Stenholm: Adjusted Gross Income Test Tough to Implement

Former Texas Congressman says farmers need payment limitations, but this is not the way to achieve that goal.

Published on: Mar 1, 2007

Charlie Stenholm was an influential voice for agriculture in Congress from 1979 to 2005. And he's still making noise on Capitol Hill as a consultant and lobbyist for the livestock industry, having left office nearly two years ago.

These days he works as a lobbyist for the livestock industry, where he's hearing more and more grumblings over high priced feedstocks. And despite positive reviews for USDA's farm bill proposal, he sees conflict ahead.

"This is the most challenging farm bill I've ever been involved in," says the former ranking member on the House Agriculture Committee, speaking at a Bayer media event at the Commodity Classic in Tampa, Fla.

Stenholm says one of the greatest challenges will be trying to implement a payment limit like the kind proposed in USDA's plan, unveiled earlier this month. Under USDA's plan, producers with annual Adjusted Gross Income (AGI) of $200,000 or more would not be eligible for commodity payments. Farmers currently abide by the three entity rule as part of the 2002 Farm Bill and can use the rule to establish corporations and other entities, which allow the amount of payments received to exceed statutory limits. USDA's proposals eliminate the three-entity rule and ties payments to an individual. USDA's plan sets the subsidy payment limit for individuals at a total of $360,000.

"The adjustable gross income idea will be tough to administer, but it will get a lot of play," predicts Stenholm. "It's one of those things the urban press, particularly Wall Street Journal, really loves."

While he doesn't agree with the $200,000 AGI plan, Stenholm does believe farmers should get serious about some kind of payment limitation in the future. "We've winked and nodded to each other long enough, now we've got to do something. There has to be changes, but I don't know if the adjusted gross income idea is the way to go.

"For years, we've dealt with the payment limitation issue," he adds. "I don't believe anyone should be limited to how big you should get – that's called efficiency. But I do believe there is a limit to how much you should be subsidized."

Stenholm knows a little something about farm policy. Throughout his career he worked with five presidents, eight ag secretaries, and six house ag committee chairmen – most recently with Republican Larry Combest to craft the 2002 Farm Bill.

"It never made any difference to me after an election whether you had an R or D behind your name, if you had a good idea, let's sit down and work on it," he says. "Unfortunately, we've gotten away from that."