U.S. Farm Programs: Eligibility and Payment Limits

Changes from October 30, 2020 to December 7, 2020

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U.S. Farm Programs:
~~October 30~~December 7, 2020 , 2020
Eligibility and Payment Limits
Randy Schnepf
Under the Agricultural Improvement Act of 2018 (P.L. 115-334, 2018 farm bil ), U.S. Under the Agricultural Improvement Act of 2018 (P.L. 115-334, 2018 farm bil ), U.S.
Specialist in Agricultural Specialist in Agricultural
farm program participants—whether individuals or multiperson legal entities—must farm program participants—whether individuals or multiperson legal entities—must
Policy Policy
meet specific eligibility requirements to receive benefits under certain farm programs. meet specific eligibility requirements to receive benefits under certain farm programs.

Some requirements are common across most programs, while others are specific to Some requirements are common across most programs, while others are specific to
Megan Stubbs
individual programs. In addition, program participants are subject to annual payment individual programs. In addition, program participants are subject to annual payment
Specialist in Agricultural Specialist in Agricultural
limits that vary across different combinations of farm programs. limits that vary across different combinations of farm programs.
Conservation and Natural Conservation and Natural
Resources Policy Resources Policy
Recent ad hoc farm revenue support payment programs, such as the Market Facilitation Recent ad hoc farm revenue support payment programs, such as the Market Facilitation

Programs (MFPs) and the Coronavirus Food Assistance Programs (CFAPs), are Programs (MFPs) and the Coronavirus Food Assistance Programs (CFAPs), are

authorized outside of omnibus farm bil legislation and include similar, but separate, authorized outside of omnibus farm bil legislation and include similar, but separate,
eligibility requirements and payment limits. eligibility requirements and payment limits.
Since 1970, Congress has used various policies to address the issue of who should be eligible for farm payments Since 1970, Congress has used various policies to address the issue of who should be eligible for farm payments
and how much an individual recipient should be permitted to receive in a single year. In recent years, and how much an individual recipient should be permitted to receive in a single year. In recent years,
congressional policy has focused on tracking payments through multiperson entities to individual recipients congressional policy has focused on tracking payments through multiperson entities to individual recipients
(referred to as direct attribution), ensuring that payments go to persons or entities actively engaged in farming (referred to as direct attribution), ensuring that payments go to persons or entities actively engaged in farming
(AEF), capping the amount of payments that a qualifying recipient may receive in any one year, and excluding (AEF), capping the amount of payments that a qualifying recipient may receive in any one year, and excluding
farmers or farming entities with large average incomes from payment eligibility. farmers or farming entities with large average incomes from payment eligibility.
Every participating person or legal entity that participates in a farm program must submit identification Every participating person or legal entity that participates in a farm program must submit identification
information. Other eligibility requirements—which may vary across programs—include U.S. citizenship; the information. Other eligibility requirements—which may vary across programs—include U.S. citizenship; the
nature and extent of an individual’s participation (i.e., AEF criteria), including ownership interests in multiperson nature and extent of an individual’s participation (i.e., AEF criteria), including ownership interests in multiperson
entities and personal time commitments (whether as labor or management); means testing (persons with combined entities and personal time commitments (whether as labor or management); means testing (persons with combined
farm and nonfarm adjusted gross income [AGI] in excess of $900,000 are ineligible for most program benefits); farm and nonfarm adjusted gross income [AGI] in excess of $900,000 are ineligible for most program benefits);
and conservation compliance requirements. For example, under the FY2019 Additional Supplemental and conservation compliance requirements. For example, under the FY2019 Additional Supplemental
Appropriations for Disaster Relief Act (P.L. 116-20), the AGI requirement as it applies to payments under the Appropriations for Disaster Relief Act (P.L. 116-20), the AGI requirement as it applies to payments under the
2018 MFP may be waived if at least 75% of AGI is from farming, ranching, or forestry-related activities. This 2018 MFP may be waived if at least 75% of AGI is from farming, ranching, or forestry-related activities. This
same AGI flexibility has been extended to the 2019 MFP and 2020 CFAP programs. same AGI flexibility has been extended to the 2019 MFP and 2020 CFAP programs.
In general, foreign persons (or foreign legal entities) are eligible to participate in farm programs if they meet the In general, foreign persons (or foreign legal entities) are eligible to participate in farm programs if they meet the
eligibility requirements. Exceptions are the four permanent disaster assistance programs created under the 2014 eligibility requirements. Exceptions are the four permanent disaster assistance programs created under the 2014
farm bil (P.L. 113-79) and the Noninsured Crop Disaster Assistance program (NAP), which exclude nonresident farm bil (P.L. 113-79) and the Noninsured Crop Disaster Assistance program (NAP), which exclude nonresident
aliens. aliens.
Current law requires tracking payments through four levels of ownership in multiperson legal entities to the Current law requires tracking payments through four levels of ownership in multiperson legal entities to the
individual recipients. Current payment limits include a cumulative limit of $125,000 for al covered commodities individual recipients. Current payment limits include a cumulative limit of $125,000 for al covered commodities
under the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) support programs, with the under the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) support programs, with the
exception of peanuts, which has its own additional $125,000 limit. Two permanent disaster assistance programs exception of peanuts, which has its own additional $125,000 limit. Two permanent disaster assistance programs
are subject to payment limits: the Livestock Forage Disaster Program (LFP) is subject to a payment limit are subject to payment limits: the Livestock Forage Disaster Program (LFP) is subject to a payment limit
($125,000 per crop year); and NAP is subject to a $125,000 per crop year limit per person for catastrophic ($125,000 per crop year); and NAP is subject to a $125,000 per crop year limit per person for catastrophic
coverage. Most current conservation programs include some limit on the amount of funding a participant may coverage. Most current conservation programs include some limit on the amount of funding a participant may
receive, but these limits vary by program. Some conservation programs have multiple limits that vary based on receive, but these limits vary by program. Some conservation programs have multiple limits that vary based on
activity or practice implemented. activity or practice implemented.
Congress addresses program eligibility and payment limit issues in periodic farm legislation. The 2018 farm bil Congress addresses program eligibility and payment limit issues in periodic farm legislation. The 2018 farm bil
extended the definition of extended the definition of family member to include first cousins, nieces, and nephews. to include first cousins, nieces, and nephews. ~~Under an August 24,~~
2020, rule (85 Federal Register ~~52033), USDA has specified that~~ Family farms receive special treatment with respect to payment limits—every adult member (18 years or older)every adult member (18 years or older)—
is deemed to meet the Congressional Research Service Congressional Research Service

U.S. Farm Programs: Eligibility and Payment Limits

~~whether a member of a family farm operation or a joint venture—must meet the AEF requirements to be eligible~~
AEF requirements and is potential y eligible to receive farm program payments in an amount up to the individualto receive farm program payments in an amount up to the individual payment limit. Thus, a family farm with a single active farm operator may stil qualify for multiple payment limits based on the number of immediate and extended adult family members (and spouses). In contrast, farm operations comprised of nonfamily members must meet AEF criteria and are subjec t to a limit on the number of farm managers that may qualify as AEF based on a contribution of active personal management alone~~payment limit. A notable exception to this~~
~~rule is spouses of individuals that meet the AEF criteria are themselves also deemed to meet AEF criteria and be~~
~~eligible for a separate payment limit. Thus, a family farm may stil qualify for multiple payment limits based on~~
~~the number of immediate and extended adult family members (and spouses) that meet the AEF criteria~~. .
Supporters of payment limits contend that large payments facilitate consolidation of farms into larger units, raise Supporters of payment limits contend that large payments facilitate consolidation of farms into larger units, raise
the price of land, and put smal er, family-sized farming operations and beginning farmers at a disadvantage. In the price of land, and put smal er, family-sized farming operations and beginning farmers at a disadvantage. In
addition, they argue that large payments undermine public support for farm subsidies and are costly. Critics of addition, they argue that large payments undermine public support for farm subsidies and are costly. Critics of
payment limits counter that al farms need support, especial y when market prices decline, and that larger farms payment limits counter that al farms need support, especial y when market prices decline, and that larger farms
should not be penalized for the economies of size and efficiencies they have achieved. Further, critics argue that should not be penalized for the economies of size and efficiencies they have achieved. Further, critics argue that
farm payments help U.S. agriculture compete in global markets and that income testing is at odds with federal farm payments help U.S. agriculture compete in global markets and that income testing is at odds with federal
farm policies directed toward improving U.S. agriculture and its competitiveness. farm policies directed toward improving U.S. agriculture and its competitiveness.
Congress may continue to address these issues, as wel as related questions, such as: How does the current policy Congress may continue to address these issues, as wel as related questions, such as: How does the current policy
design of payment limits relate to their distributional impact on crops, regions, and farm size? Is there an optimal design of payment limits relate to their distributional impact on crops, regions, and farm size? Is there an optimal
aggregation of payment limits across commodities or programs? Do unlimited benefits under the Marketing aggregation of payment limits across commodities or programs? Do unlimited benefits under the Marketing
Assistance Loan (MAL) program reduce the effectiveness of overal payment limits? Assistance Loan (MAL) program reduce the effectiveness of overal payment limits?
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U.S. Farm Programs: Eligibility and Payment Limits

