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Mr. JOHNSON of South Dakota. Mr. President, I rise today to join with my friend and colleague from Iowa, Chuck Grassley, in introducing the Farm Program Integrity Act of 2013, which would establish commonsense, meaningful farm program payment limitations. I am pleased that Senator Sherrod Brown and Senator Mike Enzi are also joining us in this effort. At a time when our country faces significant budgetary constraints, it is important that we look for bipartisan and commonsense approaches to restructuring programs in such a way that improves their effectiveness while also reducing the deficit. Our legislation will do that, and our approach has already garnered widespread support.
The current structure of our farm support program has, in a number of ways, failed rural America. In 2008, the largest 12.4 percent of farms received 62.4 percent of farm program payments, according to the United States Department of Agriculture's Economic Research Service, USDA ERS. With such a disproportionate share of the program going to the largest, most capitalized operations, the small and medium-sized family farmers are squeezed out of the business. The farm bill is intended to provide programs that function as a safety net for farmers, but it has instead become a cash cow for the few large producers. We must maintain a safety net for producers, but the system must be targeted to family farmers instead of large agribusinesses.
The 2008 farm bill took some important steps to strengthen the integrity of our farm support system. The bill established an income threshold for program eligibility in which payments are limited to producers with less than $500,000 in non-farm Adjusted Gross Income, AGI, and $750,000 in on-farm AGI, for a total limit of $1.25 million AGI. Additionally, the law eliminated the triple-entity loophole and required that payments go to a specific individual through direct attribution. These were important first steps. However, there is much more we must do to restore integrity to our farm programs.
Under the current law, we have a system of support for producers in the form of direct and counter-cyclical payments. Direct payments are capped at $40,000 and counter-cyclical payments are capped at $65,000; additionally, there is no cap on marketing loan gains and loan deficiency payments, and thus, there is effectively no total limitation. This is unacceptable. Without a cap on payments, the Federal Government is subsidizing producers to get bigger, which in turn makes it more difficult for the smaller family farmers, and particularly young and beginning producers, to survive.
Last June, we took some meaningful steps in the Senate to address the structure of our farm support system. Senators from both sides of the aisle came together to pass the Agriculture Reform, Food, and Jobs Act, S. 3240, commonly referred to as the farm bill, with broad support. The bill, as passed out of the Senate Agriculture Committee, contained a hard cap of $50,000 on payments under the new Agriculture Risk Coverage, ARC, program, a program developed to replace the antiquated direct and counter-cyclical programs.
The committee-reported bill also contained important language to close loopholes that have allowed ``paper-partners,'' or individuals not directly engaged in the farming operation, to receive farm program payments. The bill created an important new standard for determining who qualifies as a farm manager. In addition to the language incorporated into the underlying bill, Senator Grassley and I also offered an amendment during floor consideration to cap marketing loan gains and loan deficiency payments at $75,000. Our amendment passed overwhelmingly with 75 votes.
The House Agriculture Committee marked up and reported its own version of the farm bill reauthorization. Unfortunately, the House leadership refused to bring the bill to the floor before the end of 2012. As a result, Congress was left in the position of having to pass an extension of the 2008 farm bill, and push off work on a full reauthorization, including the important reforms we included in the Senate-passed bill, until the 113th Congress.
The legislation we are offering today combines the cap on farm program payments and language to close loopholes from the Senate-passed bill. As Congress proceeds with reauthorizing our farm programs, I will continue pushing to ensure that we finally provide for meaningful payment limitations and target assistance to small and medium-sized family farms.
As the most important industry in South Dakota, agriculture is the economic engine that drives our rural communities. Without viable family farmers and ranchers, our small towns and Main Street businesses would face significant financial hardships. I have worked with Senator Grassley on this issue for a number of years, and I'm proud to once again join with him today to continue this important fight.
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