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Corn+Soybean Digest

Farm Bill Update

The U.S. Senate finally passed their version of the new farm bill on December 14, by a 79-14 margin. The U.S. House of Representatives passed a new farm bill in late July 2007. The farm bill now will go to a U.S. House and Senate Conference Committee, probably in late January, to work out differences in the two versions of the new farm bill. Then the compromise version of the new bill will again be voted on by the entire U.S. House and Senate, and the new farm bill will need to be signed by President Bush before it becomes law. The Bush Administration has been very active in discussions related to a new farm bill. The Administration has raised some concerns with the House and Senate versions of the bill, especially related to budgetary and funding items, and has threatened the possibility of a presidential veto if those issues are not corrected by the Conference Committee. The new farm bill would be implemented for the 2008 crop year, and would continue through the 2012 crop year. We are a lot closer to a new farm bill than we were a few weeks ago; however, there are still a lot of key issues to worked out by the House and Senate Conference Committee. The key items to be resolved appear to be the budget issues, arriving at acceptable payment limit language and working out the details of revenue-based counter-cyclical payments.

Payment Limit Provisions
Following are the proposed payment limit provisions that are in the U.S. House and Senate versions of the new farm bill :
· Both the House and Senate farm bills would revise some of the current payment limit rules for commodity farm programs. The so-called triple-entity rule, which allows producers to be involved in three separate farming entities and to double all of the established payment limits per individual, would be eliminated in a new farm bill.However, spouses and other family members could still be eligible for individual farm program payment eligibility if the USDA criteria for actively engaged in farming are met.
· The Senate farm bill would keep the current payment cap of $40,000/individual for direct payments and lower the limit to $60,000 for CCPs, while the House farm bill would increase the direct payment limit to $60,000/individual, and continue the $65,000 CCP limit. There are no payment limits proposed on gains from CCC marketing loans and LDPs in either the House or Senate farm bills. Currently, there is a $75,000/individual limit for gains from CCC loans and LDPs; however, producers are currently able to use generic commodity certificates to avoid the limit.
· The House farm bill would forbid farm program commodity and conservation payments to anyone with an adjusted gross income (AGI) above $1 million, with no exceptions. The Senate farm bill would keep the current $2.5 million limit for 2008, lower it to $1 million in 2009 and $750,000 in 2010 and beyond. Some Senators wanted the AGI payment limit dropped to $250,000, while the Bush Administration has proposed a $200,000 AGI limit. The proposed House payment limit also includes conservation payments, while the Senate and Administration proposals do not.
· The House farm bill would require producers with an AGI of $500,000 to $1 million to derive at least 67% of their income from agriculture sources, in order to be eligible for farm program payments, while the proposed 67% income threshold would be enacted at the payment limits listed earlier in the Senate farm bill. Currently, that AGI limit from agricultural production is at 75% if above the $2.5 million AGI limit.
· Several members of Congress, the Bush Administration and many public interest groups would like to see the payment limits in the new farm bill be even more restrictive.

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at
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