The Agriculture Department is making changes to eligibility rules for commodity programs that could make it more challenging for some family members involved in farm operations to qualify for government payments.
A final rule that the Farm Service Agency will publish in the Federal Register on Monday would make first cousins, nieces and nephews of farm operators eligible to receive payments, a change made by the 2018 farm bill. But the rule would also require anyone trying to qualify for federal subsidies as a farm manager to comply with rules that had applied only to general partners, said Ferd Hoefner, senior strategic adviser for the National Sustainable Agriculture Coalition, a group that has long advocated for tightening payment limitations and eligibility rules.
Those requirements mean that a payment recipient must provide either 25% of a farm’s total management hours on an annual basis or perform at least 500 hours of management annually. A subsidy recipient also has to provide the management on a “regular, continuous and substantial” basis, the rule says.
By law, farm program participants must be "actively engaged in farming," which means they must provide labor or management or both. FSA regulations define what it takes to meet those requirements.
Less than 4% of farm operations are general partnerships, so the new rule significantly expands the impact of the management rules, said Hoefner. “While there is much about payment limitation and actively engaged in farming rules that remain to be improved, this is a very major advancement,” Hoefner said in an analysis of the rule.
The management requirements were first issued in 2015 under then-Agriculture Secretary Tom Vilsack.
Hoefner said the new rule means the management requirements apply “to everyone (not just cousins, nieces, nephews, but literally everyone) who is claiming to be actively engaged on the basis of management only.”
Brian Kuehl, government and public affairs director for KCoe Isom, which provides accounting services to the food and agriculture industry, said in an email that "the rule will provide significant direction to farming operations and includes clarifications that help FSA regulations match the current business of farming. On first read, however, we are concerned that portions of the rule relating to member contributions could have an adverse effect on family farming operations and place undue burden on those businesses."
Matthew Farrell, Nashville-based director of farm program services for KCoe Isom, agreed that the rule appears to broaden the management rules to family operations. The original requirements have had little impact since the overwhelming majority of farms are family operations, he said.
“This could hurt succession plans for family operations when younger members or older members can not be as active individually, but collectively could contribute to an entity," he said.
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Smaller multi-generational family farming operations may have too many members to meet the management requirements, he said. For example, five members of a farm family could not each contribute 25% of the total management, and a small operation may not require 2,500 hours of management.
Sen. Chuck Grassley, R-Iowa, has long advocated for tightening the management requirements for all potential recipients of farm payments. He argues that the rules have allowed farmers to exploit the system by routing USDA payments to family members who have little to do with running the operation.
The rule also defines when FSA and the Natural Resources Conservation Service can waive the $900,000 income limit for people who sign conservation contracts with USDA. The waiver is limited to contracts on “environmentally sensitive land of special significance.”
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