New rule will guide who gets some subsidies
What is a farmer? Don’t ask Congress. As part of the 2014 farm bill, lawmakers opted to pose that question to USDA. The definition is important because it determines which producers receive some federal subsidies.
“Producers who participate in the Price Loss Coverage or Agricultural Risk Coverage programs are required to provide significant contributions to the farming operation to be considered as ‘actively engaged in farming,’” notes a fact sheet from USDA—Farm Service Agency. “The Act requires the [agriculture] secretary to promulgate regulations to define “significant contribution of active personal management” as part of this determination.”
No rule had been announced by press time. It is expected by April. (Editor's note: The USDA announced the changes after the print version of Top Producer had gone to press. Get the information on the updated guidelines at USDA Announces Farmer Definition Changes.)
In-Field Implications. For many producers, any new definition won’t change how they do business.
“We want to make sure this definition isn’t going to affect current operations for farmers who provide essential contributions to their farms,” says Molly O’Connor, government relations adviser, OFW Law in Washington, D.C. “USDA has suggested that this definition shouldn’t affect their operation.”
Some have called for more sweeping reforms, arguing federal subsidies overwhelmingly go to operations they call “corporate farms,” she explains. Yet a broad definition of a farmer is essential for the 98% of farms that are family owned.
Whatever changes are made will be effective for 2015 crops, adds Phillip Fraas, attorney and partner, Stinson Leonard Street.
“The purposes of the new rulemaking are to strengthen the verification process when a participant in a farm operation wants to qualify on the basis of active personal management and to add clarity and objectivity to the ‘actively engaged’ rules to facilitate better enforcement of the payment limitations,” Fraas points out. “... [T]hey are not to apply to farms comprised solely of family members.”
The U.S. Government Accountability Office noted in a report that the existing definition of an actively engaged farmer is problematic because of:
- Requirements that are broad and subjective
- Difficulties posed by verifying individuals’ evidence of claimed contributions to a farm
- Management contribution claims from farm members who live “significant distances” away from the operation
- Challenges posed by verifying management contributions with a system that relies on interviews with payment recipients