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Grassley promoting reform compromise

A new reform proposal could be a key last-minute effort to move a farm bill forward before an extension of current law expires April 18. Senator Chuck Grassley (R-IA) said he's encouraging Senate Agriculture Committee Chairman Tom Harkin (D-IA) to consider a four-point reform package.

"As the Agriculture Committee looks for offsets for additional spending, I plan on writing to Chairman Harkin and Agriculture Deputy Secretary [Chuck] Conner to encourage substantive conversations on payment limitations," Grassley told reporters Wednesday while traveling in Iowa to meet with constituents. "Farm bill negotiations have clearly pointed to the difficulty in finding acceptable financing mechanisms that meet the demands for farm bill funding as well as having substantial reforms."

Grassley likes a four-point plan put forth by the Center for Rural Affairs of Lyons, Nebraska.

"They're a think tank that I've got great confidence in," he said.

Grassley said he's contacting Harkin and Conner because "I want to basically ask them to sit down and listen to these ideas that are being put forth," he said.

Grassley said he had talked "a few weeks ago" with Conner but hasn't heard back from him on the proposal.

The Center's plan drops any effort to put a hard cap of $250,000 on payment limits but it could potentially save about $1 billion over 10 years, the nonprofit advocacy group's executive director, Chuck Hassebrook, told Agriculture Online Wednesday. And it also considers regional differences in agriculture, accounting for potentially higher production costs and values for such southern crops as cotton, rice and peanuts.

Hassebrook said theses are the four points of the compromise plan:

  1. It adopts tougher requirements that people must be actively engaged in farming in order to receive commodity payments. Farmers would have to either provide 1,000 hours a year in labor and management, or, if the operation is too small to need that many hours, half labor and management for the operator's share of the farming business. "If you don't do that, nothing else works because people just create paper farms to get multiple payments," Hassebrook said.

    Farm operators would also have to be physically present. "You would no longer get to farm from an office tower in Chicago and draw a payment for doing it," he said.

The farm bill would have an adjusted gross income limit for receiving farm program payments. The Center's compromise doesn't address what the limit should be. House and Senate farm bills have limits between $1 million and $750,000. The White House originally proposed $200,000 but is now willing to consider $500,000. Whatever the AGI limit is, the Center's proposal would deny half of farm program payments to any landlord who tries to evade the AGI limit by switching from share rent to cash rent. Hassebrook said that, depending on where the AGI limit is set, studies have shown that between 36% and 42% of landlords would be affected by the AGI, creating a strong incentive to shift from share to cash rents.

The payment limit on direct payments would drop when commodity prices are high. In the Senate version of the farm bill, a married couple is limited to $80,000 in direct payments, no matter how high commodity prices go. The Center's proposal reduces those payments once commodity prices go above the target price. At 110% of the target price (110% of $2.63 a bushel for corn) the direct payments would be capped at $20,000 for a couple. "It's a modest payment to keep people on the land. It’s no longer a subsidy to farm big," Hassebrook said.

A regional adjustment would make the cap on direct payments smaller when commodity prices are high, down to $40,000 per couple for cotton, rice or peanuts. "I think you have to do that for the proposal to be equitable," Hassebrook said.

Hassebrook said that the Center isn't proposing capping loan deficiency payments. "The reason is we didn't have the votes. This is certainly a compromise. It is not everything we’ve advocated."

But Hassebrook said that the compromise might also free up money for a permanent disaster program, which so far is not in farm bill proposals agreed to by the leaders of both House and Senate Ag Committees. An estimate of a slightly different version of this compromise put the savings at about $1.2 billion over a decade, Hassebrook said.

The lack of a disaster program is a sticking point for Senator Max Baucus (D-MT), who chairs the Senate Finance Committee, which is looking for ways to pay for the farm bill. Grassley is the ranking Republican on the committee.

A new reform proposal could be a key last-minute effort to move a farm bill forward before an extension of current law expires April 18. Senator Chuck Grassley (R-IA) said he's encouraging Senate Agriculture Committee Chairman Tom Harkin (D-IA) to consider a four-point reform package.

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