Table of Acronyms
AEF
Actively Engaged in Farming Actively Engaged in Farming
AGI
Adjusted Gross Income Adjusted Gross Income
ARC
Agricultural Risk Coverage program Agricultural Risk Coverage program
CBO
Congressional Budget Office Congressional Budget Office
CCC
Commodity Credit Corporation Commodity Credit Corporation
CCP
Countercyclical Payment Countercyclical Payment
CFAP
Coronavirus Food Assistance Program Coronavirus Food Assistance Program
CGCS
Cotton Ginning Cost Share program Cotton Ginning Cost Share program
CRP
Conservation Reserve Program Conservation Reserve Program
CSP
Conservation Stewardship Program Conservation Stewardship Program
DMC
Dairy Margin Coverage (replaced the 2014 farm bil ’s Margin Protection Dairy Margin Coverage (replaced the 2014 farm bil ’s Margin Protection Plan or MPP)Plan or MPP)
EIN
Employee Identification Number Employee Identification Number
ELAP
Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program
EQIP
Environmental Quality Incentives Program Environmental Quality Incentives Program
ERS
Economic Research Service of USDA Economic Research Service of USDA
EWP
Emergency Watershed Protection Program Emergency Watershed Protection Program
FSA
Farm Service Agency of USDA Farm Service Agency of USDA
IRS
Internal Revenue Service Internal Revenue Service
LDP
Loan Deficiency Payment Loan Deficiency Payment
LIP
Livestock Indemnity Program Livestock Indemnity Program
LFP
Livestock Forage Disaster Program Livestock Forage Disaster Program
MAL
Marketing Assistance Loan Program Marketing Assistance Loan Program
MFP
Market Facilitation Program Market Facilitation Program
MLG
Marketing Loan Gain Marketing Loan Gain
MPP
Margin Protection Program Margin Protection Program
NAP
Noninsured Crop Disaster Assistance program Noninsured Crop Disaster Assistance program
NRCS
Natural Resources Conservation Service of USDA Natural Resources Conservation Service of USDA
PLC
Price Loss Coverage program (based on a statutory national reference price) Price Loss Coverage program (based on a statutory national reference price)
RCPP
Regional Conservation Partnership Program Regional Conservation Partnership Program
SSN
Social Security Number Social Security Number
TAP
Tree Assistance Program Tree Assistance Program
TIN
Taxpayer Identification Number Taxpayer Identification Number
TRQ
Tariff Rate Quota Tariff Rate Quota
USDA
U.S. Department of Agriculture U.S. Department of Agriculture
2017 WHIP
2017 Wildfires and Hurricanes Indemnity Program 2017 Wildfires and Hurricanes Indemnity Program
WHIP+
Wildfires and Hurricanes Indemnity Program Plus Wildfires and Hurricanes Indemnity Program Plus
WTO
World Trade Organization World Trade Organization
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Introduction
Congress has devised a variety of programs operated by the U.S. Department of Agriculture Congress has devised a variety of programs operated by the U.S. Department of Agriculture
(USDA) to support farm income and help farmers and ranchers manage production or price risk. (USDA) to support farm income and help farmers and ranchers manage production or price risk.
The programs essential y supplement farm incomes in times of low farm prices and natural The programs essential y supplement farm incomes in times of low farm prices and natural
disasters, and they are collectively cal ed the farm safety net. The three main components are (1) disasters, and they are collectively cal ed the farm safety net. The three main components are (1)
permanently authorized federal crop insurance, (2) farm revenue support programs for crop years permanently authorized federal crop insurance, (2) farm revenue support programs for crop years
2019-2023, and (3) permanently authorized agricultural disaster programs.1 Additional support is 2019-2023, and (3) permanently authorized agricultural disaster programs.1 Additional support is
provided through emergency loans and USDA discretionary assistance. The suite of programs is provided through emergency loans and USDA discretionary assistance. The suite of programs is
designed to al ow for maximum farmer choice and flexibility. designed to al ow for maximum farmer choice and flexibility.
Program eligibility requirements and payment limits are central to how various U.S. farm Program eligibility requirements and payment limits are central to how various U.S. farm
programs operate. These requirements fundamental y address various equity concerns and reflect programs operate. These requirements fundamental y address various equity concerns and reflect
the goals of government intervention in agriculture. They determine who receives federal farm the goals of government intervention in agriculture. They determine who receives federal farm
program payments and how much they receive. program payments and how much they receive.
Eligibility requirements and payment limits are controversial because they influence what size Eligibility requirements and payment limits are controversial because they influence what size
farms are supported.2 Policymakers have debated what limit is optimal for annual payments, farms are supported.2 Policymakers have debated what limit is optimal for annual payments,
whether payments should be proportional to production or limited per individual or per farm whether payments should be proportional to production or limited per individual or per farm
operation, and whether the limit should be specific to each program or cumulative across al operation, and whether the limit should be specific to each program or cumulative across al
programs. Furthermore, program eligibility requirements and payment limits generate programs. Furthermore, program eligibility requirements and payment limits generate
considerable congressional interest because their effects differ across regions and by type of considerable congressional interest because their effects differ across regions and by type of
commodities produced and because a substantial amount of annual U.S. farm program3 payments commodities produced and because a substantial amount of annual U.S. farm program3 payments
are at stake: direct federal outlays have averaged $14.1 bil ion per year from 1996 through 2019.4 are at stake: direct federal outlays have averaged $14.1 bil ion per year from 1996 through 2019.4
When federal crop insurance premium subsidies5 are included, annual farm payments have When federal crop insurance premium subsidies5 are included, annual farm payments have
averaged $18.1 bil ion over the same period. averaged $18.1 bil ion over the same period.
Report Overview6
This report discusses various eligibility factors and their interaction with current farm programs, This report discusses various eligibility factors and their interaction with current farm programs,
including those authorized under the 2018 farm bil ,7 as wel as several disaster assistance and including those authorized under the 2018 farm bil ,7 as wel as several disaster assistance and
~~other ad hoc payment programs initiated under different authorities.8 It describes current~~

1 CRS In Focus IF11163, 1 CRS In Focus IF11163, 2018 Farm Bill Primer: The Farm Safety Net. .
2 USDA, Office of the Chief Economist, 2 USDA, Office of the Chief Economist, Report of the ~~Commission~~Com mission on the Application of Payment Limitations for
Agriculture, Subm itted in Response to Section 1605, Farm Security and Rural Investm ent Act of 2002 , August 2003. , August 2003.
3 T he term 3 T he term federal farm programs generally refers to a suite of commodity support and disaster assistance programs generally refers to a suite of commodity support and disaster assistance programs
administered by USDA. Many such programs are authorized in omnibus farm bills, including most recently the 2018 administered by USDA. Many such programs are authorized in omnibus farm bills, including most recently the 2018
farm bill (P.L. 115-334), and are listed ifarm bill (P.L. 115-334), and are listed in Table A-1. Most conservation programs authorized in farm bills also include Most conservation programs authorized in farm bills also include
payment limits and eligibility requirements. However, payment limits and eligibility requirements. However, ~~they~~th ey are not discussed in detail in this report. are not discussed in detail in this report.
4 USDA, Economic Research Service (ERS), federal government direct farm program payments, data as of September 4 USDA, Economic Research Service (ERS), federal government direct farm program payments, data as of September
2, 2020, http://www.ers.usda.gov/data-products/farm-income-and-wealth-statistics.aspx. 2, 2020, http://www.ers.usda.gov/data-products/farm-income-and-wealth-statistics.aspx.
5 Federal crop insurance subsidies include premium subsidies, delivery cost payments, and shared underwriting risks. 5 Federal crop insurance subsidies include premium subsidies, delivery cost payments, and shared underwriting risks.
USDA, Risk Management Agency, Summary of Business database, http://www.rma.usda.gov; and Congressional USDA, Risk Management Agency, Summary of Business database, http://www.rma.usda.gov; and Congressional
Budget Office (CBO), annual baseline for farm programs, various years. Budget Office (CBO), annual baseline for farm programs, various years.
6 T his is the second of two reports on the subject of program eligibility and payment limits. While this report focuses on 6 T his is the second of two reports on the subject of program eligibility and payment limits. While this report focuses on
farm program payment limits, an earlier report (CRS Report R44656, farm program payment limits, an earlier report (CRS Report R44656, USDA’s Actively Engaged in Farm ing (AEF)
Requirem ent) focuses on program eligibility requirements—in particular, criteria underpinning the AEF requirements. ) focuses on program eligibility requirements—in particular, criteria underpinning the AEF requirements.
7 As specified by USDA’s final rule 7 As specified by USDA’s final rule (and subsequent correction) to implement the mandatory changes required by the 2018 farm bill; USDA,to implement the mandatory changes required by the 2018 farm bill; USDA,
“Payment Limitation and Payment Eligibility,” Final Rule, “Payment Limitation and Payment Eligibility,” Final Rule, 858 5 Federal Register 52033, August 52033, August 24, 2020; and USDA, “ Correcting Amendments,” 85 Federal Register 73601, November 19, 2020.~~24, 2020.~~
~~8 For example, the 2018 and 2019 Market Facilitation Programs (as described later in this report) were initiated by the~~
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other ad hoc payment programs initiated under different authorities.8 It describes current restrictions that limit or preclude payments to farmers based on a number of factors as wel as restrictions that limit or preclude payments to farmers based on a number of factors as wel as
those circumstances where few, if any, restrictions limit farmers’ access to such benefits or to the those circumstances where few, if any, restrictions limit farmers’ access to such benefits or to the
amount of benefits. amount of benefits.
Much of the information on farm programs and their eligibility criteria and payment limits is Much of the information on farm programs and their eligibility criteria and payment limits is
summarized isummarized in Table A-1. A second appendix table A second appendix table, Table A-2, provides a brief history of the provides a brief history of the
legislative evolution of the income eligibility thresholds—that is, means testing. A final appendix legislative evolution of the income eligibility thresholds—that is, means testing. A final appendix
table,table, Table A-3, contains a history of the legislative evolution of annual payment limits for major contains a history of the legislative evolution of annual payment limits for major
commodity programs. This report concludes with a discussion of several issues related to farm commodity programs. This report concludes with a discussion of several issues related to farm
program payment limits, including policy design issues, that may be of interest to Congress. program payment limits, including policy design issues, that may be of interest to Congress.
Background
Farm program payment limits and eligibility requirements may differ by both type of program Farm program payment limits and eligibility requirements may differ by both type of program
and type of participating legal entity (e.g., an individual, a partnership, or a corporation). The and type of participating legal entity (e.g., an individual, a partnership, or a corporation). The
Farm Service Agency (FSA) has administrative responsibility for collecting and maintaining data Farm Service Agency (FSA) has administrative responsibility for collecting and maintaining data
used to make eligibility and payment limit determinations for U.S. Department of Agriculture used to make eligibility and payment limit determinations for U.S. Department of Agriculture
(USDA) farm programs. FSA provides this data to the Natural Resources Conservation Service (USDA) farm programs. FSA provides this data to the Natural Resources Conservation Service
(NRCS) to administer conservation programs for which they have responsibility.9 (NRCS) to administer conservation programs for which they have responsibility.9
Congress first added payment limits as part of farm commodity programs in the 1970 farm bil Congress first added payment limits as part of farm commodity programs in the 1970 farm bil
(P.L. 91-524). However, such limits have evolved over time in both scope and amount(P.L. 91-524). However, such limits have evolved over time in both scope and amount (Table A-
1) as the structure of U.S. agriculture, farm policies, and commodity support programs has as the structure of U.S. agriculture, farm policies, and commodity support programs has
changed.10 With each succeeding farm bil , and occasional y via other legislation, Congress has changed.10 With each succeeding farm bil , and occasional y via other legislation, Congress has
addressed anew who is eligible for farm payments and how much an individual recipient should addressed anew who is eligible for farm payments and how much an individual recipient should
be permitted to receive in a single year. be permitted to receive in a single year.
In recent years, congressional debate has focused on In recent years, congressional debate has focused on
 attributing payments directly to individual recipients,  attributing payments directly to individual recipients,
 ensuring that payments go to persons or entities currently engaged in farming,  ensuring that payments go to persons or entities currently engaged in farming,
 capping the amount of payments that a qualifying recipient may receive in any  capping the amount of payments that a qualifying recipient may receive in any
one year, and one year, and
 excluding farmers or farming entities with incomes above a certain level—as  excluding farmers or farming entities with incomes above a certain level—as
measured by their adjusted gross income (AGI)—from payment eligibility. measured by their adjusted gross income (AGI)—from payment eligibility.
Each of these policy measures—depending on how they are designed and implemented—can Each of these policy measures—depending on how they are designed and implemented—can
have consequences, both intended and unintended, for U.S. agriculture. These consequences have consequences, both intended and unintended, for U.S. agriculture. These consequences
include, but are not limited to, farm management structure, crop choices, and farm size. Because include, but are not limited to, farm management structure, crop choices, and farm size. Because
U.S. farm program eligibility requirements and annual payment limit policy have such broad U.S. farm program eligibility requirements and annual payment limit policy have such broad
~~potential consequences for U.S. agriculture, a review of both current policies and related issues is~~
~~of potential interest to Congress.~~

