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Few Affected by Lower Payment Limits

November 19, 2008
By: Sara Schafer, Farm Journal Media Business and Crops Editor
 
 

Linda Smith, Top Producer Executive Editor
 
According to USDA Economist Ron Durst, farm bill changes to payment limitations will affect very few farmers. Under the 2002 Farm Act, total payments from direct, countercyclical and marketing loan program payments could not exceed $360,000 for couples or farmers with multiple operations. The 2008 Farm Act retains the limits on direct and countercyclical payments but removes limits on marketing loan benefits.
 
Under 2002 law, a farmer was not eligible if adjusted gross income (AGI) was more than $2.5 million, unless 75% of his income was from farming. Fewer than 0.1% of all farmers reported AGI over $2.5 million.
 
The 2008 act says you are not eligible for payments if nonfarm AGI is over $500,000 ($1 million for couples) and farm income doesn't represent two-thirds of your total AGI. If nonfarm income is over $1 million (and farming isn't at least two-thirds of total AGI), you are ineligible for conservation payments.
 
Finally, an individual with farm AGI over $750,000 can't receive direct payments.
 
In 2005, less than half a percent of sole proprietors had AGI over $1 million. Less than a third of farm operators report a farm profit and fewer still report farm income over the $750,000 cap for farm income that applies to direct payments.
 
However, watch out for traps outlined in the Summer 2008 "Moneywise.”
 

 
You can e-mail Linda Smith at lsmith@farmjournal.com.

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RELATED TOPICS: News, MoneyWise

 
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