When Farming Isn't Farming
HandelontheLaw.com Staff Writer
In late March 2015, the U. S. Department of Agriculture (USDA) created new standards for being “actively engaged” in farming, the criterion for receiving some federal farm subsidies. The Department estimates that the new definition will disqualify up to 1,400 operations and save approximately $50 million over 3 years.
Federal farm subsidies have been in place since the early 1930’s in reaction to the Dust Bowl and the Great Depression. The subsidies are meant to be a safety net to ensure a stable food supply while assisting agricultural producers financially stay afloat despite variations in production and profitability. Farm subsidies were complex from the beginning and became more so with periodic modifications, though the primary system currently consists of:
1. Direct payments made at a predetermined rate every year;
2. Counter-cyclical payments, made when market prices fall below predetermined levels;
3. Revenue assurance paid to ensure profitability of specific crops;
4. Marketing loans made to farmers;
5. Disaster payments for losses caused by natural occurrences;
6. Subsidized crop insurance to ensure against losses from a variety of causes.
U. S. agricultural producers currently receive $5 billion per year in farm subsidies of one or more types. One of the criteria for receiving subsidies is to be “actively engaged” in farming, which has been vague enough that “managers” who never set foot on a farm can receive subsidies. Sure enough, in 2013 the Government Accountability Office (GAO) found that the criterion of being “actively engaged” in farming was being abused. As a result, in 2014 Congress directed the USDA to redefine “actively engaged.”
In late March 2015, the USDA proposed that in order to qualify for subsidies by being “actively engaged,” farms must document that their managers spent at least 500 hours per year on substantial management work or 25% of the time necessary for the success of the farming operation. In order to receive the payments, a manager must document his/her direct involvement in the farm’s financial management, labor management, planting, harvesting, marketing or other direct contributions to the farming operation’s success.
The new standards will not apply to family-owned farming operations, some of America’s biggest farms, as Congress specifically exempted them when directing the USDA to redefine “actively engaged.”
The new standards are supposedly aimed at general partnerships and non-family joint ventures, which receive a large percentage of their subsidies by multiple members claiming active engagement in farming.
Leadership of Environmental Working Group, which fights subsidies for the wealthy, deems the closure of the “actively engaged” criterion a small step forward but still insufficient for ensuring that subsidies are made to the farmers they are meant to help.
By Kathy Catanzarite
Note from HandelontheLaw.com: This article is to be used as an educational guide only and should not be interpreted as a legal consultation. Readers of this article are advised to seek an attorney if a legal consultation is needed. Laws may vary by state and are subject to change, thus the accuracy of this information can not be guaranteed. Readers act on this information solely at their own risk. Neither the author, handelonthelaw.com, or any of its affiliates shall have any liability stemming from this article.