The writing and passage of the 2008 Farm Bill was hardly a smooth ride. So perhaps it shouldn’t be a surprise the bill’s implementation has been more of the same.

In late June, over a year after the legislation passed, the House Subcommittee on General Farm Commodities and Risk Management was told that key farm bill provisions aren’t yet in place. Other provisions – especially one calling for the Internal Revenue Service to be involved in farm program eligibility oversight – are on farm advocacy groups’ collective radar screen.

The focus of Jay Hardwick’s testimony to the subcommittee was “on payment limitations and eligibility because these provisions have a significant impact on cotton, rice and peanut operations. However, I also believe the elimination of the three-entity rule and the new income tests will have a far greater impact on grain, oilseed and specialty crop operations than may be understood.”

Hardwick, a northeast Louisiana producer and National Cotton Council chairman, said the latest farm bill “made the most significant and far-reaching changes in payment limitations and program eligibility provisions in over 20 years. Yet the rhetoric and the budget proposals of the (Obama) administration consistently gloss over the sweeping reforms in the new farm law and seem unconcerned about discovering the actual impact of those changes.”

Despite the administration’s apparent reticence to admit it, the actual impact on growers was bound to be dramatic because of new farm payment calculations and limitations.

“It eliminated the three-entity rule. It eliminated spousal discrimination. The $65,000 cumulative limit on counter-cyclical and ACRE payments and the $40,000 cumulative limit on direct payments as well as separate limits for peanuts were retained. The new law eliminated the limit on marketing loan gains, which will promote more orderly marketing, better protect producers in times of low prices, and importantly will reduce the administrative burden on USDA’s Farm Service Agency (FSA).”

Disaster Program
A common question the American Farm Bureau Federation (AFBF) is being asked by farmers “concerns the delivery of disaster program assistance,” testified Bob Stallman, a rice farmer from Texas and AFBF president. “For over a year, we have been unable to answer that question since the rules have not been published. Many farmers faced major disasters in 2008. It was a year of late-season flooding and crop destruction from hurricanes on the Gulf Coast, early season levy-breaks in the Midwest, devastating spring freezes in the Northeast and extreme drought in the Carolinas, Georgia and Texas.”

Farmers need disaster payments quickly, said Stallman. “Yet, a year after the passage of the farm bill, there are no rules for the disaster program, let alone a target date for when producers will receive assistance under these programs. For farmers who are facing tightening credit markets and are already stretched by high input costs combined with this year’s lower commodity market prices, the disaster program could provide meaningful assistance.”

Growers are also displeased with new USDA-written rules requiring farm program participants be “actively engaged” in farming. The interim regulations “require that every shareholder make an individual contribution of labor or management and the contribution be regular, identifiable, documentable, separate and distinct,” Hardwick pointed out.

“The new requirements are vague and, in many cases, the reason for the new requirements is difficult to understand. I believe these provisions will be a continual cause of confusion and uncertainty for farmers, because if you ask 10 FSA employees to explain what constitutes separate and distinct contributions of labor or management, you will get 10 different answers.”

Stallman was equally unimpressed with the “actively engaged” language. “The proposed changes to the definition of actively engaged hurt farmers and create uncertainty across the countryside. … The new rule takes the labor and management requirement to an entirely new level by further mandating that this management be ‘separate and distinct’ and ‘identifiable and documentable,’ but provides no clarification as to what this means.  At a minimum, this lack of clarity will almost certainly result in a multitude of standards being applied across the country.”

The proposed rule puts aside the fact that corporations and family farms are not mutually exclusive. Stallman cautioned this could actually preclude some family members from farming together. The rule “discriminate(s) against family farms that are organized as corporations. … Farms are a high-risk business where liability can be an enormous concern. A corporate business structure is the logical choice for limiting liability.”

This worry was worth noting, says Rep. Leonard Boswell (D-IA), subcommittee chairman. “That’s something I’ve been very concerned about. When have you been told to expect the rules and regulations to come out?”

Replied Stallman, “We don’t have any definitive dates. It’s in process. That’s the answer we get.”

Boswell: “No expectations or guesstimate?”

Stallman: “Not that I’d be willing to put on the table.”