By Brian Depew
Center for Rural Affairs
With Congress hammering out budget cutting legislation and preparing to take up the 2012 farm bill, the next two years emerge as a crucial time for making commonsense cuts to agriculture spending. For federal farm programs, that means placing hard caps on payments made to the nation’s largest farms, subsidies those operations use to drive their smaller neighbors out of business.
First, Congress should place a hard limit of $40,000 on direct payments to the largest farms in tough years, and ratchet down that limit to $13,000 in the best years. A hard limit on counter cyclical and loan deficiency payments and a requirement that farmers be actively engaged in farming to receive payments are needed as well.
Second, the Center for Rural Affairs supports a one-third across-the-board cut in direct payments. Direct payments are bid into higher land and rent prices, driving up costs for beginners and smaller farmers.
Finally, we propose eliminating half of the payment on cash rented land owned by landlords with income over $500,000. Though paid to tenants, the money passes through their pockets to landowners in the form of higher cash rent. High-income landowners are already ineligible for federal farm payments on crop share leases. They should not be able to get around that by cash renting.
These reforms could save enough to reduce the deficit and still allow Congress to protect investments in conservation, rural small business development and initiatives to help create the next generation of family farmers and ranchers.