Pay Limit Amendment Opposition Builds

November 16, 2007

WASHINGTON (Nov. 16, 2007)—As word spreads in rural America about a pending farm bill amendment to slash federal farm benefits, opposition to the plan sponsored by Senators Charles Grassley (R-Iowa) and Byron Dorgan (D-N.D.) continues to grow.

“The Grassley-Dorgan amendment would not just hurt Virginia farmers but the communities we live and work in,” said Herbert Putz of Orange, Virginia. “I hope Senators will reject all these harmful pay limit amendments and support the Committee reform bill.”

Opponents of the Grassley-Dorgan approach argue that the bill unanimously passed by the Senate Agriculture Committee in October already limits federal farm support. That bill will save taxpayers nearly a half billion dollars, according to the Congressional Budget Office.

Among the reforms made in the Agriculture Committee bill: 100 percent increased transparency of farm payments, elimination of the “three entity” rule, and a 70 percent reduction in the maximum adjusted gross income a person may earn and still qualify for farm program benefits.

“I hope folks in D.C. appreciate that the House Bill and the Senate Committee Bill are not paper tigers when it comes to pay limits because these new limits have teeth,” said Jeff Flora, Chief Executive Officer of the Kansas City, Missouri-based SouthWestern Association which represents agriculture implement dealers throughout the south central United States. “But there is a big difference between teeth and fangs. If a farmer cannot repay his crop loan under Grassley-Dorgan, the government can come after his farm, his equipment, and everything else he owns. This has serious implications way beyond the farm.”

The Grassley-Dorgan amendment would, among other things, overturn a bedrock principle of farm policy, converting the non-recourse loan into a recourse loan. This would allow the government to foreclose on a farm or seize equipment and real and personal property of a farmer unable to repay his or her loan. Current law provides that the government may only retain the collateral pledged on the loan.

“Inflation is already eating up the current pay limit amounts,” said Jason Shook, a farmer from Anton, Colorado. “But the Grassley-Dorgan amendment would ratchet limits down to an unsustainable level as we watch our diesel bills increase 80 percent, fertilizer costs triple, and a doubling of our equipment and repair costs.”

“Grassley-Dorgan is billed as correcting the problem of 10 percent of farmers collecting 90 percent of farm bill benefits, but this is an extremely misleading statistic,” said John Shawhan, a farmer from South Charleston, Ohio. “USDA defines a ‘farmer’ as anyone who produces $1,000 or more of farm goods in a year, so people who actually farm full time are going to make up a small percentage of total ‘farmers’ while their farming operations are going to look large by comparison.”

“Anyone who thinks the Grassley-Dorgan amendment will not hurt them has not read the amendment closely,” said Wilson Lauer, an Ithaca, Michigan farmer.

“When we see depressed prices down the road, there are going to be some very average size farmers who cannot repay their marketing loans,” Lauer added. “When that happens, Congress is going to have to step in and stop USDA from foreclosing on people because that is at the heart of what Grassley-Dorgan would allow USDA to do.”

“The Grassley-Dorgan amendment would unfairly penalize the family farmers who have invested their money and sweat to become larger and more efficient in an effort to remain competitive in an increasingly global market,” said Don Bransford, a rice farmer from Colusa, California. “The proposed cuts are draconian in nature, and represent a reckless approach to farm bill reform. I am sure it is not any one’s goal in the Senate, but the result of Grassley-Dorgan is to run full-time family farmers right off the farm, bringing economic damage to rural communities.”

“If the goal is to reform farm policy so benefits get to real farmers in places like South Dakota, the Committee bill does a good job,” said Steve Masat, a wheat farmer from Redfield, South Dakota. “But, Grassley-Dorgan and the other amendments I’ve read about will only make it harder on full-time farmers actually trying to raise their families on income from the farm.”