Payment Limit Legislation Introduced

Sen. Chuck Grassley says support of President makes passage more likely. Compiled by staff

Published on: Feb 16, 2005

Sen. Chuck Grassley introduced legislation Tuesday to target farm subsidies to small and medium-sized farmers. He introduced the legislation with Sen. Byron Dorgan, of North Dakota.

It has been Grassley's hope since the 2002 farm bill conference committee dropped the payment limit amendment that Congress would establish legitimate,
reasonable payment limits, he said in his press conference. He says, "now with the President's support, I expect good things will happen."

The bill limits payments to $250,000 - identical to the President's cap. The bill also includes other provisions supported in the President's budget. Items
in the legislation include limiting the subterfuge surrounding the three-entity rule, eliminating the use of generic certificates, and developing a measurable
standard to determine who should and should not be receiving farm subsidies.

"Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices, driving many family farmers off the farm," Grassley says.]

Here are specifics of the legislation.

  • Establish caps of $40,000 on direct payments, $60,000 on countercyclical payments, and $150,000 on loan deficiency payments and marketing loan gains, including gains on generic certificates and forfeited commodities. The combined limit would be $250,000. Under current law the cap on direct payments is $80,000 and the cap is $130,000 on countercyclical payments. There is no effective cap on loan deficiency payments and marketing loan gains.
  • Direct USDA to promulgate regulations that count all payments on production under the primary control of a single person toward that person's limitations. This would prevent large farms from avoiding limitations by constructing complex business relationships that allow them to control production but put crop ownership and payments in the name of other parties.
  • The legislation would improve the "measurable standard" by which USDA determines who should and should not receive farm payments. It requires the Secretary to promulgate regulations that define "primary control" to better determine who should qualify for farm payments.
  • The legislation would improve USDA's enforcement ability by instituting firm penalties for fraud. For example, a person who commits fraud in connection with a scheme or device constructed for the purpose of evading existing payment limits will be ineligible to receive farm payments for the crop year from which the scheme or device is adopted and the succeeding five crop years.

These organizations joined Grassley and Dorgan in support of the legislation. Citizens Against Government Waste, the Environmental Defense, the Free Enterprise Fund, the Izaak Walton League of America, the National Catholic Rural Life Conference, the National Taxpayers Union, Oxfam America, the Sustainable Agriculture Coalition, Taxpayers for Commonsense.