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Obama administration drops effort to end subsidies to large farms

As a presidential candidate, Barack Obama pledged to end subsidies to big farms by supporting a cap of $250,000 that has no loopholes.

A prominent part of his rural policy said: "Obama will take immediate action to close loopholes by proposing regulations to limit payments to active farmers who work the land, plus landlords who rent to active farmers. Both the Government Accountability Office and the Payment Limitation Commission have called for closing this loophole. Every president since Ronald Reagan has had the authority to close this loophole without additional action by Congress, but has failed to act."

This week, according to activists who want tougher limits, Barack Obama joined that long list of presidents who have failed to act.

"It's a huge disappointment," said Chuck Hassebrook, executive director of the Center for Rural Affairs in Lyons, Nebraska. "This was the centerpiece of candidate Barack Obama's policy."

On Thursday the USDA published rules on what it means to be "actively engaged in farming," which is one of the requirements to receive farm program payments. According to the critics, they remain weak.

In the past, they've been so vague that an absentee shareholder in a farm could join in a couple of conference calls a year and be considered part of a farm's management, said Ferd Hoefner, who lobbies in Washington for the National Sustainable Agriculture Coalition.

The 2008 farm bill does limit payments to nonfarmers with more than $500,000 in adjusted gross income. That might eliminate some of the payments going to "farmers" in New York City, as former Secretary of Agriculture (and now Nebraska Senator) Mike Johanns pointed out when he advocated new rules for the Bush administration.

But Hoefner says that affects relatively few farms. He estimates that just having a tougher requirement for being involved in farm management would eliminate 80% of the payments that go to very large farms. Some large farms get employees and distant relatives to sign up for payments through a chain of legal farm entities known as "Mississippi Christmas trees."

"The big story is what people who are running megafarms are doing to avoid the law," Hoefner told Agriculture.com Friday.

A few U.S. Senators have tried, unsuccessfully, to amend farm legislation to require stricter rules.

Senators Chuck Grassley (R-IA) and Byron Dorgan (D-ND), in 2005 for example, introduced an amendment that required payments to go only to farmers whose management is "personally provided on a regular, substantial, and continuous basis through direct supervision and direction of farming activities and labor and on-site services." To qualify for payments, a farmer's combined labor and management had to total 500 hours a year, or half of a farm's required management and labor.

In a statement to Agriculture.com Friday, Grassley expressed disappointment with the new rule.

"I don't want to see actively engaged rules weakened, and I will have some serious problems with the rule if it allows people to be eligible for farm program payments with a simple phone call. That's not the direction I want to head," Grassley said.

Hoefner's group credits the USDA with keeping some "micro-reforms" in a rule first published in the waning days of the Bush Administration.

As a presidential candidate, Barack Obama pledged to end subsidies to big farms by supporting a cap of $250,000 that has no loopholes.

In a statement, the Coalition said, the modest reforms require that contributions to "active management" be "regular and substantial" and "documented." But they don't include an objective, quantifiable standard against which to measure those terms, and are of little practical usefulness, or as Senator Chuck Grassley (R-IA) noted at the time are "much about nothing."

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