8 For example, the 2018 and 2019 Market Facilitation Programs (as described later in this report) were initiated by the Administration using Section 5 of the Commodity Credit Corporation (CCC) Charter Act (15 U.S.C. §714c). Administration using Section 5 of the Commodity Credit Corporation (CCC) Charter Act (15 U.S.C. §714c).
9 Conservation programs have different eligibility requirements from the commodity support programs. Many 9 Conservation programs have different eligibility requirements from the commodity support programs. Many
eligibility requirements are tied to the condition and control of the land and less to activities of those involved in an eligibility requirements are tied to the condition and control of the land and less to activities of those involved in an
operation. However, some requirements and data relating to eligibility are similar between the two types of programs operation. However, some requirements and data relating to eligibility are similar between the two types of programs
and are coordinated between NRCS and FSA. and are coordinated between NRCS and FSA.
10 FSA, “Legislative History of Payment Eligibility and Payment Limitation Provisions,” FSA Handbook, 10 FSA, “Legislative History of Payment Eligibility and Payment Limitation Provisions,” FSA Handbook, Payment
Eligibility, Paym ent Lim itation, and Average Adjusted Gross Incom e—Agricultural Act of 2014, as of February 10, , as of February 10,
2016 (hereinafter FSA Handbook). 2016 (hereinafter FSA Handbook).
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potential consequences for U.S. agriculture, a review of both current policies and related issues is of potential interest to Congress. Program Eligibility
Not al farm businesses are eligible to participate in federal farm programs. A number of statutory Not al farm businesses are eligible to participate in federal farm programs. A number of statutory
and regulatory requirements govern federal farm program eligibility for benefits under various and regulatory requirements govern federal farm program eligibility for benefits under various
programs. Some farm businesses, although eligible to participate, are restricted from receiving programs. Some farm businesses, although eligible to participate, are restricted from receiving
certain benefits or may be limited in the extent of program payments that they may receive. certain benefits or may be limited in the extent of program payments that they may receive.
Over time, program eligibility rules have evolved, expanding to more programs and including Over time, program eligibility rules have evolved, expanding to more programs and including
more limitations. Cross-cutting methods across programs for determining program eligibility—more limitations. Cross-cutting methods across programs for determining program eligibility—
such as AGI thresholds—are relatively new.11 Discussed below are cross-cutting eligibility such as AGI thresholds—are relatively new.11 Discussed below are cross-cutting eligibility
requirements that affect multiple programs, including participant identification, foreign requirements that affect multiple programs, including participant identification, foreign
ownership, nature and extent of participation (i.e., actively engaged in farming or AEF criteria), ownership, nature and extent of participation (i.e., actively engaged in farming or AEF criteria),
means tests, and conservation compliance requirements. Recent ad hoc programs developed by means tests, and conservation compliance requirements. Recent ad hoc programs developed by
USDA include some of these eligibility requirements, but also variations that al ow for expanded USDA include some of these eligibility requirements, but also variations that al ow for expanded
participation and payments. participation and payments.
Participant Identification
General y, program eligibility begins with identification of participants. Identifying who or what General y, program eligibility begins with identification of participants. Identifying who or what
entity is participating and therefore how payments may be attributed is the cornerstone of most entity is participating and therefore how payments may be attributed is the cornerstone of most
farm program eligibility requirements. To be eligible to receive any farm program payment, every farm program eligibility requirements. To be eligible to receive any farm program payment, every
person or legal entity—including both U.S. citizens and noncitizens—must provide a name and person or legal entity—including both U.S. citizens and noncitizens—must provide a name and
address and have either a Social Security number (SSN), in the case of a person, or a Taxpayer address and have either a Social Security number (SSN), in the case of a person, or a Taxpayer
Identification Number (TIN) or Employee Identification Number (EIN), in the case of a legal Identification Number (TIN) or Employee Identification Number (EIN), in the case of a legal
entity with multiple persons having ownership interests. In this latter situation, each person with entity with multiple persons having ownership interests. In this latter situation, each person with
an interest must have a TIN or EIN and must declare his or her interest share in the joint entity an interest must have a TIN or EIN and must declare his or her interest share in the joint entity
using the requisite USDA forms.12 using the requisite USDA forms.12
Al participants in programs subject to payment eligibility and payment limitation requirements Al participants in programs subject to payment eligibility and payment limitation requirements
must submit to USDA two completed forms.13 The first, CCC-90114 (Members’ Information), must submit to USDA two completed forms.13 The first, CCC-90114 (Members’ Information),
identifies the participating persons and/or entities (through four levels of attribution if needed) identifies the participating persons and/or entities (through four levels of attribution if needed)
and their interest share in the operation. The second form, CCC-902 (Farm Operating Plan), and their interest share in the operation. The second form, CCC-902 (Farm Operating Plan),
identifies the nature of each person’s or entity’s stake—that is, capital, land, equipment, active identifies the nature of each person’s or entity’s stake—that is, capital, land, equipment, active
personal labor, or active personal management—in the operation.15 These forms need to be personal labor, or active personal management—in the operation.15 These forms need to be
submitted only once (not annual y) but must be kept current in regard to any change in the submitted only once (not annual y) but must be kept current in regard to any change in the
~~farming operation. Critical changes to a farming operation might include expanding the number~~
~~of limitations for payment, such as by adding a new family member, changing the land rental~~

11 For example, means testing (i.e., AGI requirements) was first introduced in the Food Security and Rural Investment 11 For example, means testing (i.e., AGI requirements) was first introduced in the Food Security and Rural Investment
Act of 2002 (P.L. 107-171). Act of 2002 (P.L. 107-171).
12 T his requirement may be different for American Indians, Alaska Natives, and Pacific Islanders in which a unique 12 T his requirement may be different for American Indians, Alaska Natives, and Pacific Islanders in which a unique
identification number for each individual may be used as an alternative to a T IN or SSN. identification number for each individual may be used as an alternative to a T IN or SSN.
13 Some program eligibility requirements (e.g., AEF) are not required for 13 Some program eligibility requirements (e.g., AEF) are not required for some conservation and disaster assistance conservation and disaster assistance
programs. T herefore some forms required for commodity support programs are not required for participation in others. programs. T herefore some forms required for commodity support programs are not required for participation in others.
All required forms for participation in any USDA farm program are provided through a producer’s local USDA Service All required forms for participation in any USDA farm program are provided through a producer’s local USDA Service
Center. See https://offices.sc.egov.usda.gov/locator/app. Center. See https://offices.sc.egov.usda.gov/locator/app.
14 T he CCC abbreviation is USDA’s Commodity Credit Corporation. For additional information, see CRS Report 14 T he CCC abbreviation is USDA’s Commodity Credit Corporation. For additional information, see CRS Report
R44606, R44606, The Com m odity Credit Corporation: In Brief. .
15 FSA Handbook, paragraph 44, p. 2-59. All forms are available at the local USDA county office or online at 15 FSA Handbook, paragraph 44, p. 2-59. All forms are available at the local USDA county office or online at
http://www.sc.egov.usda.gov. http://www.sc.egov.usda.gov.
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farming operation. Critical changes to a farming operation might include expanding the number of limitations for payment, such as by adding a new family member, changing the land rental status from cash to share basis, purchasing additional base acres16 equivalent to at least 20% of status from cash to share basis, purchasing additional base acres16 equivalent to at least 20% of
the previous base, or substantial y altering the interest share of capital or equipment contributed the previous base, or substantial y altering the interest share of capital or equipment contributed
to the farm operation. This information is critical in determining the extent to which each person to the farm operation. This information is critical in determining the extent to which each person
is actively engaged in the farming operation, as described below. is actively engaged in the farming operation, as described below.
Three Principal Farm Business Categories
Many types of farm business entities own operations engaged in agricultural production. For Many types of farm business entities own operations engaged in agricultural production. For
purposes of determining the extent to which the participants of a farm operation qualify as purposes of determining the extent to which the participants of a farm operation qualify as
potential farm program participants, three major categories are considere potential farm program participants, three major categories are considered (Table 1):17 ):17
1. 1. Sole proprietorship or family farm. The farm business is run by a single The farm business is run by a single
operator or multiple adult family members—the linkage being common family operator or multiple adult family members—the linkage being common family
relationship—whereby each qualifying member is subject to an individual relationship—whereby each qualifying member is subject to an individual
payment limit. Thus, a family farm potential y qualifies for an additional payment limit. Thus, a family farm potential y qualifies for an additional
payment limit for each family member (18 years or older) associated with the payment limit for each family member (18 years or older) associated with the
principal operatorprincipal operator, including nephews, nieces, cousins, and spouses.~~.18~~ Family farms or sole proprietorships comprised nearly 86% Family farms or sole proprietorships comprised nearly 86%
of U.S. farm operations in 2017. of U.S. farm operations in 2017.
2. 2. Joint operation. Each member of a joint operation—where members need not Each member of a joint operation—where members need not
have a common family relation—is treated separately and individual y for have a common family relation—is treated separately and individual y for
purposes of determining eligibility and payment limits. Thus, a partnership’s purposes of determining eligibility and payment limits. Thus, a partnership’s
potential payment limit is equal to the number of qualifying members (plus any potential payment limit is equal to the number of qualifying members (plus any
special designees such as spouses) times the individual payment limit.special designees such as spouses) times the individual payment limit.
18 3. 3. Corporation. A legal y defined association of joint owners or shareholders that A legal y defined association of joint owners or shareholders that
is treated as a single person for purposes of determining eligibility and payment is treated as a single person for purposes of determining eligibility and payment
limits.19 This includes corporations, limited liability companies, and similar limits.19 This includes corporations, limited liability companies, and similar
entities. Nearly 90% of incorporated farm operations are family held.20 entities. Nearly 90% of incorporated farm operations are family held.20
As of 2017, these three categories represented nearly 98% of U.S. farm operations As of 2017, these three categories represented nearly 98% of U.S. farm operations (Table 1). In ). In
addition, federal regulations exist for evaluating both the eligibility of and relevant payment addition, federal regulations exist for evaluating both the eligibility of and relevant payment
limits for other exceptional types of potential recipients, including a spouse, minor children, and limits for other exceptional types of potential recipients, including a spouse, minor children, and
other family members, as wel as marketing cooperatives, trusts and estates, cash-rent tenants, other family members, as wel as marketing cooperatives, trusts and estates, cash-rent tenants,
sharecroppers, landowners, federal agencies, and state and local governments.21 These sharecroppers, landowners, federal agencies, and state and local governments.21 These
institutional arrangements represent a smal share (2.2%) of U.S. farm operations, according to institutional arrangements represent a smal share (2.2%) of U.S. farm operations, according to

