WASHINGTON – As farm bill conference committee negotiations continue, Senators Chuck Grassley and Byron Dorgan have urged consideration of “Dorgan-Grassley II,” a possible payment limitations compromise.
In a letter to Senate Agriculture Committee Chairman Tom Harkin and Department of Agriculture Deputy Secretary Chuck Conner, the Senators wrote that “in recent days, farm bill negotiations have clearly pointed to the continuing difficulty in finding acceptable financing mechanisms that meet the demands for farm bill funding. We believe that a sizeable amount of the gap might be found in adopting the four-point program.”
During the Senate farm bill debate in December, Grassley and Dorgan introduced a payment limits amendment that would have put a hard cap on federal farm program payments and ensure that only farmers get payments. The amendment received a majority of 56 votes, but did not pass because it was required to reach a 60 vote threshold.
Here is a copy of the text of the letter.
March 26, 2008
Chairman Tom Harkin Deputy Secretary Chuck Connor
Committee on Agriculture, U.S. Department of Agriculture
Nutrition, and Forestry 1400 Independence Ave., SW
Russell 328-A Washington, DC 20250
Washington, DC 20510
Dear Chairman Harkin and Deputy Secretary Connor,
The purpose of this letter is to encourage a conversation between the two of you on the recently proposed four-point plan for payment limitations, both on its merits and in relation to the widely reported need to close a sizeable gap between funding levels and available offsets.
You both are acutely aware of our commitment to achieve payment limitations in the commodity program in the Farm Bill. This past winter Dorgan-Grassley received the support of 56 Senators, but fell short of the 60 vote super majority needed for passage.
The four-point proposal (attached) could correctly be called Dorgan-Grassley II. It attempts to get us closer to a politically acceptable compromise by:
• Reducing payment limitations and income limitations only when prices are above target price, which should be acceptable to Chairman Peterson who has been willing to sacrifice all payments in years of high commodity prices;
• Softening the impact of reduced limits on cotton, rice and peanuts in recognition of the differences between northern and southern agriculture;
• Incorporating the Administration proposal to lower Adjusted Gross Income limits, but with a feature to increase the savings by reducing payments on cash rented land owned by high income landlords; and
• Responding to the findings of the GAO and USDA Payment Limitations Commission by incorporating the primary control and actively engaged in farming provisions of Dorgan Grassley I.
In recent days, farm bill negotiations have clearly pointed to the continuing difficulty in finding acceptable financing mechanisms that meet the demands for farm bill funding. We believe that a sizeable amount of the gap might be found in adopting the four-point program.
In response to our request, the Congressional Budget Office estimated preliminary savings of $1.186 billion over 10 years for the four-point program.
We understand that the Center for Rural Affairs recently presented Senator Harkin with a revised version of the 4-point program that they believe would be scored in the range of $2 billion.
The farm program, as it currently exists, too often directs payments in amounts that defy common sense or logic. Limiting farm program payments is good government on its own merits. At a time when there is an earnest search to find savings that will allow the Farm Bill to move forward, we urge the two of you to give careful consideration to Dorgan-Grassley II.
We thank you for your attention to this matter and look forward to hearing back from you concerning discussions on the subject.
Sincerely,
Charles E. Grassley Byron L. Dorgan
U.S. Senator U.S. Senator
CEG:art
Payment Limitation Compromise for Conference Committee
Actively Engaged in Farming – Adopt the actively engaged language from Dorgan Grassley requiring 1,000 hours annually or 50% of the labor and management required. Management must be personally provided through regular and direct supervision on-site farming activities. Landowners who share rent land to actively-engaged producers are exempt from the labor and management requirements. Corporations can only receive payments if most stockholders are actively engaged, except for family farm corporations where only one family member/stockholder must be actively engaged.
Payment Reduction on Cash Rented Land Owned by High Income Landlords -- In addition to prohibiting payments to landlords who exceed the adjusted gross income limit, eliminate half the payment on cash rented land owned by any landlord who exceeds the limit. That would eliminate the incentive for high income landlords to switch to cash rent. High income landlords who do cash rent would be forced to lower their rates since their tenants would get only half a direct payment.
Counter Cyclical Direct Payment and Adjusted Gross Income Limitation - As prices rise above the target price, phase down the AGI and direct payment limits. 1) If the price is above target price but below 110% of target price, count $1 of direct payment on that commodity as $2 toward the recipient’s limit and eliminate payments on that commodity to recipients with income over $400,000. 2) If the price is above 110% of target price, count $1 of direct payments on that commodity as $4 toward the recipient’s limit and eliminate payments on that commodity to recipients with income over $200,000.
Regional Adjustments - Provide that no individual combined with his/her spouse shall be limited to direct payments on fewer than 1,000 acres he/she operates by the counter cyclical payment limitation reduction section. This will be helpful to rice producers, single farmers and high yield continuous corn, wheat and cotton producers who would otherwise be disproportionately affected by the counter cyclical direct payment limit. Alternatively, count one dollar of cotton, rice or peanut payment as only 50 cents toward the limit for purposes of the counter cyclical payment limitation reduction.