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House Votes to Supsend Farm Bill's 10-Acre Restriction for Two Years

00:00AM Sep 25, 2008

via a special arrangement with Informa Economics, Inc.

Senate to follow but search is on for an alternative budget offset

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

The House on Wednesday cleared a bill (HR 6849) by voice vote that would suspend for two years language that farmers with 10 base acres or less be ineligible for farm program payments. The measure was prompted by concerns that USDA's interpretation of the provision is excluding some small farming operations from receiving subsidies.

The bill also would extend the registration deadline from Sept. 30 to Nov. 14 or 45 days after enactment, to give more time to smaller producers who had been discouraged from enrolling.

A companion Senate bill (S 3538) is pending and is widely expected to pass but at this juncture, the Senate bill currently has no budget offset.

The House bill suspends, for 2008 and 2009 crops, a provision barring subsidies to farmers who do not have at least 10 eligible base acres on a farm – the matter will be revisited next year and House Ag Committee Chairman Collin Peterson (D-Minn.) said the new language on this matter would detail the farm law's original intent to permit farmers who aggregate their land to continue receive farm program payments.

USDA continues to say the 2008 Farm Bill does not allow farmers to combine tracts to meet the threshold. However, farm bill writers said the provision was intended to allow farmers to aggregate multiple plots of land to meet the 10-acre minimum. A managers’ statement accompanying the 2008 Farm Bill detailed that intent – the threshold was designed to stop money from going to non-producers who live on small plots of land.

Around 255,000 farms have 10 acres or less in "bases" eligible for farm program payments – the farm bill exempts socially disadvantaged and limited-resource farmers from the 10-acre rule.

"The intent of that original provision was to stop gardeners in New York City from getting program payments. It was never intended to prevent bona fide farmers from participating in commodity programs," House Agriculture Committee Ranking Member Bob Goodlatte (R-Va.) said during floor debate. "It is unfortunate that we are forced to pass further legislation to make sure this intent cannot be misconstrued."

The 2008 Farm Bill prohibits direct, counter-cyclical, or Average Crop Revenue Election (ACRE) payments to producers of 2008-2012 crops if the sum of base acres on the farm is 10 acres or less, unless the farm is owned by a socially disadvantaged or limited resource farmer or rancher, as determined by the Secretary of Agriculture.

(The Farm Act defines “socially disadvantaged or limited resource” farmers or ranchers as those who have
suffered certain kinds of discrimination.)

Each farm’s base acres are an average of the number of acres planted in each crop (feed grains, oilseeds, wheat, rice, cotton, and pulse crops) over a specified historical period. A farm’s base acres do not increase or decrease over time.

According to USDA, about 255,000 farms in 2006 with total crop base of 10 acres or less received about $23 million in payments. Information from USDA also indicates that about one-third of those payments were made to farms owned by socially disadvantaged or limited resource farmers or ranchers.

The Congressional Budget Office (CBO) estimates that suspending the prohibition on payments to such producers would increase direct spending by a total of $11 million for the 2008 crops and $9 million for the 2009 crops, for a total of $20 million over the 2009-2018 period.

Budget offset still an issue. In the House-passed bill, the $20 million cost of suspending the 10-acre rule would be offset by cutting computer outlays for USDA's Risk Management Agency (via the Federal Crop Insurance Corporation) for upgrades to its computer systems, but USDA Deputy Secretary Chuck Conner said the cut could slow the delivery of crop insurance benefits.

"The lack of (infrastructure technology) will greatly impact not only the speed of delivery of crop insurance benefits but the quality of those benefits in terms of our tracking ... ability," Conner said. Cutting funding makes it harder "to ensure that we're making payments to the producers who have actually had a loss in that situation," he said. Conner called the move "a very bad idea" because the funding was needed to upgrade computer infrastructure used for crop insurance programs that are in "dire straits."

But Rep. Peterson said the proposal “should have no impact on crop insurance delivery. If USDA had followed Congressional intent on this issue, we wouldn't have to reduce spending on other Administration priorities to fix their mistake."

The Senate is searching for an alternative budget offset – if one can be found. Rep. Jerry Moran (R-Kan.) said during House consideration that he opposed the offset and would work to remedy it.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.