This Is NOT Reform

Since House Agriculture Committee Chairman Collin Peterson unveiled his latest version of the 2007 farm bill a little over a week ago, speculation has swirled that Peterson would propose additional farm program payment limitation reform. The general consensus was that Peterson’s proposal for farm programs, an extension of current programs with minor tweaks, would face insurmountable political opposition on the floor of the House, so he would have to include more substantial changes during the full Agriculture Committee consideration of the 2007 farm bill that began today (or else he would be faced with the floor rewriting farm programs entirely). Earlier this evening, Peterson unveiled his additional payment limitation reform proposal for full Agriculture committee consideration this week (click on the "manager's amendment" for the actual text, or the summary for the short and sweet version).

It is a sham. It is not real reform. It will not end the unlimited commodity payments that mega-farms use today to drive their smaller neighbors out of business. Maybe most importantly, it does not stand up and say, once and for all, that the farm bill exists to help small and mid-sized family farms and rural communities. And before we get into the details, let me say up front that we’re asking you to contact Speaker of the House Nancy Pelosi. Click on the link and let her know this is false reform, and you’re not going to stand for it.

The proposal lowers the adjusted gross income limit on eligibility for farm programs to $900,000 (for an individual- you can double that limit if you’re married). If you make more than that, you would not be eligible for farm program checks. We’ve written before about why this is inadequate reform on its own. For now, let’s leave aside the fact that $900,000 is a number that was probably decided on by politicians so it could be said that millionaires are excluded from farm programs (which still would not be true, anyway). And for now, we’ll ignore the fact that you would have to be one rich damn farmer to get anywhere close to $900,000, let alone reach that limit Let me put it this way- should we have a $900,00 AGI limit on food stamps?

If you think about it, there is little logic to this proposal. A farmer could be eligible for payments one year, not eligible the next, and eligible again the third year. And you could be ineligible the year of a serious drought, given that eligibility is based on past income. To really boil it down, a farmer making $899,999 could be eligible for hundreds of thousands of dollars in farm payments. If you make one dollar more, you receive nothing. It defies logic, and it’s not hard to see the opportunities for fraud and abuse here. The answer is to put a cap on the amount received through farm programs- i.e. payment limits. Putting a cap on income alone is downright absurd. And are we going to have the IRS audit farmers every year to make sure they’re telling the truth? The politicians behind this are simply trying to obscure the real issue and fool people into thinking this is real reform. It isn’t, and we’re not buying.

To add insult to injury, the limit on direct payments is raised by 50%. Direct payments are paid regardless of price or actual production. They will almost certainly be the only payments paid on corn, soybeans, and wheat in the next few years, due to high prices on those crops. Why, exactly, are we raising this limit? I can’t figure it out. You can still get around this limit with the loopholes in farm programs, but at least it takes a little work. Direct payments are not a safety net for low prices, and are immediately bid into inflated land prices (the landlord can receive the money whether he rents the land or not, so he just adds the direct payment into the rental price). We’ll be increasing the payments made to farmers who are already turning a substantial profit. What is that?

Last, we’ve railed about commodity certificates in the past (also called “generic” certificates or “marketing loan” certificates). Quite simply, they are a tool for mega-farms to evade the current paper payment limits on what is known as the “marketing loan” program. Supposedly, that program has a limit today of $150,000. Because of commodity certificates, there is no limit at all. Through commodity certificates alone, Florida real estate developer Maurice Wilder received $1.8 million in a single year.

How does the Chairman’s proposal deal with the marketing loan program and its much-abused loophole? IT COMPLETELY REMOVES ANY LIMIT ON THE PROGRAM AT ALL. You might think that ensuring Maurice Wilder doesn’t get million dollar checks would involve getting rid of commodity certificates. You would be right. But the current proposal actually makes it easier for Mo Wilder to get paid. That $150,000 limit? Gone. Old Mr. Wilder won’t have to even go to the trouble of using certificates. Have a loophole in a payment limit? Evidently the solution to that problem is not to get rid of the loophole, it’s to get rid of the payment limit.

This, my friends, is a sorry state of affairs. There is actually a couple of good things in some of what has been proposed, but we’re so overwhelmed by the lack of commitment to family farms we don’t have the energy to detail them yet. And the rumor is that Speaker of the House Nancy Pelosi thinks this is actual reform, and will support this bill on the floor of the House. Please, please, visit our web form. Tell the Speaker that this proposal is a sham, and you’re not going to stand for a farm bill that doesn’t include real payment limitations. Tell your friends too.

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