16 For the purpose of calculating program payments, the term 16 For the purpose of calculating program payments, the term base acres is the historical planted acreage on each farm is the historical planted acreage on each farm
within the USDA program system using a multiyear average from as far back as the 1980s. Base acre provisions since within the USDA program system using a multiyear average from as far back as the 1980s. Base acre provisions since
1981 are described in Edwin Young et al., 1981 are described in Edwin Young et al., Econom ic Analysis of Base Acre and Paym ent Yield Designations Under the
2002 U.S. Farm Act, ERS, September 2005, pp. 36-41. , ERS, September 2005, pp. 36-41.
17 T hese three principal business categories, as they relate to farm program eligibility, are discussed in more detail in 17 T hese three principal business categories, as they relate to farm program eligibility, are discussed in more detail in
CRS Report R44656, CRS Report R44656, USDA’s Actively Engaged in Farm ing (AEF) Requirem ent. .
~~18 T he spouse of the principal operator qualifies automatically for an additional payment limit, but all other adult family~~
~~members must meet AEF criteria described later in this report in order to be eligible for USDA farm program~~
~~payments~~18 However, the number of nonfamily members that may qualify for payments as AEF based on personal farm management criteria is limited, as discussed later in this report. .
19 Because the company shields its owners from liability (or risk), the company is given a single payment limit 19 Because the company shields its owners from liability (or risk), the company is given a single payment limit
regardless of the number of owners. regardless of the number of owners.
20 USDA, National Agricultural Statistics Service, 2017 Census of Agriculture, T able 74, April 11, 2019. 20 USDA, National Agricultural Statistics Service, 2017 Census of Agriculture, T able 74, April 11, 2019.
21 For a discussion of the eligibility of sharecroppers, estates and trusts, deceased and incapacitated persons, military 21 For a discussion of the eligibility of sharecroppers, estates and trusts, deceased and incapacitated persons, military
personnel, and other exceptional circumstances, see the discussion under 7 C.F.R. §1400, “Subpart C—Payment personnel, and other exceptional circumstances, see the discussion under 7 C.F.R. §1400, “Subpart C—Payment
Eligibility.” Eligibility.”
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USDA’s 2017 USDA’s 2017 Census of Agriculture. Special rules also describe eligibility and payment limits in . Special rules also describe eligibility and payment limits in
the event of the death of a previously eligible person. the event of the death of a previously eligible person.
Table 1. U.S. Farms by Legal Status for Tax Purposes, 2017
Farms

Production Valuea

USDA Payments
Farm Type
Number
%
$ Billions
Share
# Farmsb $ Billions
Sole proprietor or family farm Sole proprietor or family farm
1,751,126 1,751,126
85.7% 85.7%

$187.7 $187.7
47.2% 47.2%

514,710 514,710
$5.7 $5.7
Joint operation or partnership Joint operation or partnership
130,173 130,173
6.4% 6.4%

$90.5 $90.5
22.8% 22.8%

61,730 61,730
$1.8 $1.8
Corporation Corporation
116,840 116,840
5.7% 5.7%

$112.2 $112.2
28.2% 28.2%

49,136 49,136
$1.2 $1.2
Othe Otherc
44,081 44,081
2.2% 2.2%

$7.1 $7.1
1.8% 1.8%

17,569 17,569
$0.2 $0.2
Total
2,042,220
100%

$397.5
100%

643,143
$8.9
Source: USDA, National Agricultural Statistics Service, 2017 Census of Agriculture, Table 74, April 11, 2019. USDA, National Agricultural Statistics Service, 2017 Census of Agriculture, Table 74, April 11, 2019.
Notes: USDA’s Census of Agriculture is conducted every five years, most recently in 2017. USDA’s Census of Agriculture is conducted every five years, most recently in 2017.
a. Includes the value of both agricultural production and government payments. a. Includes the value of both agricultural production and government payments.
b. The number of farms receiving federal farm payments. b. The number of farms receiving federal farm payments.
c. Cooperative, estate or trust, institutional, etc. c. Cooperative, estate or trust, institutional, etc.
Actively Engaged in Farming (AEF) Requirement
To be eligible for certain farm program benefits, participants—al individuals, as wel as other To be eligible for certain farm program benefits, participants—al individuals, as wel as other
types of legal entities—must meet AEF requirements.22 The AEF requirements (where applicable) types of legal entities—must meet AEF requirements.22 The AEF requirements (where applicable)
apply equal y to U.S. citizens, resident aliens, and foreign entities. This section briefly reviews apply equal y to U.S. citizens, resident aliens, and foreign entities. This section briefly reviews
the specific requirements for each type of legal entity—person, partnership, or corporation—to the specific requirements for each type of legal entity—person, partnership, or corporation—to
qualify as “actively engaged in farming.”23 qualify as “actively engaged in farming.”23
“Significant Contribution” Defined
A key aspect of the AEF criteria that applies across al types of legal entities is the requirement A key aspect of the AEF criteria that applies across al types of legal entities is the requirement
that the entity make “a significant contribution to the farming operation.”24 This requirement that the entity make “a significant contribution to the farming operation.”24 This requirement
involves the following minimum investments in the operation: involves the following minimum investments in the operation:
1. 1. Land, capital, or equipment. If land, the investment must be at least 50% of the If land, the investment must be at least 50% of the
rental value of the land; if capital or equipment, the investment must be at least rental value of the land; if capital or equipment, the investment must be at least
50% of the value of capital or the rental value of the equipment necessary to 50% of the value of capital or the rental value of the equipment necessary to
conduct the farming operation; if a combination of land, capital, and equipment, conduct the farming operation; if a combination of land, capital, and equipment,
then the investment must be at least 30% of the total value of the farming then the investment must be at least 30% of the total value of the farming
operation. operation.
2. 2. Active personal labor. The smal er of the following: 1,000 hours per calendar The smal er of the following: 1,000 hours per calendar
year of labor; or 50% of the total hours necessary to conduct a farming operation year of labor; or 50% of the total hours necessary to conduct a farming operation
comparable in size to the person’s share in the farming operation. comparable in size to the person’s share in the farming operation.
3. 3. Active personal management. Must meet at least one of the following: performs Must meet at least one of the following: performs
at least 25% of the total management hours required for the farming operation on at least 25% of the total management hours required for the farming operation on

