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Modest U. S. Farm Subsidy Reforms Criticized

The U. S. Agriculture Department unveiled tighter eligibility rules for farm subsidies on Jan. 6 but a small-farm group says they don’t live up to President Barack Obama’s call for reform.

The rules, effective Jan. 7, bar subsidies to the wealthiest Americans, as required by the 2008 farm law. There is no limit on how much money a producer can collect.

After nearly a year of review, USDA settled on a modestly stricter definition of who is a farmer. Producers must be able to document a regular, separate and identifiable contribution of labour, management or both to qualify for subsidies if they do not provide capital, land or equipment.

Until now, there was no requirement to prove individual contribution of labour or management.

Reformers want USDA to set a minimum number of hours of labour or management. Otherwise, they say, money goes to people, such as passive investors, with few ties to the land.

“The best chance for reform in a generation has been punted away,” said Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition. USDA could write a strong definition if it wanted, he said, but instead “the big loopholes have been left intact.”

USDA said its changes were sufficient. “However, we are currently exploring whether the current definition could be amended in a manner that would be fair, equitable and enhance program integrity,” it said.

The new eligibility rules were proposed on Dec. 29, 2008, in the final days of the Bush administration and reopened by the incoming Obama administration.

The 2008 farm law is the first to ban subsidies to the wealthy. It denies payments to people with more than $500,000 adjusted gross income (AGI) from off the farm. Those with more than $750,000 AGI from agricultural sources are ineligible for the direct-payment subsidy but get price supports and counter-cyclical payments. There is a $1 million AGI limit to participate in land stewardship programs.

Obama was rebuffed last year when he proposed a $250,000 limit on farm subsidies and a phase-out of the direct-payment subsidy to large farms.

Farmers can receive up to $40,000 in direct payments and $65,000 a year in counter-cyclical payments. There is no limit on money from price supports.

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