As with all things related to commodity subsidies, this is confusing. First of all, there are various programs and an individual farmer may be eligible for a number of them depending on the yield and acreage history of his or her land, prices for that year, yield for that year, which crop(s) he or she is growing, and more. According to the most recent rules:
- Anyone who makes over $500,000 in off-farm adjusted gross income (AGI) cannot receive subsidies. That rule presumably ensures that the real help goes to actual farmers (although if that were truly the case, they might consider setting the limit below half a million dollars!).
- Those with over $750,000 AGI from agricultural sources are ineligible for direct payments but can still receive counter-cyclical payments and loan deficiency payments. Translation: Direct payments are payments the government gives out each year regardless of need. If you're making big bucks off of farming, then the government no longer gives that to you. But if prices fall very low, you still get subsidies to compensate for the loss you take from low prices.
- Anyone who makes over $1 million AGI cannot enroll in conservation programs. This reserves conservation programs (which are perennially underfunded) to farmers who aren't millionaires.
So here's the news. Typically, you must be "actively engaged" in farming in order to get Direct Payments and Counter-Cyclical Payments and to participate in the new ACRE program (which is an alternate to taking Counter-Cyclical Payments). Actively engaged means that you must provide land, equipment, capital or labor, and management in order to get subsidies. Now, the USDA has new, more relaxed rules aimed at sending more money to "family farms:"
USDA has implemented the following change to permit certain operations, most often family-run operations, to meet 'actively engaged' in farming requirements under less restrictive rules.
Every stockholder or member of a legal entity, such as a corporation, does not have to contribute labor or management if both of the following apply:
* at least half of the interest in the legal entity is held by stockholders or members who are providing active personal labor or active personal management that altogether qualifies as a significant contribution to the farming operation;
* the total direct payments received, both directly and indirectly, by the legal entity and each of the members does not exceed $40,000.
I'd just like to point out that 96% of all U.S. farms are "family farms" so saying "family farms" is pretty much the same as saying "farms."
Let's see who this actually effects. Here are the payment rates for direct payments for the duration of the 2008 farm bill:
Wheat: $0.52/bu
Corn: $0.28/bu
Grain sorghum: $0.35/bu
Barley: $0.24/bu
Oats: $0.024/bu
Upland cotton: $0.0667/lb
Long-grain rice: $2.35/cwt
Medium-grain rice: $2.35/cwt
Soybeans: $0.44/bu
Peanuts: $36/ton
Other oilseeds: $0.80/cwt
Direct payments are calculated by (83.3% of base acres * base yield) * direct payment rate. Using average yields from 2007, the following farms would get direct payments of $40,000 or less:
1161 acres (or fewer) of corn
800 acres (or fewer) of cotton
284 acres (or fewer) of rice
2701 acres (or fewer) of soybeans
2359 acres (or fewer) of wheat
In other words, you can still have a pretty big farm and qualify for this new loosened eligibility requirement. So this is all kind of a load of B.S. |
