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USDA exempts family farms from limit on farm subsidy recipients

Those definitions described active personal management as involvement critical to the profitability of a farming operation.

In a reversal, the USDA said on Wednesday that family-run farms are not subject to a rule that tightens eligibility standards for crop subsidies — the opposite of what it announced three months ago. A small-farm advocate criticized the “correction,” which applies to the bulk of U.S. farms, as a violation of the rule-making process and encouraged the incoming Biden administration to void it.

At issue was an Aug. 24 regulation that requires people to perform at least 500 hours of active management or at least 25% of the management work needed in a year on a farm in order to qualify for a subsidy check as a manager. Almost 96% of farms in America are family-owned, so the new standard was hailed by reformers as a step against farm program abuse.

Congress has tried since 1987 to limit crop subsidy payments to those “actively engaged” in farming, defined as providing land, funding, or equipment to an operation as well as performing labor or management. But there have always been ways to get around the limits. The maximum payment per person is $125,000 a year. In 2018, the Government Accountability Office reported finding a farming operation that had received $651,000 in subsidies in 2012, with 16 of its 22 members claiming they had provided active management.

In a Federal Register notice, scheduled for publication on Thursday, the USDA said it had inadvertently applied the new management standard to all farms, when it had intended to apply it to “farming operations comprised of nonfamily members,” such as general partnerships. “After publication of the rule, stakeholders notified [the Farm Service Agency] of concerns regarding potential non-intended, adverse effects to farming operations comprised solely of family members,” it said.

“This correction restores the previous definitions” of active management for family farms, said the notice. Those definitions described active personal management as involvement critical to the profitability of a farming operation.

The USDA’s explanation for changing its regulation strains credulity because it suggests that no one — administrators, program specialists, or lawyers — involved in the multistep process of writing a federal regulation recognized the impact of setting the 500-hour threshold for management, said Ferd Hoefner of the National Sustainable Agriculture Coalition, a small-farm advocacy group. He said the USDA executed “just a 180° about-face here” in an apparent election-year gambit.

“This is a direct violation of the Administrative Procedures Act,” said Hoefner, referring to the law that requires the government to seek public input before making major changes in policy. “I have to believe an incoming administration would say, ‘No you don’t.’ ”

In a statement, Farm Service Agency administrator Richard Fordyce said the stricter management definition would apply to the comparatively small number of large farms targeted as a result of a provision in the 2014 farm law.

The USDA issued a regulation in 2015 that limited large farms, of more than 2,500 acres, that operate as general partnerships or joint ventures to no more than three managers who collect crop subsidy checks. The rule affected about 4% of U.S. farms.

To read the Federal Register notice revising the management rule, click here.

The Aug. 24 regulation is available here.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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