Senator Chuck Grassley, R-Ind., and Senator Tim Johnson, D-S.D., introduced the Rural American Preservation Act of 2011, a bill designed to lower the cap on farm commodity program payments and limit subsidies to the nation’s largest farms, while also simplifying eligibility and ensuring that payments flow to working farmers.

“This legislation represents the most important step congress can take to strengthen family farms - limit the subsidies that mega farms use to drive smaller operations out of business,” said Chuck Hassebrook, executive director at the Center for Rural Affairs. “The Act includes measures to close the loopholes in farm payment limitations that others in Washington know how to close but won't, because of the political clout of mega farms.”

“There’s no problem with a farmer growing his operation, but the taxpayer should not have to subsidize it. There comes a point where some farms reach levels that allow them to weather the tough financial times on their own.  Smaller farms do not have the same luxury, but they play a pivotal role in producing this nation’s food,” said Senator Grassley in his statement on the Senate floor.

Senator Johnson concurred in his statement, saying, “Farm payments need to be targeted to those who need it, the small and mid-size family farmers in South Dakota and across the nation.”

“The original intent of the federal farm programs was not to help the big get bigger.  But, the safety net has veered sharply off course,” added Grassley.

According to Hassebrook, the legislation would set a limit of $250,000 for married couples for farm payments in an attempt to better target farm program payments to family farmers.  Specifically, the bill caps direct payments at $40,000; counter-cyclical payments at $60,000; and marketing loan gains - including forfeitures, loan deficiency payments, and commodity certificates - at $150,000.  It also closes loopholes that people are using to maximize their take from the federal government. The bill improves the standard which the Department of Agriculture would use to determine that program recipients are actually farmers who are actively engaged in their operations.

"The bill would tighten rules that are supposed to limit payments to active farmers who work the land and their landlords. Current law is weak. Investors who participate in one or two conference calls are considered active farmers, allowing mega-farms to get around payment limitations by claiming uninvolved investors as partners," explained Hassebrook.  

The legislation would save the federal treasury more than $1 billion over 10 years, according to the Congressional Budget Office.

According to the National Sustainable Agriculture Coalition, current law requires a contribution of 1,000 hours of labor on the farm or involvement in its management to receive payments.  However, the vague, unenforceable regulatory standard for “actively managing” farm operations has foiled lawmakers’ attempts to target payments to working farmers.  This bill would clarify the definition of management to require ongoing and direct involvement in farm activities to stop the current evasion of payment limits.  Closing the current management loophole is widely viewed by experts as the linchpin to any attempt to stop abusive practices that allow mega farms to receive millions of dollars in taxpayer subsidies.

Senator Grassley has previously championed similar legislation, co-sponsored for many years by former Senator Byron Dorgan, D-N.D., and in the last Congress by former Senator Russ Feingold, D-Wis.  The bill received strong bipartisan support in the Senate, winning the votes of a majority of Senators in 2002 and again in 2007.  It did not, however, become law.

The bill text can be found here