Chuck Grassley

United States Senator from Iowa

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VIDEO: Grassley Remarks on Farm Subsidy Policy at the Heritage Foundation

Jun 12, 2018

WASHINGTON – Sen. Chuck Grassley of Iowa gave remarks at the Heritage Foundation, a conservative think tank in Washington, D.C., regarding the 2018 Senate Farm Bill. He outlined some of his top legislative priorities related to agriculture policy, including payment limits and crop insurance.

Video of Grassley’s remarks is available here. A full read-out of his remarks is available below.

Thank you for inviting me here today, I really appreciate the chance to talk about farm policy.

The Senate Agriculture Committee is planning to hold a markup of the Farm Bill on Wednesday. I expect there will be a number of amendments.

No other piece of legislation Congress passes drives land-use in our country like the Farm Bill. In 2012, the amount of land utilized by farms according to the Ag census was 915 million acres. That includes cropland, pasture and woodlands.

Let that sink in – 915 million acres across all 50 states is directly impacted by the Farm Bill. And all 325 million Americans are impacted because this bill sets our country’s food policy.

One issue I have worked on for a great number of years is real and enforceable payment limits for farm subsidies.

I believe in a safety net for farmers. Farm programs should provide temporary assistance when there is a sudden change in markets or a natural disaster that hits a farmer’s crop.

I do not, however, believe in unlimited subsidies like in the House Farm Bill. The House bill also made successful billionaires like Warren Buffett, Bill Gates and President Trump eligible for farm subsidies because the House bill eliminates the income cap for farm subsidy eligibility. 

I would point out, President Trump in his budget actually lowered the income cap from the current level of $900,000 to $500,000. So it seems President Trump doesn’t believe in farm subsidies for fellow billionaires.

I have fought for years to keep the farm safety net focused exclusively on real farmers. In fact, during the last Farm Bill, my payment limit legislation was passed by both bodies of Congress as part of the Farm Bill.

Under the way things are supposed to work, the conference committee should have left my language in place. Instead, they violated congressional rules and created a new loophole to replace the original loophole I was trying to close.

You can’t make this stuff up folks!

Most Americans agree if you really farm, you really should be eligible for farm programs.

Unfortunately, the farm bill is another example of good intentions gone wrong.

Ten percent of farmers get over 70 percent of the payments from the farm bill. One reason for this is that current farm policy offers farmers unlimited subsidies if they hire the right lawyer. 

One of the most egregious loopholes we need to fix deals with what it means to be ‘Actively Engaged’ in a farming operation.

Under current law, a designation called ‘Active Personal Management Only’ allows people who do not work on farms to get farm subsidies of $125,000 or $250,000 for a married couple. And if the person grows peanuts you can double those numbers again.

The loophole has eight vague ways to satisfy the service contribution for eligibility. They include “Supervision of Activities” and “Other management functions reasonably necessary” for farming.

Obviously, the Department of Agriculture has no way of enforcing those rules and many people would agree they are written that way on purpose.

The GAO released a new report a few weeks ago that outlined how much money flows through this loophole. In 2015 it was $259 million, or more than a quarter billion dollars.

The largest farms abuse this loophole to the detriment of young and beginning farmers who have to compete against them for land with little to no assets.

I have an amendment to close this loophole.

I would also point out we’re talking about a small fraction of farming entities. 

The GAO compiled a list of the top 50 largest subsidy recipient entities for 2015. Collectively, the top 50 used 193 extra managers to collect additional farm subsidies. We’re probably talking about impacting under a thousand people total with my amendment compared to the 98,000 entities that are eligible for farm programs.

I am working with my fellow senators to fix this egregious loophole once and for all. But, I must say, it’s a real fight. The one percent of the farmers this will impact will fight tooth and nail to keep their quarter billion dollar gravy train from taxpayers.

Other areas of the farm safety net deserve debate too.

There is great disparity between the amounts of assistance individual crops get from the government. On a per acre basis, peanuts, rice and cotton get far and away the largest payments from the government through both crop insurance and farm programs.

Peanuts have been receiving over $340 an acre which accounts for nearly half the production value of the crop under the 2014 Farm Bill. Rice gets $238 per acre and cotton gets $104 an acre.

When you add the dollars per acre for corn and soybeans together, it still does not equal what rice, cotton and peanuts are getting.

The reason for these payment disparities is where the payment triggers are set compared to market prices for the various crops.

For instance, cotton has its marketing loan trigger set at 99 percent of the world price of cotton according to the Congressional Research Service. That’s not a safety net. It’s a hammock.

That means if the world price of cotton drops by one percent, U.S. cotton farmers get a marketing loan payment which is unlimited because of a goofy thing called commodity certificates. No one can explain how commodity certificates work, but everyone knows they exist so cotton can get around payment limits for marketing loans.

For the PLC program, there are several crops which have a payment trigger set well over their 10 year price average. You can probably guess which crops those are.

As a government, we need to get smarter about how we spend money. Allowing several hundred million dollars a year to line the pockets of non-farmers is ridiculous considering we do not even have broadband available all across rural America.

As a farmer, a citizen and a legislator, I believe it is wrong to expect, or allow, the government to give unlimited support to my farm, or any farm. Especially since our country has a record $21 trillion debt.

I am looking forward to the markup on Wednesday. Fixing these loopholes is what our constituents elected us to do.

I know Chairman Roberts and Ranking Member Stabenow have worked hard to get us to this point. However, there are some improvements needed to get a Farm Bill that we can justify to the American taxpayers.

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