New Pay Limit Rules Creating Confusion, Chaos

February 18, 2009

WASHINGTON (Feb 18, 2009)—Although farm families across the country were put on notice last summer that strict new payment limitation rules were coming down the pike for the 2009 crop year, nobody could have anticipated the drastic changes that materialized nearly a half a year later, leaving farm families scrambling to understand and comply with the new rules.

The 2008 farm bill radically reformed payment limitations by requiring that all payments be traced to a warm body, that the total amount of benefit be cut in half through elimination of the so-called triple entity rule, and that the total amount of adjusted gross income a person could have and still receive benefits be cut by as much as 80%.

Farm families, which make up more than 97% of all farmers in the country, knew these new rules were coming and, sadly, some have even exited production agriculture due to the new benefit eligibility requirements.

But everybody saw them coming.

Unfortunately, what farm families could not have anticipated was an 11th hour airdrop of vastly expanded new rules that were not published until December 29 of last year, right between New Years and Christmas, as farmers were spending time with their families, closing out the books for 2008, and preparing for 2009.

Since then, farm families are slowly learning of the new rules and grappling to try and understand them—let alone comply with them by June 1 signup.

“Farming operations are set up for the long-term, taking into consideration things like estate planning, the desire on the part of many growers to transfer the operation to the next generation and the general economic conditions of the ag industry,” said Will Roehm, a wheat producer in Great Falls, Montana. “Not having any notice before a major rule change regarding program payments will do significant damage to many Montana family farms.”

Although the Congress clearly stated in what is called “report language” to the farm bill that it did not intend any changes to “actively engaged” requirements, the Bush Administration drastically rewrote the requirements, squeezing producers of all sizes.

“Anybody who would require every single person on a farm to have a completely separate and distinct role to play from any other person working on that farm has never been on a farm before,” said Steve Kramer, a corn, soybean, and sugarbeet farmer from Hector, Minnesota. “My wife and kids and I don’t sit down at the beginning of the year and say, ‘you slop the hogs, I’ll drive the tractor, and you pick rocks’ but that’s at least how this rule reads.”

The new rule appears to require every job on the farm performed by a person to be totally unique to the job performed by another person even though that is not at all how farms operate, and certainly not how family farms work where everybody chips in. A manufacturing company may have 100 employees, each with a separate and distinct responsibility, but farm families have to work together to get the job done. They don’t have the luxury of division of labor.

“Nobody faults the policy people at USDA for this mess,” said Barry Evans, a cotton farmer from Kress, Texas. “The expansions of the rule that go way beyond and, in some cases actually against, what Congress directed are the political leftovers from the previous Administration where a handful were trying to re-fight the farm bill through the rulemaking process.”

When the rule was first published there were deep concerns that it did not conform to new spousal qualification rules approved by Congress, but, fortunately, recent indications from the Department indicate that the rules will, at least, inch closer to Congressional intent on this issue.

“We greatly appreciate the hard work and diligence of USDA workers just trying to do their job,” said Tommy Hoskyn, a rice farmer from Stuttgart, Arkansas. “We also appreciate Secretary Vilsack providing an extension of the comment period and his recent statements about sticking to Congressional intent when implementing the farm bill.”

Hoskyn added, “Unfortunately, if this rule goes into effect for the 2009 crop year, as is, our comments will not count, we may have to go through this all over again next year, and the intent of Congress will have been ignored.”

Producers nationwide are worried that efforts to comply with the new rule in such a compressed period of time will result in unintended errors, excessive costs, and, ultimately, add no value.

Meanwhile, 23 Senators are urging USDA to adhere to Congressional intent and directive when implementing the new regulations, beginning in the 2009 crop year. The group is led by Senate Agriculture Committee Ranking Member Saxby Chambliss (R-GA) and Subcommittee Chairwoman Blanche Lincoln (D-AR), both long time champions of American farm and ranch families.