Redefining 'Family Farm'

The Farm Service Agency's proposed rule could set a dangerous precedent. Carroll Smith

Published on: Apr 19, 2004

USDA's Farm Service Agency (FSA) has a proposed rule on the table to change the definition of the "family farm" that would cap family farm eligibility for direct and guaranteed loan programs based on farm income limits.

According to the National Cotton Council (NCC), only farms that in a typical year generate annual gross farm income that does not exceed the greater of $750,000 or 95% of the statistical distribution of the income of farms in the state with gross sales in excess of $10,000 will be eligible for FSA assistance. For many states this would create a defacto eligibility income cap of $750,000. About 25,000 farms would be affected by this new definition.

The current eligibility requirements for direct loans are determined by state to allow local offices the flexibility to address the credit needs of family farmers in their area.

The NCC, along with 17 other organizations, including the USA Rice Federation, the U.S. Rice Producers Federation, the American Bankers Association, the American Farm Bureau Federation and the National Association of Wheat Growers, submitted a letter to USDA-FSA urging them to withdraw the proposed definition of a "family farm."

The National Milk Producers Federation (NMPF) estimates that the $750,000 bar would  be reached by farms with 230 or more cows, at a time when the economics of the dairy industry push farmers to have more animals to be profitable. In addition, NMPF told the Associated Press that the top 5% of farms in terms of gross income in any given state, would still be disproportionate. More than half of the dairy farms in California, Arizona and Colorado would not fall within the definition of a family farm.

Although the proposed definition is aimed at direct and guaranteed loans, if it gets in the system, it could set a precedent for other farm programs it could apply to.

As Sen. Chuck Grassley, R-Iowa, continues to pursue changes in the current payment limitations provisions, such a precedent could be dangerous for high-value crops such as cotton and rice.

The time frame for the Final Rule is sketchy, but NCC's Robbie Minnich says, "There are a lot of factors to take into consideration, the obvious being how many comments they have to sort through and then addressing every concern in the comments. I would imagine it would be at least a month or two (past April 9) and then they probably would come out with a Proposed Final Rule.

"Following that, there would be another comment period before the Final rule is published," Minnich adds.