USDA Moves to Keep Nonfarmers From Program Payments

The federal government is taking steps to make sure a larger share of the overall amount of money devoted to farm payments actually winds up in farmers' hands.

On Tuesday, USDA officials announced they're proposing a rule that would limit payments to those "not actively engaged in farm management," something essentially mandated by the 2014 farm bill in which Congress "gave USDA the authority to address this loophole for joint ventures and general partnerships while exempting family farm operations from being impacted by the new rule USDA ultimately implements," according to a government report.

"We want to make sure that farm program payments are going to the farmers and farm families that they are intended to help. So we've taken the steps to do that, to the extent that the Farm Bill allows," USDA secretary Tom Vilsack says in a USDA report. "The Farm Bill gave USDA the authority to limit farm program payments to individuals who are not actively engaged in the management of the farming operation on nonfamily farms. This helps close a loophole that has been taken advantage of by some larger joint ventures and general partnerships."

The "farm manager" loophole has existed for decades, and in 1987, USDA classified farm managers as those who didn't make measurable "contributions to critical farm management decisions" but who could receive farm program payments. Now, the agency has proposed a rule to prevent that same group from receiving payments. And this time around, the rules are much clearer and more specific.

"The proposed rule seeks to close this loophole to the extent possible within the guidelines required by the 2014 Farm Bill. Under the proposed rule, nonfamily joint ventures and general partnerships must document that their managers are making significant contributions to the farming operation, defined as 500 hours of substantial management work per year, or 25% of the critical management time necessary for the success of the farming operation," according to a USDA report. "Many operations will be limited to only one manager who can receive a safety-net payment. Operators that can demonstrate they are large and complex could be allowed payments for up to three managers only if they can show all three are actively and substantially engaged in farm operations."

Federal officials are careful to point out the new rule won't affect family or otherwise active farmers and won't change any other mandates on farm ownership or management in the farm bill.

"The changes specified in the rule would apply to payment eligibility for 2016 and subsequent crop years for Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) Programs, loan deficiency payments, and marketing loan gains realized via the Marketing Assistance Loan program," according to a USDA report. "As mandated by Congress, family farms will not be impacted. There will also be no change to existing rules for contributions to land, capital, equipment, or labor. Only nonfamily farm general partnerships or joint ventures comprised of more than one member will be impacted by this proposed rule."

• See more on USDA's new 'Actively Engaged' rule