22 T he lone exception concerns spouses of AEF-qualified persons. “If one spouse … is determined to be actively 22 T he lone exception concerns spouses of AEF-qualified persons. “If one spouse … is determined to be actively
engaged in farming … the other spouse is considered to have made a significant contribution.” 7 C.F.R. §1400.202(b). engaged in farming … the other spouse is considered to have made a significant contribution.” 7 C.F.R. §1400.202(b).
23 For details, see CRS Report R44656, 23 For details, see CRS Report R44656, USDA’s Actively Engaged in Farming (AEF) Requirement. .
24 USDA added specificity to the definition of “significant contribution” in its rule of August 24, 2020; USDA, 24 USDA added specificity to the definition of “significant contribution” in its rule of August 24, 2020; USDA,
“Payment Limitation and Payment Eligibility,” Final Rule, 85 “Payment Limitation and Payment Eligibility,” Final Rule, 85 Federal Register 52033, August 24, 2020. 52033, August 24, 2020.
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an annual basis; or performs at least 500 hours of management annual y for the an annual basis; or performs at least 500 hours of management annual y for the
farming operation. farming operation.
4. 4. For a combination of active personal labor and active personal management, ,
the combination must (a) be critical to farm profitability; (b) be performed on a the combination must (a) be critical to farm profitability; (b) be performed on a
regular, continuous, and substantial basis, and (c) adhere to a table of required regular, continuous, and substantial basis, and (c) adhere to a table of required
hours, as shown ihours, as shown in Table 2.
Table 2. Significant Contribution of Active Personal Labor or Management
USDA-defined acceptable combinations of hours per year USDA-defined acceptable combinations of hours per year
Minimum Combined Threshold
Management Contribution
Labor Contribution
550 550
475 475
75 75
550 550
450 450
100 100
650 650
425 425
225 225
650 650
400 400
250 250
750 750
375 375
375 375
750 750
350 350
400 400
750 750
325 325
425 425
850 850
300 300
550 550
850 850
275 275
575 575
850 850
250 250
600 600
850 850
225 225
625 625
850 850
200 200
650 650
850 850
175 175
675 675
950 950
150 150
800 800
950 950
125 125
825 825
950 950
100 100
850 850
950 950
75 75
875 875
950 950
50 50
900 900
950 950
25 25
925 925
Source: Code of Federal Regulations, 7 C.F.R. §1400., 7 C.F.R. §1400.3601 Definitions, Definitions, “Significant Contribution.” “Significant Contribution.”
Individual AEF Requirements
An individual producer must meet three AEF criteria: An individual producer must meet three AEF criteria:
1. The person, independently and separately, makes a significant contribution to the 1. The person, independently and separately, makes a significant contribution to the
farming operation of both (a) capital, equipment, or land; and (b) active personal farming operation of both (a) capital, equipment, or land; and (b) active personal
labor, active personal management, or a combination of active personal labor and labor, active personal management, or a combination of active personal labor and
management. management.
2. The person’s share of profits or losses is commensurate with his/her contribution 2. The person’s share of profits or losses is commensurate with his/her contribution
to the farming operation. to the farming operation.
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3. The person makes contributions to the farming operation that are at risk of loss, 3. The person makes contributions to the farming operation that are at risk of loss,
with the level of risk commensurate with the person’s claimed share of the with the level of risk commensurate with the person’s claimed share of the
operation. operation.
~~Prior to the issuance of the USDA rule on payment limits and eligibility of August 24, 2020,~~
~~family~~Family farms farms ~~received~~receive special treatment whereby every adult member (i.e., 18 years or older) special treatment whereby every adult member (i.e., 18 years or older) ~~was~~is
deemed to meet the AEF requirements. deemed to meet the AEF requirements. ~~At that time, family membership was based on lineal~~
~~ascendants or descendants but was also extended to siblings and spouses. Under the 2018 farm~~
~~bil~~ Under the 2018 farm bil (§1703), for purposes of assessing the availability of individual payment limits, the definition (§1703), for purposes of assessing the availability of individual payment limits, the definition
of of family member has been extended to include first cousins, nieces, and nephews. has been extended to include first cousins, nieces, and nephews. ~~However,~~
~~under the August 24 rule,~~ 25 Thus, a family farm with a single active farm operator may stil qualify for multiple payment limits based on the number of immediate and extended adult family members (and spouses). Under USDA’s August 24, 2020, rule on payment limits and eligibility, each of these individuals (with the exception of spouses, see below) each of these individuals (with the exception of spouses, see below) is
was no longer “deemed” to meet AEF criteria but no longer “deemed” to meet AEF criteria but ~~must now~~ instead had to certify that they meet each of the three certify that they meet each of the three
AEF criteria cited above, including the conditions identified under the more strictly defined term AEF criteria cited above, including the conditions identified under the more strictly defined term
“significant contribution.”“significant contribution.”25
26 However, USDA acknowledged in a correction notice that this tightening of payment limits on family-farm members was inadvertent.27 In its correcting amendment, USDA reversed its mistake. Current law also al ows for special treatment of a spouse: If one spouse is determined to be Current law also al ows for special treatment of a spouse: If one spouse is determined to be
actively engaged in farming, then the other spouse shal also be determined to have met the actively engaged in farming, then the other spouse shal also be determined to have met the
requirement.requirement.2628 The spousal exception applies to both individual producers (as in a family farm) The spousal exception applies to both individual producers (as in a family farm)
and producers operating within a partnership. and producers operating within a partnership.
An additional exception is made for landowners who may be deemed in compliance with al AEF An additional exception is made for landowners who may be deemed in compliance with al AEF
requirements if they receive income based on the farm’s operating results without providing labor requirements if they receive income based on the farm’s operating results without providing labor
or management. or management.2729
Partnership AEF Requirements
In a general partnership, each member is treated separately for purposes of meeting the AEF In a general partnership, each member is treated separately for purposes of meeting the AEF
criteria and determining eligibility. In particular, each partner with an ownership interest must criteria and determining eligibility. In particular, each partner with an ownership interest must
satisfy al three of the AEF criteria for an individual, including the “significant contribution” satisfy al three of the AEF criteria for an individual, including the “significant contribution”
specificity cited above. The active personal labor or management contribution must be (a) specificity cited above. The active personal labor or management contribution must be (a)
performed on a regular basis; (b) identifiable and documentable; and (c) separate and distinct performed on a regular basis; (b) identifiable and documentable; and (c) separate and distinct
from such contributions made by any other partner. Each partner who fails to meet the AEF from such contributions made by any other partner. Each partner who fails to meet the AEF
criteria is ineligible to participate in the relevant farm program. criteria is ineligible to participate in the relevant farm program.
Corporate AEF Requirements
A corporation, as an association of joint owners, is treated as a single person for purposes of A corporation, as an association of joint owners, is treated as a single person for purposes of
meeting the AEF criteria and determining eligibility.meeting the AEF criteria and determining eligibility.2830 In addition to the AEF criteria cited for a In addition to the AEF criteria cited for a
person—of sharing commensurate profits or losses and bearing commensurate risk—each person—of sharing commensurate profits or losses and bearing commensurate risk—each
member with an ownership interest in the corporation must make a significant contribution of member with an ownership interest in the corporation must make a significant contribution of
personal labor or active personal management—whether compensated or not—to the operation personal labor or active personal management—whether compensated or not—to the operation
~~that is (a) performed on a regular basis; (b) identifiable and documentable; and (c) separate and~~
~~distinct from such contributions of other stockholders or members. Furthermore, the collective~~
~~contribution of corporate members must be significant and commensurate with contributions to~~
~~the farming operation.~~

~~25 7 C.F.R. §1400.3 Definitions, “Significant Contribution.”~~
26 25 USDA, “Payment Limitation and Payment Eligibility,” 85 Federal Register 52033, August 22, 2020. 26 7 C.F.R. §1400.3 Definitions, “Significant Contribution.” 27 USDA, “Payment Limitation and Payment Eligibility,” Correcting amendment, 85 Federal Register 73601, November 19, 2020. 28 7 U.S.C. §1308-1(c)(6) and 7 C.F.R. §1400.202(b). 7 U.S.C. §1308-1(c)(6) and 7 C.F.R. §1400.202(b).
2729 7 C.F.R. §1400.207. See also, FSA Handbook, “Landowner Exemption,” p. 2-158. 7 C.F.R. §1400.207. See also, FSA Handbook, “Landowner Exemption,” p. 2-158.
2830 As mentioned earlier, because a corporation shields its owners from liability (or risk), the company is given a single As mentioned earlier, because a corporation shields its owners from liability (or risk), the company is given a single
payment limit regardless of the number of owners. payment limit regardless of the number of owners.
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that is (a) performed on a regular basis; (b) identifiable and documentable; and (c) separate and distinct from such contributions of other stockholders or members. Furthermore, the collective contribution of corporate members must be significant and commensurate with contributions to the farming operation. If any member of the legal entity fails to meet the labor or management contribution If any member of the legal entity fails to meet the labor or management contribution
requirements, then any program payment or benefit to the corporation wil be reduced by an requirements, then any program payment or benefit to the corporation wil be reduced by an
amount commensurate with the ownership share of that member. An exception applies if (a) at amount commensurate with the ownership share of that member. An exception applies if (a) at
least 50% of the entity’s stock is held by members that are “actively engaged in providing labor least 50% of the entity’s stock is held by members that are “actively engaged in providing labor
or management” and (b) the total annual farm program payments received collectively by the or management” and (b) the total annual farm program payments received collectively by the
stockholders or members of the entity are equal to or less than one payment limitation. stockholders or members of the entity are equal to or less than one payment limitation.
Special Nonfamily AEF Requirements
Prior to the 2014 farm bil (P.L. 113-79), the definition of Prior to the 2014 farm bil (P.L. 113-79), the definition of active personal labor or management
was broad and could be satisfied by undertaking passive activities without visiting the operation, was broad and could be satisfied by undertaking passive activities without visiting the operation,
thus enabling individuals who lived significant distances from an operation to claim such labor or thus enabling individuals who lived significant distances from an operation to claim such labor or
management contributions.management contributions.2931 This was often seen as problematic, as passive investors were This was often seen as problematic, as passive investors were
receiving farm program payments without actively contributing to the farming operation. receiving farm program payments without actively contributing to the farming operation.
Recent farm bil s have amended the AEF criteria in an attempt to tighten the requirements. Recent farm bil s have amended the AEF criteria in an attempt to tighten the requirements.
However, the issue remains controversial. In particular, the 2014 farm bil (§1604) required However, the issue remains controversial. In particular, the 2014 farm bil (§1604) required
USDA to add more specificity to the role that a nonfamily producer must play to qualify for farm USDA to add more specificity to the role that a nonfamily producer must play to qualify for farm
program benefits. program benefits.3032 These AEF regulations were not changed under the 2018 farm bil . These AEF regulations were not changed under the 2018 farm bil .
As a result of the rule, a limit of three is placed on the number of nonfamily members of a As a result of the rule, a limit of three is placed on the number of nonfamily members of a
farming operation who can qualify as a farm manager—depending on the size and complexity of farming operation who can qualify as a farm manager—depending on the size and complexity of
the farm operation.the farm operation.3133 Also, additional recordkeeping requirements now apply for each nonfamily Also, additional recordkeeping requirements now apply for each nonfamily
member of a farming operation claiming active personal management status. No such limit member of a farming operation claiming active personal management status. No such limit
applies to the potential number of qualifying family members. applies to the potential number of qualifying family members.3234
Foreign Person or Legal Entity
General y, foreign persons (or foreign legal entities) are eligible to participate if they meet a General y, foreign persons (or foreign legal entities) are eligible to participate if they meet a
particular farm program’s eligibility requirements.particular farm program’s eligibility requirements.3335 Exceptions include the four permanent Exceptions include the four permanent
disaster assistance programs—Emergency Assistance for Livestock, Honey Bees, and Farm-disaster assistance programs—Emergency Assistance for Livestock, Honey Bees, and Farm-
Raised Fish Program (ELAP); Livestock Forage Disaster Program (LFP); Livestock Indemnity Raised Fish Program (ELAP); Livestock Forage Disaster Program (LFP); Livestock Indemnity
Program (LIP); and Tree Assistance Program (TAP)—and the Noninsured Crop Disaster Program (LIP); and Tree Assistance Program (TAP)—and the Noninsured Crop Disaster
~~Assistance Program (NAP), which explicitly prohibit payments to foreign entities other than~~
~~resident aliens.34~~

