 

For that matter, the House Agriculture Committee worked towards that end as well.  I commend Chairman Stabenow and then Ranking Member Roberts for corralling the many ideas of the members of the committee to write a bill that cut $23 billion.

 

We were able to work in committee to get the bill done.  We were able to work in a bi-partisan manner to get the bill across the Senate floor.  It is how legislation is supposed to be considered and debated on in the Senate.

 

One of the measures in last year’s farm bill was my proposal reforming payment limitations in the farm program.

 

Adopting reforms to payment limitations contributed to the $23 billion in savings.  Beyond just being a part of saving money, these reforms help ensure farm payments go to those who they were originally intended, small- and medium-size farmers.

 

In addition, the reforms include closing off loopholes so non-farmers can’t game the system.  I’ll come back to my proposed reforms in a minute after I say just a few words about the overall farm bill picture.

 

As we all know, Congress was not able to complete work on the farm bill last year.  But that’s not for a lack of desire by either of the Senate or House Agriculture Committees.  There remains a desire to get a five-year bill passed.

 

Supporters of the farm bill need to take a hard look at what challenges were presented last year to getting the bill done.  We need to forge ahead knowing some tough decisions need to be made.

 

For the Senate, we need to consider whether it’s realistic that we only cut $4 billion out of the nearly $800 billion nutrition title.  More can, and should be done.  The nutrition title comprised by far and away the largest expenditure in the bill.

 

There are more reforms we can make to programs such as food stamps; and they are reforms that cut down on waste, fraud, and abuse in the program, while also safeguarding assistance for people who need it.

 

There are other programs we need to take a fresh look at – should we accept the status quo on the sugar program?  How do we handle dairy policy?  What policy can we implement in the commodity program that won’t distort planting decisions but maintains an effective safety-net?

 

These are some of the many issues we need to debate again and decide upon.  I for one hope we are able to start soon and work together to get a five-year bill completed this year.  Our farmers and rural communities deserve to have certainty.

 

When we do move forward on drafting a new farm bill, I will again be pushing for the reforms to payment limitations.  That is why today I am introducing the Farm Program Integrity Act of 2013 with Senators Johnson of South Dakota, Senator Enzi and Senator Brown.

 

The proposed legislation strikes a needed balance of recognizing the need for a farm safety-net, while making sure we have a defensible and responsible safety-net.

 

In case there is any doubt, we do need a farm program safety-net.  For those who argue we do not need a safety-net for our farmers, I argue they do not understand the danger of a nation which does not produce its own food.

 

Take Germany and Japan during World War II for instance; there came a point where their soldiers had difficulty fighting because they didn’t have food to eat.

 

It’s a matter of social cohesion as well.  Without a secure source of food, we jeopardize our very way of life.  Look around the world where there is hunger and you see rioting, stealing, and other acts of violence.  We need our farmers to keep producing our food.

 

For all the advances in modern agriculture, farmers are still subject to conditions out of their control.  Just look at the drought that still grips much of the U.S.  Without an adequate safety-net, some farmers would be left with no ability to make it through.  That would mean potentially less food being produced for an ever increasing world population.  That is a scary prospect.

 

While farmers need a safety-net, there does come a point where a farmer gets big enough he can weather tough times without much assistance from the government.

 

Somehow though, over the years there has developed this perverse scenario where big farmers are receiving the lion’s share of farm program payments.  We now have the largest 10 percent of farmers receiving nearly 70 percent of farm payments.

 

There is nothing wrong with a farmer growing his operation, but the taxpayer should not be subsidizing large farming operations to grow even larger.  By having reasonable caps on the amount of farm program payments any one farmer can receive, it helps ensure the program meets the intent of assisting small- and medium-size farmers through tough times.

 

My proposed caps on payments will also help encourage the next generation of rural Americans to take up farming.

 

I am approached time and again about how to help young people get into farming.  When large farmers are able to use farm program payments to drive up the cost of land and rental rates, our farm programs end up hurting those they are meant to help.

 

It is simply good policy to have a hard cap on the amount a farmer can receive in farm program payments.  We will keep in place a much needed safety net for the farmers who need it most.  And it will help reduce the negative impact farm payments have on land prices.

 

Our bill sets the overall cap at $250,000 for a married couple.  In my state, many people would say this is still too high.

 

But I recognize that agriculture can look different around the country, and so this is a compromise.

 

Just as important to setting a hard cap on payments is closing off loopholes that have allowed non-farmers to game the farm program.

 

The bill being introduced today will do this by cutting off the ability of these non-farmers from abusing what is referred to as the “actively engaged” test.

 

In essence, the law says one has to be actively engaged in farming to qualify for farm payments.  However, this has been exploited by people who have virtually nothing to do with the farming operation yet receive payments from the farm program.

 

Our nation has over $16 trillion in debt.  We cannot afford to simply look the other way and let people abuse the farm program.

 

The Farm Program Integrity Act of 2013 is the same in purpose as what it states in the name.  This is about increasing the integrity of the program.

 

My colleagues here in the Senate agreed with me last year as we included these pivotal reforms in the Farm Bill.  I am confident these reforms will garner similar approval in the 113th Congress.

 

I mentioned earlier how we need to assess some of the challenging areas of farm policy as we look to pass a five year farm bill, and some tough decisions need to be made.

 

However, my proposed reforms regarding payment limits do not pose a tough decision.  They are common sense and necessary reforms.

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