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Q&A: Tax Incentives for Ethanol

June 21, 2011
Dysart Reporter


Senator Charles Grassley

Q & A: Keeping Farm Payments Focused on Family Farms

Q. What is the Rural America Preservation Act?

A. The Rural America Preservation Act is legislation I've sponsored to help restore the government farm program to its original intent by making sure program payments are targeted at small- and medium-sized farmers who need assistance getting through tough economic times that are due to circumstances beyond a farmer's control. I introduced the bill with Senator Tim Johnson of South Dakota. The legislation would limit the total amount of farm-program payments that a single farmer could receive to $125,000. The payment-limit breakdown for an individual farmer would be 1) a cap of $20,000 on direct payments, which are based on a farmer's acres and yields, as well as a set payment rate; 2) a cap of $30,000 on counter-cyclical payments, which are available to farmers when the market price of the commodity they produce is less than a target price set by the federal government; and 3) a cap of $75,000 total on gains a farmer can receive from repaying a marketing assistance loan, loan deficiency payments, and gains realized from the use of a commodity certificate issued by the Commodity Credit Corporation.

Our bipartisan bill also would close a loophole that some non-farmers have exploited to improperly receive farm payments. It does so by narrowing the guidelines used to define who is considered actively engaged in farming. The evidence of non-farmers' abusing this loophole is astounding. Both the Government Accountability Office and the U.S. Department of Agriculture Payment Limit Commission have pinpointed this as a critical area of concern. Closing this eligibility loophole is important to maintaining support from non-farm state members of Congress for the farm program. In order to help alleviate this problem, the bill would create a measurable standard of active, personal labor and management for the Department of Agriculture to use in determining if people requesting farm program payments are indeed farmers, or if they are just trying to game the system.

Q. Why are these changes necessary?

A. To ensure that farmers are able to provide a safe, affordable and abundant food supply, it's important to get the farm safety net back to its original intent. The federal farm programs were meant to help small- and medium-sized farmers weather the bumps associated with farming. The importance of providing a food supply is clear at every family's dinner table. Without a reliable and affordable food supply, desperation results. If a mom or a dad wasn't able to feed their kids for three days, they would do just about anything to feed them. If we lose the safety net that allows family farmers to weather the storm, then that safe, affordable and abundant food supply might just go away. To keep this safety net in place, we need to change the way farm program payments are distributed. Unfortunately, under current policies 10 percent of the biggest farmers in the U.S. receive more than 70 percent of farm payments, and some payments go to non-farmers. If left as is, the distribution system that pays out the lion's share of federal dollars to the largest and wealthiest farming operations will spell the beginning of the end of the farm safety net.

The trend in farm program payments going to big farmers also has a negative impact on the next generation of farmers. We need to keep young people in farming, so they're ready to take the lead when the older generation of farmers turn over the reins. When 70 percent of farm payments go to 10 percent of farmers, it puts upward pressure on land prices and cash-rent arrangements, making it a lot harder for smaller and beginning farmers to buy ground or afford to rent land. This makes it difficult to get a foothold in farming and leads to big farmers getting even bigger.

It's time to enact legitimate, reasonable farm program payment limits that tighten eligibility requirements and help those that the farm program was created for in the first place. The Grassley-Johnson bill would go a long way toward getting the farm program refocused on providing needed assistance to small- and medium-sized farmers.



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