USDA proposes definition of farming, limiting some subsidies

WASHINGTON — The government is revising its definition of what it means to farm, meaning some people who receive farm subsidies but don’t do any of the work would receive less government cash.

Congress charged the Agriculture Department last year with creating a new definition for what it means to be “actively engaged” in farming, the criteria to receive some subsidies. USDA proposed Tuesday that farms must document that their managers put in 500 hours of substantial management work annually or 25 percent of the time necessary for the success of the farming operation to qualify.

“We want to make sure that farm program payments are going to the farmers and farm families that they are intended to help,” Agriculture Secretary Tom Vilsack said.

The rules only apply to some farm businesses, however. Congress exempted family owned entities, which make up some of the country’s largest farms, as part of a provision in the wide-ranging farm bill that directed USDA to issue the new rules.

USDA said as many as 1,400 operations could lose eligibility under the rules, saving around $50 million over a three-year period.

The rules are in response to concerns that some people were abusing the idea of “actively engaged” to qualify for subsidies. A report by the Government Accountability Office in 2013 looked at some farms that received hundreds of thousands of subsidies a year and claimed that 11 or more people were actively engaged in the operation. For some operations, unlimited numbers of so-called managers can now receive payments.

Under the new rules, up to three managers per operation could receive subsidies.

Farmers receive roughly $5 billion a year under the actively-engaged requirements. The definition up until now has been broad, allowing people to claim vague “active personal management” to receive subsidies. People who don’t even visit a farm can receive money. USDA employees often have a difficult time verifying how engaged an individual is.

The proposed rule still would allow people to claim “active personal management” but defines that as the 500 hours of work or 25 percent of time necessary for the operation’s success. It is focused on farm businesses that are organized as general partnerships, in which multiple members share management, and non-family joint ventures, which are short-term business associations among individuals or entities.

Farms that organize under those two types of business models can sometimes sidestep farm subsidy limits. The GAO report found that general partnerships and joint ventures received a very high proportion of their subsidies through multiple members claiming that they were actively engaged in farming.

Vilsack says the rules would help “close a loophole that has been taken advantage of” by those businesses.

Farm bills passed by both the House and the Senate proposed stricter rules for which farmers could qualify, and would not have allowed anyone to have qualified under the vague classification of “active personal management.” Farmers would have had to contribute labor, capital, equipment or land to qualify for money.

Instead, the final bill that emerged from House-Senate negotiations directed USDA to better define what that management is and specified that family farms could not be part of the rule.

Craig Cox of the Environmental Working Group, which has fought farm subsidies for the wealthy, called the rule “a tiny step forward.”

“It doesn’t get at the heart of the problem,” he said.