2931 U.S. Government Accountability Office (GAO), U.S. Government Accountability Office (GAO), Changes Are Needed to Eligibility Requirements for Being Actively
Involved in Farm ing, GAO-13-781, September 2013, http://www.gao.gov/assets/660/658208.pdf. , GAO-13-781, September 2013, http://www.gao.gov/assets/660/658208.pdf.
3032 CCC, “Payment Limitation and Payment Eligibility; Actively Engaged in Farming,” 80 CCC, “Payment Limitation and Payment Eligibility; Actively Engaged in Farming,” 80 Federal Register 78119, 78119,
December 16, 2015. For more on this rule, see CRS Report R44656, December 16, 2015. For more on this rule, see CRS Report R44656, USDA’s Actively Engaged in Farm ing (AEF)
Requirem ent. .
3133 7 C.F.R. §1400.602 “ Restrictions on active personal management contributions.” 7 C.F.R. §1400.602 “ Restrictions on active personal management contributions.”
3234 However, an indirect limit of four farm managers is in effect for smaller farm operations under the requirement that a However, an indirect limit of four farm managers is in effect for smaller farm operations under the requirement that a
manager must account for at least 25% of a farm operation’s total management hours. In contrast, a large farm manager must account for at least 25% of a farm operation’s total management hours. In contrast, a large farm
operation could conceivably have more than four managers who log at least 500 hours of management time. operation could conceivably have more than four managers who log at least 500 hours of management time.
3335 Verifiable physical, on-farm presence is critical in a successful determination for eligibility for nonresident Verifiable physical, on-farm presence is critical in a successful determination for eligibility for nonresident ~~aliens.~~
~~34 7 U.S.C. §9081(a)(2)(B).~~
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Assistance Program (NAP), which explicitly prohibit payments to foreign entities other than resident aliens.36
As of December 31, 2018, foreign persons held an interest in 31.8 mil ion acres of U.S. As of December 31, 2018, foreign persons held an interest in 31.8 mil ion acres of U.S.
agricultural land (including forest land).agricultural land (including forest land).3537 This accounts for 2.5% of al privately held agricultural This accounts for 2.5% of al privately held agricultural
land in the United States and approximately 1% of total U.S. land. land in the United States and approximately 1% of total U.S. land.
A Foreign Person or Entity
A foreign person is any person who is neither a citizen of the United States nor an alien lawful y admitted into the A foreign person is any person who is neither a citizen of the United States nor an alien lawful y admitted into the
United States for permanent residence under the Immigration and Nationality Act (8 U.S.C. 1101 et seq.).United States for permanent residence under the Immigration and Nationality Act (8 U.S.C. 1101 et seq.).3638
Similarly, a foreign entity is a corporation or other legal entity in which more than 10% of the ownership is held by Similarly, a foreign entity is a corporation or other legal entity in which more than 10% of the ownership is held by
foreign persons. foreign persons.
Foreign persons or entities can become eligible for most farm program benefits if they have the Foreign persons or entities can become eligible for most farm program benefits if they have the
requisite U.S. taxpayer ID and meet the AEF criteria discussed earlier. In the case where a foreign requisite U.S. taxpayer ID and meet the AEF criteria discussed earlier. In the case where a foreign
corporation or similar entity fails to meet the AEF criteria but has shareholders or partners with corporation or similar entity fails to meet the AEF criteria but has shareholders or partners with
U.S. residency status, then the foreign entity may—upon written request to USDA—receive U.S. residency status, then the foreign entity may—upon written request to USDA—receive
payments representative of the percentage ownership interest by those U.S. citizens or U.S. payments representative of the percentage ownership interest by those U.S. citizens or U.S.
resident aliens that do meet the AEF criteria. resident aliens that do meet the AEF criteria.
Current law imposes no specific restrictions on foreign persons or entities with respect to Current law imposes no specific restrictions on foreign persons or entities with respect to
eligibility for crop and livestock insurance premium subsidies. Also, the Dairy Margin Coverage eligibility for crop and livestock insurance premium subsidies. Also, the Dairy Margin Coverage
(DMC) program makes no distinction about producer or owner citizenship. Instead, the law states (DMC) program makes no distinction about producer or owner citizenship. Instead, the law states
that al dairy operations in the United States shal be eligible to participate in the DMC program that al dairy operations in the United States shal be eligible to participate in the DMC program
to receive margin protection payments.to receive margin protection payments.3739 Similarly, no citizenship requirement exists for a sugar Similarly, no citizenship requirement exists for a sugar
processor or a cane or beet producer operating under the U.S. sugar program price guarantees. processor or a cane or beet producer operating under the U.S. sugar program price guarantees.
However, the sugarcane and sugar beets being processed must be of U.S. origin. However, the sugarcane and sugar beets being processed must be of U.S. origin.
AGI Limit
General y, means testing prohibits persons or legal entities from being eligible to receive any General y, means testing prohibits persons or legal entities from being eligible to receive any
benefit under certain commodity and conservation programs during a crop, fiscal, or program benefit under certain commodity and conservation programs during a crop, fiscal, or program
year as appropriate if their income is above an established level. The first means test for farm year as appropriate if their income is above an established level. The first means test for farm
programs was established by the 2002 farm bil (P.L. 107-171). Income is measured by an programs was established by the 2002 farm bil (P.L. 107-171). Income is measured by an
individual’s or entity’s average AGI from the previous three-year period but excluding the most individual’s or entity’s average AGI from the previous three-year period but excluding the most
recent complete taxable year.recent complete taxable year.3840 A brief history of the legislative evolution of the AGI threshold is A brief history of the legislative evolution of the AGI threshold is
provided in provided in Table A-2.
Means testing has recently been applied as a determining factor for the level of payment limit Means testing has recently been applied as a determining factor for the level of payment limit
rather than a threshold for eligibility. Supplemental disaster assistance authorized in 2018 and rather than a threshold for eligibility. Supplemental disaster assistance authorized in 2018 and
2019 uses an individual’s or entity’s average AGI over a three-year period to determine the total 2019 uses an individual’s or entity’s average AGI over a three-year period to determine the total
~~payment limits depending on how much of that income is derived from farming.39 This is~~
~~discussed further in the “Payment Limits” section below.~~

35 36 7 U.S.C. §9081(a)(2)(B). 37 T ricia Barnes et al., T ricia Barnes et al., Foreign Holdings of U.S. Agricultural Land through December 31, 2018 , FSA, December 31, , FSA, December 31,
2018. 2018.
3638 7 U.S.C. §1308-3. 7 U.S.C. §1308-3.
3739 7 U.S.C. §9054(a). 7 U.S.C. §9054(a).
3840 For example, the AGI for the 2016 crop year is based on the AGI base years of 2012, 2013, and 2014, excluding the For example, the AGI for the 2016 crop year is based on the AGI base years of 2012, 2013, and 2014, excluding the
most recently completed tax year of 2015. Those tax years where the person or legal entity had no taxable income are most recently completed tax year of 2015. Those tax years where the person or legal entity had no taxable income are
excluded from the calculation of the AGI average. excluded from the calculation of the AGI average.
~~39 T he three-year period for calculation varies by program. See 2017 WHIP and WHIP+ entry and note in Table A-1.~~
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payment limits depending on how much of that income is derived from farming.41 This is discussed further in the “Payment Limits” section below. Recent farm bil s, including the 2018 farm bil , have preserved the three-year average AGI as the Recent farm bil s, including the 2018 farm bil , have preserved the three-year average AGI as the
relevant measure of income. Given apparent agreement on the concept of an AGI limit, the debate relevant measure of income. Given apparent agreement on the concept of an AGI limit, the debate
has shifted to which programs are covered by the means test and what income level is an has shifted to which programs are covered by the means test and what income level is an
appropriate threshold. appropriate threshold.
AGI Defined
Since most U.S. farms are operated as sole proprietorships or partnerships Since most U.S. farms are operated as sole proprietorships or partnerships (Table 1), most farm ), most farm
households are taxed under the individual income tax rather than the corporate income tax.households are taxed under the individual income tax rather than the corporate income tax.4042 For For
an individual, AGI is the Internal Revenue Service (IRS) reported AGI. AGI measures an individual, AGI is the Internal Revenue Service (IRS) reported AGI. AGI measures net
income—that is, income after expenses. Farm income is reported on the IRS Schedule F where income—that is, income after expenses. Farm income is reported on the IRS Schedule F where
AGI is net of farm operating expenses. For an incorporated business, a comparable measure to AGI is net of farm operating expenses. For an incorporated business, a comparable measure to
AGI—as determined by USDA—is used to measure income. AGI—as determined by USDA—is used to measure income.
Since the household is the typical unit of taxation, farm and nonfarm income are combined when Since the household is the typical unit of taxation, farm and nonfarm income are combined when
computing federal income taxes for farm households. In fact, most federal income tax paid by computing federal income taxes for farm households. In fact, most federal income tax paid by
farm households (80% in 2019) can be attributed to nonfarm income. farm households (80% in 2019) can be attributed to nonfarm income.4143
Farm operations overwhelmingly report operating losses for tax purposes. For example, in 2015, Farm operations overwhelmingly report operating losses for tax purposes. For example, in 2015,
two-thirds of farm sole proprietors reported a net farm loss for tax purposes.two-thirds of farm sole proprietors reported a net farm loss for tax purposes.4244 The substantial The substantial
portion of capital investment that can be expensed in the first year is an important determinant of portion of capital investment that can be expensed in the first year is an important determinant of
the large loss reporting, along with cash accounting and other practices. the large loss reporting, along with cash accounting and other practices.
Program participants are required to give their consent to the IRS annual y to verify that they are Program participants are required to give their consent to the IRS annual y to verify that they are
in compliance with their AGI limit provisions using a specific USDA form (CCC-941). in compliance with their AGI limit provisions using a specific USDA form (CCC-941).4345 Failure Failure
to provide the consent and subsequent certification of compliance results in ineligibility for to provide the consent and subsequent certification of compliance results in ineligibility for
program payments and a required refund of any payments already received for the relevant year. program payments and a required refund of any payments already received for the relevant year.
Historical Development of the AGI Eligibility Limit
The 2002 farm bil (§1604) established the initial AGI threshold for program eligibility at $2.5 The 2002 farm bil (§1604) established the initial AGI threshold for program eligibility at $2.5
mil ion. This AGI criterion applied to most farm programs (listed i mil ion. This AGI criterion applied to most farm programs (listed in Table A-2). However, the . However, the
2002 farm bil included an exemption if at least 75% of AGI was from farming. 2002 farm bil included an exemption if at least 75% of AGI was from farming.
The 2008 farm bil (§1604) replaced the single AGI limit of the 2002 farm bil with three separate The 2008 farm bil (§1604) replaced the single AGI limit of the 2002 farm bil with three separate
AGI limits that distinguished between farm and nonfarm AGI: AGI limits that distinguished between farm and nonfarm AGI:
~~1. First, a nonfarm AGI limit of $500,000 applied to eligibility for selected farm~~
~~commodity program benefits, including the Milk Income Loss Contract~~
~~program,44 NAP, and the disaster assistance programs.~~

