Farm payment limits addressed in Farm Program Integrity Act

Sen. Chuck Grassley (R-Iowa) and Sen. Sherrod Brown (D-Ohio), in introduced bipartisan legislation to address abuse of the farm payment system and ensure taxpayer support is targeted to those actively engaged in farming. The Farm Program Integrity Act would create a hard cap of $250,000 in total commodity support for any one farm operation and require beneficiaries of the system spend at least 50% of each year engaged in farm labor or management. Currently, just 10% of farm operations receive 70% of all yearly farm payment subsidies.

“For years we’ve seen big farms get bigger while small and mid-sized family farmers in Ohio get squeezed,” Brown said. “Too often, farm program payments have gone to producers who do not need the support, or to people who aren’t even involved in farming. With this commonsense bill we can ensure assistance is directed toward working Ohio farmers.”

The Farm Program Integrity Act has garnered support from Taxpayers for Common Sense, National Sustainable Agriculture Coalition, R Street Institute, U.S. Public Interest Research Group, National Taxpayer Union, Environmental Working Group, Farm Action Fund, Regenerate America, Kiss the Ground and the Ohio Ecological Food and Farm Association. 

Robert Moore, attorney and research specialist for the Ohio State University Agricultural & Resource Law Program said, if passed, the new law could have significant impacts on many larger farms.

“Most FSA programs include payment limitations which limit the number and amount of payments any individual and some type of business entities may receive,” Moore said. “The limitations mean that no person, corporation or LLC may receive more than the designated limitation for the corresponding program in a single year. However, there is a notable exception to the payment limitation rule — general partnerships. Currently, a general partnership may have as many payment limitations as it does eligible partners. The Farm Program Integrity Act would limit general partnerships to just two payment limitations.”

Moore provided examples using the ARC program with $125,000 payment limitation illustrating potential impacts of the new legislation on ohioaglaw.wordpress.com.

1. Farmer is a sole proprietor and is enrolled in ARC. Farmer is eligible for one payment limitation and may not receive more than $125,000 in ARC payments in any year.
2. Farmer is married and Spouse owns 50% of the farm assets. Both Farmer and Spouse are likely eligible for a payment limitation and could receive up to $250,000 in ARC payments each year.
3. Ohio Grain Farms LLC is a farm operation with four owners, all of whom are actively engaged in the farming operation. Because this entity is an LLC, it is only eligible for one payment limitation. The LLC cannot receive more than $125,000 in ARC payments in any year.
4. Ohio Grain Farms Partnership is a general partnership with four equal partners, all of whom are actively engaged in the farming operation. The partnership is currently eligible for four payment limitations and could receive up to $500,000 of ARC payments in any year. The Farm Program Integrity Act would limit the partnership to two payment limitations or $250,000.