Farm payment loopholes exposed

Farm payment loopholes exposed

GAO report confirms flaws in farm payment limit rules for those who are "actively involved."

IT has commonly been said that no matter how Congress tries to tighten payment limitations on farm payments, there's always a way around it.

However, a new report from the Government Accountability Office (GAO) confirms that if language included in both the House and Senate farm bills is included in a final package, it would help in reducing abuse and fraud within payments.

The report details continuing problems with the implementation and enforcement of the farm bill's payment limitation provisions with respect to commodity production subsidies. The report reconfirms earlier GAO reports that demonstrate abuse of the "actively engaged in farming" eligibility rules designed to target payments to working farmers.

The largest abuse stems from lax standards related to qualifying for subsidies by supplying only management, and no labor, to the farm. Over the course of many decades, the U.S. Department of Agriculture standards have consistently resulted in payments to farms that are multiple times higher than the statutory payment limits allow, GAO found.

GAO found that farms organized as general partnerships receive the most in payments and have the highest percentage of members receiving payments based on "active personal management only." General partnerships with 11 or more individual members received 84% of their farm payments based on members contributing "active personal management only."

Farm Service Agency officials consistently said current "actively engaged" regulations are too vague to enforce in a meaningful way, the report adds.


Legislative work

The GAO report notes that, as "FSA stated in 2010 final regulations for farm program eligibility and as a senior FSA official told GAO in August 2013, FSA does not plan to change the regulatory definition of active personal management without direction from Congress."

The report states that Congress should consider modifying the definition of significant contributions of management activities either as it did in recent deliberation on reauthorizing the farm bill or in other ways designed to make contributions clearer and more objective.

The legislative language in both the House and Senate farm bills mirror the Farm Program Integrity Act of 2013 from Sen. Chuck Grassley (R., Iowa), a longtime advocate of payment limits.

The bill would define clearly the scope of people who are able to qualify as actively engaged by providing only management for the farming operation. This allows only one off-farm manager, which will help USDA crack down on the general partnerships that have multiple non-farmers trying to qualify for farm payments by exploiting the management loophole, a statement from Grassley explained.

Grassley said the conferees to the farm bill should take notice of the GAO report and take a hands-off approach to the provisions in both the House and Senate bills.

"This is just one more reason that my payment limits provisions included in the Senate and House bills — placing a hard cap on farm payments and closing loopholes that allow non-farmers to game the system — should stay untouched," Grassley said.

Ferd Hoefner, National Sustainable Agriculture Coalition policy director, added that the loophole has cost taxpayers "hundreds of millions of dollars and has concentrated farm program payments in the hands of mega farms.

"The GAO report demonstrates once again that the subsidy system is being abused and that USDA, sadly, refuses to make the needed corrections without additional direction from Congress," Hoefner concluded.

Volume:85 Issue:42

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