40 41 T he three-year period for calculation varies by program. See 2017 WHIP and WHIP+ entry and note in Table A-1. 42 USDA estimates that 98% of farm households are pass-through entities (including sole proprietorships, partnerships, USDA estimates that 98% of farm households are pass-through entities (including sole proprietorships, partnerships,
and Subchapter S corporations)—any profit or loss from them is passed to the owner/partner/shareholder, and tax is and Subchapter S corporations)—any profit or loss from them is passed to the owner/partner/shareholder, and tax is
paid at the individual rather than the corporate level. James Williamson and Siraj Bawa, paid at the individual rather than the corporate level. James Williamson and Siraj Bawa, Estim ated Effects of the Tax
Cuts and Jobs Act on Farm s and Farm Households, ERS, June 2018, p. 3. , ERS, June 2018, p. 3.
4143 ERS, “2020 Farm Sector Income Forecast,” February 5, 2020 . ERS, “2020 Farm Sector Income Forecast,” February 5, 2020 .
4244 Williamson and Bawa, Williamson and Bawa, Estimated Effects of the Tax Cuts and Jobs Act on Farms and Farm Households, p. 4. , p. 4.
4345 T hus, a participant completes form CCC-941 for USDA. USDA then submits the forms to IRS for processing. IRS in T hus, a participant completes form CCC-941 for USDA. USDA then submits the forms to IRS for processing. IRS in
turn notifies USDA of each participant’s compliance status regarding the AGI limit. Producers who fail to comply will turn notifies USDA of each participant’s compliance status regarding the AGI limit. Producers who fail to comply will
be given written notice by USDA and have a 30 -day window to challenge their noncompliance status. A subsequent be given written notice by USDA and have a 30 -day window to challenge their noncompliance status. A subsequent
appeal process is available for producers deemed out of compliance following the appeal process is available for producers deemed out of compliance following the ~~initia l challenge.~~
~~44 T he 2014 farm bill (§1422) eliminated this program.~~
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1. First, a nonfarm AGI limit of $500,000 applied to eligibility for selected farm commodity program benefits, including the Milk Income Loss Contract program,46 NAP, and the disaster assistance programs. 2. Second, a farm-specific AGI limit of $750,000 applied to eligibility for direct 2. Second, a farm-specific AGI limit of $750,000 applied to eligibility for direct
payments. payments.
3. Third, a nonfarm AGI limit of $1 mil ion—but subject to an exclusion if 66.6% 3. Third, a nonfarm AGI limit of $1 mil ion—but subject to an exclusion if 66.6%
of total AGI was farm-related income—applied to eligibility for benefits under of total AGI was farm-related income—applied to eligibility for benefits under
conservation programs. conservation programs.
However, the AGI limit could be waived in its entirety on a case-by-case basis if implementing a However, the AGI limit could be waived in its entirety on a case-by-case basis if implementing a
particular conservation program would protect environmental y sensitive land of special particular conservation program would protect environmental y sensitive land of special
significance.significance.4547 The 2008 farm bil also added a provision for married individuals filing a joint tax The 2008 farm bil also added a provision for married individuals filing a joint tax
return whereby the joint AGI could be al ocated as if a separate return had been filed by each return whereby the joint AGI could be al ocated as if a separate return had been filed by each
spouse. This would potential y al ow the farmer to exclude any earned income from a spouse as spouse. This would potential y al ow the farmer to exclude any earned income from a spouse as
wel as a share of any unearned income from jointly held assets for purposes of the eligibility wel as a share of any unearned income from jointly held assets for purposes of the eligibility
cap.cap.4648 This provision had the potential to significantly reduce the share of farms affected by the This provision had the potential to significantly reduce the share of farms affected by the
AGI cap. AGI cap.
The 2014 farm bil (§1605) returned the eligibility threshold to a single total AGI limit but at a The 2014 farm bil (§1605) returned the eligibility threshold to a single total AGI limit but at a
level of $900,000 for individuals and incorporated businesses.level of $900,000 for individuals and incorporated businesses.4749 It also retained the provision for It also retained the provision for
married individuals filing a joint tax return to al ocate the AGI as if a separate return had been married individuals filing a joint tax return to al ocate the AGI as if a separate return had been
filed by each spouse. In the case of a payment to a general partnership or joint venture comprising filed by each spouse. In the case of a payment to a general partnership or joint venture comprising
multiple individuals, the payment would be reduced by an amount that is commensurate with the multiple individuals, the payment would be reduced by an amount that is commensurate with the
share of ownership interest of each person who has an average AGI in excess of $900,000. The share of ownership interest of each person who has an average AGI in excess of $900,000. The
2018 farm bil retained the AGI provisions from the 2014 farm bil but added the 2008 farm bil ’s 2018 farm bil retained the AGI provisions from the 2014 farm bil but added the 2008 farm bil ’s
case-by-case waiver for conservation programs that would protect environmental y sensitive land case-by-case waiver for conservation programs that would protect environmental y sensitive land
of special significance. of special significance.4850
Conservation Compliance
Two provisions—highly erodible land conservation (Sodbuster) and wetland conservation Two provisions—highly erodible land conservation (Sodbuster) and wetland conservation
(Swampbuster)—are collectively referred to as conservation compliance.(Swampbuster)—are collectively referred to as conservation compliance.4951 To be eligible for To be eligible for
certain USDA program benefits, a producer agrees to conservation compliance—that is, to certain USDA program benefits, a producer agrees to conservation compliance—that is, to
maintain a minimum level of conservation on highly erodible land and not to convert or make maintain a minimum level of conservation on highly erodible land and not to convert or make
production possible on wetlands. production possible on wetlands.
Conservation compliance has been in effect since the 1985 farm bil (P.L. 99-198). The majority Conservation compliance has been in effect since the 1985 farm bil (P.L. 99-198). The majority
of farm program payments, loans, disaster assistance, and conservation programs are benefits that of farm program payments, loans, disaster assistance, and conservation programs are benefits that
may be lost if a participant is out of compliance with the conservation requirements. The 2014 may be lost if a participant is out of compliance with the conservation requirements. The 2014
farm bil extended conservation compliance to federal crop insurance premium subsidies, and the farm bil extended conservation compliance to federal crop insurance premium subsidies, and the
2018 farm bil retains this compliance requirement.2018 farm bil retains this compliance requirement.5052 Most recently, the 2018 farm bil made Most recently, the 2018 farm bil made
~~relatively minor amendments to the compliance provisions. Within U.S. farm policy, conservation~~

45 46 T he 2014 farm bill (§1422) eliminated this program. 47 T he land’s special significance may derive from its landscape, wildlife, or historical value. T he land’s special significance may derive from its landscape, wildlife, or historical value.
4648 7 U.S.C. §1308-3a(3). 7 U.S.C. §1308-3a(3).
4749 FSA, “Average Adjusted Gross Income (AGI) Certification and Verification, 2014 FSA, “Average Adjusted Gross Income (AGI) Certification and Verification, 2014 -2018,” March 2016.-2018,” March 2016.
48 50 Annual reports to Congress are required for waivers issued under this provision. Annual reports to Congress are required for waivers issued under this provision.
4951 For additional information, see CRS Report R42459, For additional information, see CRS Report R42459, Conservation Compliance and U.S. Farm Policy; and NRCS, ; and NRCS,
“Conservation Compliance,” as of March 7, 2019, https://www.nrcs.usda.gov/wps/portal/nrcs/site/national/home/. “Conservation Compliance,” as of March 7, 2019, https://www.nrcs.usda.gov/wps/portal/nrcs/site/national/home/.
5052 Federal crop insurance premium subsidies were previously included under conservation compliance from 1985 to Federal crop insurance premium subsidies were previously included under conservation compliance from 1985 to
~~1995. However, the 1996 farm bill (P.L. 104-127) removed crop insurance from the list of benefits that could be lost if~~
~~the farmer was found out of compliance.~~
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relatively minor amendments to the compliance provisions. Within U.S. farm policy, conservation compliance continues to be one of the only environmental y based requirements for program compliance continues to be one of the only environmental y based requirements for program
participation. participation.5153
Ad Hoc Farm Revenue Support Program Eligibility Criteria
Since 2018, USDA has established several large ad hoc payment programs that support farm Since 2018, USDA has established several large ad hoc payment programs that support farm
revenue—first, the 2018 and 2019 Market Facilitation Programs (MFPs) in response to trade revenue—first, the 2018 and 2019 Market Facilitation Programs (MFPs) in response to trade
retaliation,retaliation,5254 and then in 2020, successive rounds of the Coronavirus Food Assistance Program and then in 2020, successive rounds of the Coronavirus Food Assistance Program
(CFAP-1 and CFAP-2) in response to the Coronavirus Disease 2019 (COVID-19) pandemic.(CFAP-1 and CFAP-2) in response to the Coronavirus Disease 2019 (COVID-19) pandemic.53
55 These programs were established under authorities outside of omnibus farm legislation and These programs were established under authorities outside of omnibus farm legislation and
therefore are not subject to the same eligibility requirements as farm bil authorized programs therefore are not subject to the same eligibility requirements as farm bil authorized programs
discussed above. Instead of adhering to the AEF and AGI eligibility criteria previously discussed, discussed above. Instead of adhering to the AEF and AGI eligibility criteria previously discussed,
USDA tailored producer eligibility under each of the ad hoc programs to meet each program’s USDA tailored producer eligibility under each of the ad hoc programs to meet each program’s
relief assistance goals. relief assistance goals.
2018 MFP and 2019 MFP Eligibility
The 2018 MFP was announced by USDA in July 2018 to provide direct payments to producers of The 2018 MFP was announced by USDA in July 2018 to provide direct payments to producers of
selected commodities. To qualify, USDA required that MFP recipients meet AEF, AGI, and selected commodities. To qualify, USDA required that MFP recipients meet AEF, AGI, and
conservation compliance (see below) criteria. Also, a producer’s average AGI for tax years 2014, conservation compliance (see below) criteria. Also, a producer’s average AGI for tax years 2014,
2015, and 2016 must be less than $900,000. However, Congress subsequently amended the AGI 2015, and 2016 must be less than $900,000. However, Congress subsequently amended the AGI
criterion as it applies to MFP payments in the FY2019 Supplemental Appropriations for Disaster criterion as it applies to MFP payments in the FY2019 Supplemental Appropriations for Disaster
Relief Act (P.L. 116-20, §103).Relief Act (P.L. 116-20, §103).5456 The MFP-relevant AGI criterion was amended to (1) use the tax The MFP-relevant AGI criterion was amended to (1) use the tax
years 2013, 2014, and 2015 to calculate average AGI for evaluating eligibility for 2018 MFP years 2013, 2014, and 2015 to calculate average AGI for evaluating eligibility for 2018 MFP
payments and (2) al ow eligibility for AGI in excess of $900,000 if at least 75% came from payments and (2) al ow eligibility for AGI in excess of $900,000 if at least 75% came from
farming, ranching, or forestry-related activities. It is unclear if MFP payments made in 2018 farming, ranching, or forestry-related activities. It is unclear if MFP payments made in 2018
under the previous AGI criteria would be reevaluated against the new AGI specification and under the previous AGI criteria would be reevaluated against the new AGI specification and
would then be subject to repayment if the new AGI formulation made a producer ineligible. would then be subject to repayment if the new AGI formulation made a producer ineligible.
In May 2019, USDA announced a second round of MFP payments—referred to as 2019 MFP In May 2019, USDA announced a second round of MFP payments—referred to as 2019 MFP
payments. To qualify, USDA required 2019 MFP recipients to meet AEF, AGI, and conservation payments. To qualify, USDA required 2019 MFP recipients to meet AEF, AGI, and conservation
compliance criteria. However, the AGI criteria to assess eligibility for the 2019 MFP payments compliance criteria. However, the AGI criteria to assess eligibility for the 2019 MFP payments
used the 2015, 2016, and 2017 tax years but retained the exception whereby if at least 75% of used the 2015, 2016, and 2017 tax years but retained the exception whereby if at least 75% of
AGI was derived from farming, ranching, or forestry-related activities then the AGI criteria no AGI was derived from farming, ranching, or forestry-related activities then the AGI criteria no
longer applied. longer applied.
~~CFAP-1 and CFAP-2 Eligibility~~
~~In April 2020, USDA announced the first Coronavirus Food Assistance Program (CFAP-1).55~~
~~CFAP-1 included up to $16 bil ion in direct payments to eligible producers of qualifying~~

