Friday, July 20, 2007

A Look Back to 1985

Now that the House Ag committee has passed its version of a new farm bill, including changes in the payment limitation provisions that date back to 1985, it's interesting to look back to the reporting following that act. From the NYTimes archives, a long excerpt [from a 1986 article
link added]:

The law [1985 farm bill] set out to restore United States competitiveness in international commodities markets by lowering prices, while shielding farmers from the blow through higher income subsidy rates.

That means many producers who in past years have received less from the Government than the $50,000 limit now are approaching that ceiling, giving them an incentive to look for ways around it.

And large producers who have not bothered with Federal price support programs in the past now feel economically forced to participate.

''Their attitude is, $50,000 will buy you a cup of coffee,'' said John Gordley, former agriculture aide to the Senate majority leader, Bob Dole, Republican of Kansas. Mr. Gordon is now a private public relations consultant. Definition of 'Person' Studied

Larger farmers and their lawyers have studied every line of Agriculture Department rules regarding payment limits and found numerous ways to multiply their subsidies. Most focus on the definition of what constitutes a ''person.''

The rules say corporations, partnerships, trusts and other legal entities can qualify as ''persons,'' in addition to an individual farmer, as long as the entity has a legitimate interest in the land or crop, exercises management responsibility and is liable for costs and losses as well as being entitled to profits.

Thus one Arkansas farmer, the chairman of the local committee of the Agricultural Stabilization and Conservation Service, was able to get $150,000 from the Government in 1985 by spinning off two corporations from his original farm, one owned by himself and his brother, the other by the farmer and his mother.

The reorganization was approved by the local committee and at the state level. Investigators in the department's Office of Inspector General rejected the claim, saying it was merely a paper change and no real change in the farming operation had occurred, but not until the farmer had been overpaid $188,000 over two years.

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