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Commentary: GAO report sheds little new light on payment limits

By now, we all know the drill. A congressman or senator gets hold of an issue that has the potential to make headlines. So he asks the General Accounting Office to conduct an investigation.

After a few months, the GAO releases findings remarkably similar to the point the congressman was trying to make. Then the special interest groups throw in their “analysis,” and the media have a field day at the subject’s expense.

That was what happened the other day when Sen. Charles Grandstand, uh, Grassley of Iowa held a hearing on a GAO report of USDA’s administering of farm program payment regulations.

“Unfortunately the GAO didn’t have good news to give me,” Grassley intoned following the release. He said the report indicates the Agriculture Department’s Farm Service Agency implementation of the regulations hasn’t “measured up.”

“The report says USDA doesn’t have measurable standards to insure recipients of farm program payments are actively engaged in farming,” the senator said. “And that’s a standard that needs to be measured.”

The GAO said that for one-half the farming operations it reviewed for 2001, FSA field offices did not use the available tools to determine whether individuals or entities are actively engaged in farming and eligible to receive farm program payments.

A spokesman for the Sustainable Agriculture Coalition, which issued a press release before the GAO unveiled its report, was even more acerbic.

“Current payment limit regulations are designed to fail, and fail they have,” said the Sustainable Agriculture Coalition’s Ferd Hoefner. “The GAO is correct to recommend that the USDA revise the regulations to remove the blatant loopholes and to recommend improved USDA oversight and enforcement.”

The GAO said it found a family operating two farming partnerships comprising eight limited liability companies. They farmed 6,000 acres and received $800,000 in farm payments in 2001. The partners also participated in nine other partnerships, a joint venture and a corporation.

The report made it sound like this was a new discovery — that the “Christmas tree” arrangement that characterizes many larger farming operations had not previously been explored on “60 Minutes.”

Interestingly, the report said most of the reviews were conducted on farming operations in Arkansas, California, Louisiana, Mississippi and Texas, implying that no farmers in Iowa or Illinois or Indiana would conceive of doing such a thing.

The GAO made several recommendations for improving the oversight, most of which will only create more work for lawyers and accountants in communities with larger farming operations.

Here’s a suggestion for Sen. Grassley and the Sustainable Agriculture Coalition: Why don’t we toss the payment limit rules and regulations and allow individual farmers to receive payments commensurate with the size — and the risk incurred — of their farming operations?

That would insure that small farmers receive the payments due them, and large farmers would not have to resort to the sort of legal shenanigans cited above just to stay afloat in years like 2001 when profits were poor to nonexistent.

e-mail: flaws@primediabusiness.com

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