Ag Policy Blog

Hundreds of people are getting farm payments without doing any real work, prompting Sen. Charles Grassley, R-Iowa, to criticize the lack of farm-payment reforms in the House version of the farm bill.

The senator pointed to a Government Accountability Office report on farm-program payments that was released Friday that pointed to people in general partnerships, joint ventures and other corporate structures who receive farm subsidies but don't list themselves as providing any farm labor.

"The glaring loopholes in current law is allowing people to qualify under what is termed, and this is a legal term, as actively personal management only," Grassley said. When people choose this option, they are saying they do not work on a farm, he said. "If they did you think they would choose that qualification option when they sign up."

Just in the larger farm operations, there were $259.8 million in payments for people listed as "active personal management only." Such funding would basically pay for the request by commodity groups to double funding for U.S. trade programs annually.

Outside taxpayer groups had criticized the House farm bill for expanding who qualifies for farm-program payments and language in the bill that could allow pass-through entities to have no payment limits for commodity programs. Grassley concurs with those views. The House farm bill "goes out of its way to make subsidy loopholes even bigger," the senator said.

Rep Mark Meadows, R-N.C., offered an amendment in the House similar to the Grassley amendment on income caps and payment limits, but the amendment was not allowed a floor debate and vote.

"It simply is not smart to make it easier for people who do not work on farms to get $125,000, or if they are married $250,000, free from the taxpayers with no enforceable requirements," Grassley said, indicating there would be backlash against the farm bill.

Grassley said he is working with Sen. Pat Roberts, R-Kan., and Sen. Debbie Stabenow, D-Mich., on farm-bill language that would tighten eligibility for farm payments. Yet, such language passed both the House and Senate in 2013, but did not make the final farm bill. The senator acknowledged that without similar language in the House bill, he would be in a weaker negotiating position this time around. Yet, Grassley said if the House version of the farm bill goes through, it could ensure tighter reforms the next time around.

"It would make the farm payments to Wall Street bankers so outrageous we may finally get some decent restrictions," Grassley said.

Grassley said he thinks the Senate Agriculture Committee will advance a bill in June. If a farm bill isn't conferenced and get a final vote by early August, the senator thinks it would be more likely that there would be an extension of the 2014 farm law.

Grassley's complaints about the House bill come after the GAO issued a report last Friday, requested by Grassley, taking a look at farm program payments, following up on a similar report issued in September 2013, before the current farm bill was enacted.

For 2015, the GAO cited 95,417 operations received a combined $2.7 billion in payments. Breaking it down a little more,

22,636 general partnerships collected $1.3 billion in payments with average payments of $56,760 per entity. And 4,783 joint ventures claimed an average of $43,282 in payments while 30,335 corporations received an average of $25,928 in payments. Another 23,216 LLCs received an average of $15,532 in payments.

The 50 largest farm operations received an average of $884,495 per operation. Those farms also averaged more than eight people per operation receiving payments, but nearly four people collecting payments per farm were listed as "active personal management only." Most of the rest of people receiving payments in these big operations were also listed providing both management and labor.

The largest 10 farms collecting payments -- general partnerships or joint ventures averaging $1.34 million per operation -- had an average of eight people collecting payments who are considered "active personal management only" while two-to-three people per operation were labor, or both labor and management.

Out 22,234 farms considered general partnerships, nearly 75% of payments went to people who provided both labor and management to the farm. But 23.1% of the people collecting farm payments in general partnerships were listed as "active personal management only." They received $259.8 million in payments in 2015.

Grassley said of those people classified as "active personal management only" were "non-farmers" who only receive farm-program payments "because of the egregious loophole that applied to general partnerships and joint ventures."

The larger the general partnership, the more people who are only providing "active personal management." Of 150 general partnerships who had 11 or more members, nearly 85% of the people receiving farm payments are listed as providing "active personal management only."

Beyond 2015, Grassley said these non-farmers are collecting more payments because the farm bill lasts five years.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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