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Peterson tackles payment limits

Agriculture.com Staff 07/18/2007 @ 9:14am

In the final version of the farm bill that the House Agriculture Committee is debating today, Committee Chairman Collin Peterson has proposed changes to payment limit rules that would do away with the three-entity rule that allows farms to increase the payments they receive. Critics say that his changes still have a big loophole. Peterson would not place any limit at all on marketing loans.

The income cap "caused quite a commotion," especially among cotton, rice and wheat farmers, Peterson told reporters, according to a Dow Jones Newswires report. But he also stressed it would save the government $522 million over 10 years.

Peterson uses the payment limit approach advocated by Agriculture Secretary Mike Johanns, who wanted to end payments to those with adjusted gross income of more than $200,000. The law currently bans payments to those with AGI above $2.5 million. Peterson nearly splits the difference. He would ban payments to anyone with a three-year average AGI above $1 million, with no exceptions for farmers with income above that level. Persons with a three-year AGI above $500,000 would also be ineligible, unless two-thirds of their income is ag related.

If Peterson's proposal makes cotton growers nervous, it makes reformers angry.

"This proposal unfortunately fails the laugh test for payment limitation reform," said Ferd Hoefner, policy director for the Sustainable Agriculture Coalition. "A proposal that increases direct payment caps by $40,000 per year and removes all limits on marketing loan benefits can only truthfully be called counter-reformation. It will only accelerate farm consolidation and further subsidize the demise of the family farm."

Peterson's proposal would raise the nominal limit on direct payments from $40,000 to $60,000 and then allow it to be doubled for a married couple to $120,000, Hoefner's group pointed out. It would maintain the current countercyclical payment limit at $65,000, or $130,000 once doubled. The limit for the two payments combined would be $250,000. There would be no limit at all on marketing loan payments. That means there would be no hard cap at all on total payments, Hoefner said.

The Agriculture Committee is getting other pressure to have tougher limits.

Senator Chuck Grassley and Senator Byron Dorgan sent a letter Monday to Speaker of the House Nancy Pelosi asking her to consider legislation they introduced in the Senate in May that would place a hard cap on the amount of farm payments an individual can receive.

The bill sets a limit of $250,000 for farm payments to better target farm program payments to family farmers. It caps direct payments at $20,000; countercyclical payments at $30,000; and marketing loan gains (including forfeitures), loan deficiency payments, and commodity certificates at $75,000.

"The bottom line is that under the current budget situation we cannot continue justifying to the American public, and the urban members of the House, the high amount of subsidies going to only the largest farms," Grassley said. "We're leaving those who need the most help empty-handed."

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