USDA Proposed Rule Limits Payments to Non-Farmers
A newly proposed rule issued by the U.S. Department of Agriculture (USDA) under authority of the 2014 Farm Bill limits farm payments to non-farmers. Under the current rule, individuals designated as farm managers were eligible to receive farm payments even if they made little to no contributions to active farm management. Under the new rule, however, individuals not engaged in active farm management are no longer eligible for farm payments, regardless of whether they are designated as farm managers. This rule does not affect family-managed farms.
According to Secretary of Agriculture Tom Vilsack, the proposed rule is intended to "close a loophole" that has been used by larger farm operations. Vilsack stated that the USDA's goal was to "make sure that farm program payments are going to the farmers and farm families that they are intended to help." In order to accomplish that goal, the newly proposed rule requires managers of non-family joint ventures and general partnerships to make yearly minimum contributions of 500 hours of management work or 25% of the management time necessary for the farm's successful operation. Managers not falling into that category are no longer eligible for farm payments under the proposed rule.
According to the USDA, family farms are not affected by the proposed rule. Additionally, the proposed rule does not impact the existing regulations governing contributions to land, capital, equipment, or labor. Rather, the proposed rule is only intended to cover non-family joint ventures and general partnerships consisting of more than one member.
This article was co-written by Herman Hofman while Herman was a summer associate at Varnum in 2015.