USDA tightens eligibility rules for farm subsidies

Loopholes remain, but the USDA is tightening its crop subsidy rules by limiting who can collect a payment for managing a farm, historically one of its most porous definitions. The new regulation, to be published on Monday, requires people to perform at least 500 hours of management or at least 25% of the management work required annually to merit a subsidy check — "a very major advancement," according to a small-farm advocate.

"This is way stronger than what we had before this week," said Ferd Hoefner of the National Sustainable Agriculture Coalition.

• READ MORE: Farm management rule is a step toward equity, say reformers

Previously, the USDA standard was active personal management that was crucial to the profitability of the farming operation. Crop subsidy recipients can collect up to $125,000 apiece, with spouses automatically eligible for payments.

Congress has tried since 1987 to restrict access to federal subsidies but there are many ways to evade the rules, which say that subsidies are available to people who are "actively engaged" in agriculture by providing land, equipment, or capital to an operation and performing labor or management as well. The Government Accountability Office, a congressional agency, reported in 2018 that it found a farming operation that received $651,000 in subsidies in 2012 with 16 of its 22 members claiming they provided active management.

Iowa Sen. Chuck Grassley, who says farm supports should be directed to working farmers and family-size farming operations, fought for a limit of one "manager" per farm in the 2018 farm law.

"The farm safety net in this country was never intended to maximize government payments or cover every bushel of every commodity on every acre," wrote Grassley and Nebraska Rep. Jeff Fortenberry, both Republicans, to Agriculture Secretary Sonny Perdue in June 2019 in arguing for the personal management test that was adopted by USDA.

In the rule to appear in the Federal Register, the USDA amended its definition of "active personal management" and "significant contribution" to activities performed on a "regular, continuous and substantial basis" that are either 25% of total management hours needed each year, or at least 500 hours annually.

A similar standard was applied to joint ventures and general partnerships in 2015. Family-run operations were excluded from it under terms of the 2014 farm law.

The 2018 farm law made first cousins, nieces, and nephews eligible for farm payments as family members. This new revision was incorporated into the new USDA rule, "which increases the number of additional individuals eligible for payment within joint operations comprised solely of family members." However, the additional family members are subject to the new rule on management, said Hoefner after reading the USDA regulation.

"While there is much about payment limitation and 'actively engaged in farming' rules that remain to be improved, this is a very major advancement," wrote Hoefner.

Ironically, the bulk of USDA payments to farmers since 2017 have flowed through stop-gap programs created by the Trump administration, with payment limits far larger than those that apply to the traditional farm program. The USDA set a maximum payment of $250,000 per person or entity, but up to $750,000 for corporations, in its coronavirus aid program this summer. Slightly more than $9 billion has been paid from a $16-billion fund for agriculture. The administration also funneled $23 billion to farmers and ranchers to offset the impact of the Sino-U.S. trade war on crops and livestock produced in 2018 and 2019.