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

Presentation Outline Brief History of Payment Limitations Goals of Farm Programs Goals Advanced for Payment Limitations

Brief History of Payment Limitations Payment limit debate began in late 1960s Limits first enacted in 1970 farm bill at $55, farm bill lowered to $20, farm bill increased to $40, farm bill raised to $50,000 per “person” –Initiated 3 entity rule 1990 farm bill established separate limits of $50,000 for deficiency payments, $75,000 for MLG & LDP –Total limit $250,000

Brief History (Continued) 1996 farm bill set AMTA limit at $40,000 and MLG/LDP at $75, increased MLG/LDP limit to $150, 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

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

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