Wednesday, December 31, 2008

Grassley Dislikes FSA's Reg

According to Chris Clayton, Sen. Grassley "wants Vilsack to establish a tighter management test for defining "actively engaged" in farming than the details posted Monday by USDA in the Federal Register."

The example in the reg seemed to me to be unrealistic (a portion of the example):

"With this rule, each of the stockholders in this example would be required to establish that their respective contribution of active personal management was made on a regular basis, and was identifiable and documentable as separate and distinct from the other stockholders of the entity. For example, stockholder B
could represent through copies of signed purchase orders that stockholder B was individually responsible for obtaining and purchasing all inputs for the farming operation on behalf of the Corporation. Stockholder C could represent through signed contracts and delivery agreements with grain elevators and a cotton gin that stockholder C was individually responsible for the marketing of all commodities produced by the Corporation’s farming operation. Stockholder D could represent through copies of payroll records that stockholder D was individually responsible for the supervision of all hired labor utilized by the Corporation’s farming operation."
I wouldn't own shares in a corporation where there was more than one manager. Of course, I've no experience in this area so my opinion is worth less than nothing. I might guess, however, one problem is married couples, where you might expect to have some joint management. But writing regulations which distinguish a married couple from a legal entity is difficult (not to mention the reality of unmarried couples, straight and gay).

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