Historical Background on Payment Limitations

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Historical Background on Payment Limitations
Edward G. Smith Associate Director for
Agriculture Natural Resources Texas
Cooperative Extension National Public Policy
Education Conference Salt Lake City,
Utah September 22, 2003
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Presentation Outline

• Brief History of Payment Limitations
• Goals of Farm Programs
• Goals Advanced for Payment Limitations

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Brief History of Payment Limitations

• Payment limit debate began in late 1960s
• Limits first enacted in 1970 farm bill at 55,000
• 1973 farm bill lowered to 20,000
• 1977 farm bill increased to 40,000
• 1985 farm bill raised to 50,000 per person
• Initiated 3 entity rule
• 1990 farm bill established separate limits of
  50,000for deficiency payments, 75,000 for MLG
  LDP
• Total limit 250,000

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Brief History (Continued)

• 1996 farm bill set AMTA limit at 40,000 and
  MLG/LDP at 75,000
• 1999-2001 increased MLG/LDP limit to 150,000
• 2002 farm bill set direct payment limit at
  40,000, CCP at 65,000, and MLG/LDP at 75,000
• Introduced means testing for first time
• 2.5 million AGI limitation (3 year avg) unless
  75 came from Ag.
• Peanuts subject to separate limit
• Maintained 3 entity rule

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Goals of Farm Programs

• Foster an abundant supply of food and fiber
• Support and stabilize farm income
• Help producers get access to credit
• Expand agricultural exports
• Conserve natural resources
• Maintain the family farm and the vitality of
  rural communities
• Capitalize on the multiple functions of
  agriculture
• Counter the protection provided to agriculture in
  other countries

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Goals Advanced for Payment Limitations

• Reduce government spending
• Prevent large operators from receiving excessive
  support
• Prevent wealthy non-producers from receiving
  payments
• Slow down farm consolidation and the bidding up
  of land values
• Redistribute agricultural program spending