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Ohio State University Extension


Newly Introduced Legislation Would Affect Program Payments

By:Robert Moore, Thursday, August 17th, 2023

Legal Groundwork

New legislation was recently introduced in the US Senate potentially affecting USDA-FSA program payment limitations.  The Farm Program Integrity Act, co-sponsored by Senator Grassley from Iowa and Senator Brown from Ohio, seeks to limit FSA payment limitations to partnerships.  If passed, the new law could have significant impacts on many larger farms.

Most FSA programs include payment limitations which limit the number and amount of payments any individual and some type of business entities may receive.  See the table below for programs and their respective payment limitations.  The limitations mean that no person, corporation or LLC may receive more than the designated limitation for the corresponding program in a single year.  However, there is a notable exception to the payment limitation rule – general partnerships. Currently, a general partnership may have as many payment limitations as it does eligible partners.  The Farm Program Integrity Act would limit general partnerships to just two payment limitations.

Let’s look at some examples using the ARC program ($125,000 payment limitation):

Farmer is a sole proprietor and is enrolled in ARC.  Farmer is eligible for one payment limitations may not receive more than $125,000 in ARC payments in any year.

Farmer is married and Spouse owns 50% of the farm assets.  Both Farmer and Spouse are likely eligible for a payment limitation and could receive up to $250,000 in ARC payments each year.

Ohio Grain Farms LLC is a farm operation with 4 owners, all of whom are actively engaged in the farming operation.  Because this entity is an LLC, it is only eligible for one payment limitation.  The LLC cannot receive more than $125,000 in ARC payments in any year.

Ohio Grain Farms Partnership is a general partnership with 4 equal partners, all of whom are actively engaged in the farming operation.  The partnership is currently eligible for four payment limitations and could receive up to $500,000 of ARC payments in any year.  The Farm Program Integrity Act would limit the partnership to two payment limitations or $250,000.

As the examples show, the number of payment limitations can have a significant impact on farm income.

According to a news release from Senator Grassley’s office, the legislation is meant to “rein in abuse of the farm payment system and ensure taxpayer support is targeted to those actively engaged in farming”.  The same news release states that just 10 percent of farm operations receive 70 percent of all yearly farm payment subsidies.  Senator Brown is quoted as saying “For years we’ve seen big farms get bigger while small and mid-sized family farmers in Ohio get squeezed. Too often, farm program payments have gone to producers who do not need the support, or to people who aren’t even involved in farming. With this commonsense bill we can ensure assistance is directed toward working Ohio farmers.”

The entire press release can be viewed here.  We will continue to monitor this proposed legislation as well as other state and federal legislation initiatives.

Payment Limitation Table