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Farm Payment Loopholes

According to the Government Accountability Office (GAO), “Congress should consider modifying the definition of significant contributions of management activities, either as it did in recent deliberations on reauthorizing the farm bill or in other ways designed to make contributions more clear and objective.”  This was the findings from a report requested by Senator Chuck Grassley (R-IA) to look at the Farm Service Agency’s compliance reviews of farm operation members’ claimed contributions of active personal management and personal labor.  Senator Grassley said, “The report shows that there is still far too much subterfuge of the actively engaged law.  For instance, taxpayers are footing the bill for farm payments to 11 active managers of one farm, who supposedly provide significant management experience, yet perform no labor.  The loophole has been allowed to stand for too long.  It’s time to close it once and for all and put the issue to rest so we can maintain a safety net for the farmers who really need it.”  Highlights of the report included: 

·       Farm Service Agency officials consistently said current ‘actively engaged’ regulations are too vague to enforce in a meaningful way. 

·       Farms organized as general partnerships receive the most in payments and have the highest percentage of members receiving payments based on "active personal management only."  General partnerships with 11 or more individual members received 84% of their farm payments based on members contributing "active personal management only." 

·       Operations that have members determined out of compliance at the local level for not being able to demonstrate adequate knowledge to contribute "active personal management" have appealed the decisions to the state and federal levels and won because they have time to prepare the individual in question. 

·       A farm in the Midwest, which received roughly $400,000 in payments for 2012, was organized as a general partnership with six corporations and 11 individual members of the same family who ranged in age from 18-88.  Publicly available data indicated two of the individuals, including the 88 year-old, lived in South Florida and claimed "active personal management only" for eligibility purposes.  

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