Closing Loopholes in the Farm and Nutrition Programs PDF Print E-mail
News Releases - Food & Dining
Written by Sen. Charles Grassley   
Friday, 13 December 2013 08:21

Prepared Floor Statement of Senator Chuck Grassley of Iowa

The 2013 Farm and Nutrition Bill

Wednesday, December 11, 2013

Mr. President, I rise today to talk about the farm bill; and specifically about reforming payment limits for farm programs.

Beyond saving money, these reforms help ensure farm payments go to those who they were originally intended, small and medium-size farmers.  In addition, the reforms include closing off loopholes so non-farmers can’t game the system.

Supporters of the farm bill need to take a hard look at what challenges were presented last year to getting the bill done.  We need to forge ahead knowing some tough decisions need to be made.

There are more reforms we need to make to programs such as food stamps; and they are reforms that cut down on waste, fraud, and abuse in the program, but also safeguard assistance for people who need it.

And while I support closing loopholes to the food stamp program, I believe the farm bill should also close the loopholes in farm programs that are abused.

As we move forward on finalizing a new Farm Bill, I want to state clearly that Sections 1603 and 1604 related to farm payments, which are in both the House and Senate Farm Bills, should stay in the bill.

These farm payment reforms strike a needed balance of recognizing the need for a farm safety-net, while making sure we have a defensible and responsible safety-net.

In case there is any doubt, we do need a farm program safety-net.  For those who argue we do not need a safety-net for our farmers, I argue they do not understand the danger of a nation which does not produce its own food.  For all the advances in modern agriculture, farmers are still subject to conditions out of their control.

And while farmers need a safety-net, there does come a point where a farmer gets big enough he can weather tough times without as much assistance from the government.

Somehow though, over the years there has developed this perverse scenario where big farmers are receiving the lion’s share of farm program payments.  We now have the largest 10 percent of farmers receiving nearly 70 percent of farm payments.

There is nothing wrong with a farmer growing his operation, but the taxpayer should not be subsidizing large farming operations to grow even larger.  By having reasonable caps on the amount of farm program payments any one farmer can receive, it helps ensure the program meets the intent of assisting small and medium-size farmers through tough times.

My payments reforms essentially say we will help farmers up to $250,000 per year, but then the government training wheels come off.

These new caps will also help encourage the next generation of rural Americans to take up farming.

I am approached time and again about how to help young people get into farming.  When large farmers are able to use farm program payments to drive up the cost of land and rental rates, our farm programs end up hurting those they are meant to help.

It is simply good policy to have a hard cap on the amount a farmer or farm entity can receive in farm program payments.  And while both bodies of Congress have decided to cap farm payments, crop insurance is still available to large operations with no limits on indemnities.

Sections 1603 and 1604 of the current farm bills set the overall payment cap at $250,000 for a married couple.  In my state of Iowa, many people would say this is still too high.  But I recognize that agriculture can look different around the country, and so this is a compromise.

Just as important to setting a hard cap on payments is closing off loopholes that have allowed non-farmers to game the farm program.

The House and Senate farm bills also end the ability of non-farmers to abuse what is known as the “actively engaged” test.

In essence, the law says one has to be actively engaged in farming to qualify for farm payments.  However, this has been exploited by people who have virtually nothing to do with the farming operation yet receive payments from the farm program.

A Government Accountability Office report which I released in October outlined how the current actively engaged regulations are so broad they are essentially unenforceable.  And those comments came from the USDA employees who administer the programs.  The report illustrated that one farming entity had 22 total members of which 16 were deemed contributing ‘active personal management only’ to the farm.

What does ‘active personal management only’ mean?   That means they are becoming eligible for farm programs because of one of the eight overly broad and unenforceable eligibility requirements that currently exist.  More simply put, they likely aren’t doing any labor and are nothing more than a participant on paper to allow the entity to get more government payments.

Our nation has over $17 trillion in debt.  We cannot afford to simply look the other way and let people abuse the farm safety-net.

I mentioned earlier how we need to assess some of the challenging areas of farm policy as we look to pass a five year farm bill, and some tough decisions need to be made.

However, my reforms to payment limits do not pose a tough decision.  They are common sense and necessary reforms that are included in both the House and Senate versions of the farm and nutrition bill.


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