Mega Farm Loophole Remains Open

In a repudiation of the president’s central campaign pledge on rural policy, the Obama administration has refused to close the biggest loophole in the federal farm payment limitation.

At an October 2007 Linn County, Iowa, campaign event Obama said, “Too many family farmers are being squeezed as big agribusiness takes up larger shares of federal subsidies.” He released a rural platform that day pledging immediate action to close loopholes by limiting payments to active farmers who work the land and their landlords – noting that “every president since Ronald Reagan had the authority to close this loophole but failed to act.”

But last month the Obama administration joined its predecessors in failing to act by releasing regulations that continue this gaping loophole. As a result, mega farms will continue claiming unlimited payments to drive smaller farmers out of business.

USDA allows investors to count as active farmers as long as they participate in a few conference calls, according to the Government Accountability Office. That enables mega farms to get another set of payments up to the limit for each additional investor in the operation.

The decision to continue this loophole is not just one forgotten campaign promise. This promise was the centerpiece of Obama’s rural policy and his central message to rural America about the kind of change he offered. But the administration has now refused to make the one change it can make without waiting for Congress – tighten USDA administration of farm programs to close loopholes.

To its credit, the administration made one important change to prevent payment limitation rules from hurting smaller farmers who receive payment far below the limit. A rule adopted in 2008 had cut payments to family farm corporations with family stockholders who did not farm or pretend to farm. They will no longer lose payments as long as half the stock is held by active farmers and the combined payment to all stockholders, through all interests, is under the limit.

Nevertheless, the administration would do well to return to the commitments made to rural America in Iowa. It could start by fulfilling another pledge made by the president that day – to return to Iowa to convene a summit on rural issues. The summit should define an aggressive strategy to revitalize America’s rural communities.

Our communities have real opportunities to advance. But one key to our future is a federal government that works with us to capitalize on those opportunities, rather than against us by subsidizing agricultural concentration.

A one-day forum on rural issues in Iowa would serve as good refresher for the president on the lessons he learned and espoused while campaigning in Iowa. It could also educate his White House staff.

Agree or disagree? Send your comments to Chuck Hassebrook at chuckh@cfra.org or call 402.687.2103 x 1018, or post a comment below.

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