Farm management rule is a step toward equity, say reformers
Although the USDA adopted a stricter rule on who qualifies for crop subsidies, farm-program reformers said on Monday there was more work to do. The new rule, which applies to people who say they deserve a payment because they help manage a farm, should be applied across the board to all USDA programs, and it needs to have teeth, they said.
“We urge the (USDA) — and Congress — to build on these efforts to ensure that aid is directed toward those who need it most,” said vice president Mike Stranz of the National Farmers Union. “Eligibility for these programs must be appropriately limited and enforced.”
Since 1987, lawmakers have tried to limit eligibility for crop subsidies, defined as someone who provides land, capital, or equipment as well as personal labor or active management, and the maximum amount of money available per farmer, nominally $125,000 a year. Payments go to individuals and entities such as partnerships, corporations, and trusts.
Operators and investors have devised creative ways to collect USDA payments, such as dividing their land into smaller farms, each eligible for a payment, or forming a series of partnerships, each of which applies for a payment, or listing more family members as eligible for payments because they provide labor or management. Spouses are automatically eligible for payments. There are periodic attempts in Congress or during USDA rule-making to carve exclusions from the limits or to expand eligibility.
The 2018 farm law, for example, made first cousins, nieces, and nephews eligible for subsidies as family members. That change was incorporated into the so-called final rule published by USDA on Monday, which also tightened the management standard to require people to perform at least 500 hours of management or at least 25% of the management work required annually on the farm. Reformers said the new standard would reduce the opportunity for people with a limited connection to the land to claim a payment.
“That’s why we’ve found thousands of people who live in cities who have received subsidies over the years,” said Anne Schechinger of the Environmental Working Group, known for its database of farm subsidy recipients. “So the new rule will do a better job of limiting farm subsidies to people who actually provide a significant contribution to the farm, instead of going to people who are loosely related to the farm who often don’t live or work on the farm.”
But the results are far from guaranteed, she said. Large farms will have an easier time than small operators in justifying 500 hours a year of management work by multiple people, “so it still remains to be seen whether the rule makes a big difference.” In addition, said Schechinger, the management rule “needs to be applied across the board to all subsidy programs.” The new language applies to traditional crop subsidies but not to the multibillion-dollar stopgap programs created by the Trump administration in response to the pandemic and the Sino-U.S. trade war.
Iowa Sen. Chuck Grassley, who tried in the 2014 and 2018 farm bills to limit the number of managers per farm, said crop subsidies should be directed toward family-size operations. “I’ll keep a close eye on USDA’s implementation of management and labor rules so that federal farm payments go to farmers who actually need it,” said Grassley.
The USDA indicated the new rule will make little difference in crop subsidy payments. Its cost-benefit analysis said farm program outlays would rise by about $21 million a year, mostly in disaster relief programs. Federal direct farm payments run at $10 billion to $15 billion a year.