51 1995. However, the 1996 farm bill (P.L. 104-127) removed crop insurance from the list of benefits that could be lost if the farmer was found out of compliance. 53 A number of overarching environmental policies apply to agricultural production. However, conservation A number of overarching environmental policies apply to agricultural production. However, conservation
compliance is one of the only environmentally related policies authorized and overseen by the compliance is one of the only environmentally related policies authorized and overseen by the ~~agriculture~~a griculture committees committees
within the context of farm program participation. within the context of farm program participation.
5254 See CRS Report R45310, See CRS Report R45310, Farm Policy: USDA’s 2018 Trade Aid Package, and CRS Report R45865, , and CRS Report R45865, Farm Policy:
USDA’s 2019 Trade Aid Package. .
5355 See USDA, “ Coronavirus and USDA Assistance for Farmers,” https://www.farmers.gov/coronavirus. See USDA, “ Coronavirus and USDA Assistance for Farmers,” https://www.farmers.gov/coronavirus.
5456 CRS In Focus IF11245, CRS In Focus IF11245, FY2019 Supplemental Appropriations for Agriculture.
55 See CRS Report R46395, USDA’s Coronavirus Food Assistance Program (CFAP) Direct Payments. .
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CFAP-1 and CFAP-2 Eligibility In April 2020, USDA announced the first Coronavirus Food Assistance Program (CFAP-1).57 CFAP-1 included up to $16 bil ion in direct payments to eligible producers of qualifying commodities.58~~commodities.56~~ USDA has developed criteria to determine which commodities and which USDA has developed criteria to determine which commodities and which
producers are eligible for CFAP support. For example, to be eligible for a payment, a commodity producers are eligible for CFAP support. For example, to be eligible for a payment, a commodity
must have suffered a price loss of at least 5% during the mid-January to mid-April period or been must have suffered a price loss of at least 5% during the mid-January to mid-April period or been
subject to additional significant marketing costs for unexpected supply chain disruptions, subject to additional significant marketing costs for unexpected supply chain disruptions,
including unsold inventories and, for certain commodities, spoilage caused by disruption of the including unsold inventories and, for certain commodities, spoilage caused by disruption of the
food supply chain. Eligible commodities were listed in the program’s final rule—additional food supply chain. Eligible commodities were listed in the program’s final rule—additional
commodities were added in subsequent corrections to the final rule.commodities were added in subsequent corrections to the final rule.5759 For an individual or legal For an individual or legal
entity to be eligible for CFAP-1 payments, they were required to complete an application to entity to be eligible for CFAP-1 payments, they were required to complete an application to
determine the quantities affected and to meet certain other criteria. These criteria included determine the quantities affected and to meet certain other criteria. These criteria included
conservation compliance; sharing in the risk of profit and loss from the farm’s operation (a conservation compliance; sharing in the risk of profit and loss from the farm’s operation (a
difference from the more stringent AEF criteria); and having an average AGI for 2016, 2017, and difference from the more stringent AEF criteria); and having an average AGI for 2016, 2017, and
2018 of less than $900,000, unless at least 75% of AGI is from farming, ranching, or forestry-2018 of less than $900,000, unless at least 75% of AGI is from farming, ranching, or forestry-
related activities. related activities.
In September 2020, USDA announced the second Coronavirus Food Assistance Program (CFAP- In September 2020, USDA announced the second Coronavirus Food Assistance Program (CFAP-
2), which included up to $14 bil ion in direct payments to producers.2), which included up to $14 bil ion in direct payments to producers.5860 USDA expanded the USDA expanded the
number of eligible commodities but retained most of the producer eligibility criteria from CFAP-number of eligible commodities but retained most of the producer eligibility criteria from CFAP-
1, including the AGI limit. 1, including the AGI limit.5961
Direct Attribution of Payments
The process of tracking payments to an individual through various levels of ownership in single The process of tracking payments to an individual through various levels of ownership in single
and multiperson legal entities is referred to as “direct attribution.” Several types of legal entities and multiperson legal entities is referred to as “direct attribution.” Several types of legal entities
may qualify for farm program payments. However, ultimately every legal entity represents some may qualify for farm program payments. However, ultimately every legal entity represents some
combination of individuals. For example, a joint operation can be made up of a combination of combination of individuals. For example, a joint operation can be made up of a combination of
individuals, partnerships, and/or corporate entities. A particular individual may be part of each of individuals, partnerships, and/or corporate entities. A particular individual may be part of each of
these three component entities, as wel as additional subentities within each of these components. these three component entities, as wel as additional subentities within each of these components.
Farm payments flow down through these arrangements to individual recipients. Farm payments flow down through these arrangements to individual recipients.
For purposes of farm program payments, Congress defines For purposes of farm program payments, Congress defines legal entity as an entity created under as an entity created under
federal or state law that (1) owns land or an agricultural commodity or (2) produces an federal or state law that (1) owns land or an agricultural commodity or (2) produces an
agricultural commodity.agricultural commodity.6062 This broad definition encompasses the multiperson legal entities This broad definition encompasses the multiperson legal entities
discussed earlier such as family farm operations, joint ventures, corporations, and institutional discussed earlier such as family farm operations, joint ventures, corporations, and institutional
~~arrangements. Ownership shares in a multiperson legal entity are tracked via a person’s SSN or~~
~~EIN as reported in CCC-901 and CCC-902. Identification at the individual payment recipient~~
~~level is critical for assessing the cumulative payments of each individual against the annual~~
~~payment limit.~~

56 57 See CRS Report R46395, USDA’s Coronavirus Food Assistance Program: Round One (CFAP-1). 58 On May 19, 2020, USDA released the final rule that detailed CFAP’s $16 billion direct payment program, including On May 19, 2020, USDA released the final rule that detailed CFAP’s $16 billion direct payment program, including
the list of eligible commodities, eligibility requirements for producers, payment calculations, and application the list of eligible commodities, eligibility requirements for producers, payment calculations, and application
procedures. procedures.
5759 USDA, “Coronavirus Food Assistance Program, Final Rule,” 85 USDA, “Coronavirus Food Assistance Program, Final Rule,” 85 Federal Register 30825, May 21, 2020; USDA, 30825, May 21, 2020; USDA,
“Coronavirus Food Assistance Program, Correction,” 85 “Coronavirus Food Assistance Program, Correction,” 85 Federal Register 35799, June 12, 2020; USDA, “Coronavirus 35799, June 12, 2020; USDA, “Coronavirus
Food Assistance Program, Correction,” 85 Food Assistance Program, Correction,” 85 Federal Register 41382, July 10, 2020; and USDA, “Coronavirus Food 41382, July 10, 2020; and USDA, “Coronavirus Food
Assistance Program, Correction,” 85 Assistance Program, Correction,” 85 Federal Register 49593, August 14, 2020. 49593, August 14, 2020.
5860 USDA, “ USDA to Provide Additional Direct Assistance to Farmers and Ranchers Impacted by the Coronavirus,” USDA, “ USDA to Provide Additional Direct Assistance to Farmers and Ranchers Impacted by the Coronavirus,”
Press Release No. 0378.20, September 18, 2020Press Release No. 0378.20, September 18, 2020 . .
5961 Refer to the section Refer to the section “ Special Payment Limits Under CFAP for a Corporate Entity ” for a description of the difference. ” for a description of the difference.
USDA, “Coronavirus Food Assistance Program, Final Rule,” 85 USDA, “Coronavirus Food Assistance Program, Final Rule,” 85 Federal Register 59380, September 22, 2020. 59380, September 22, 2020.
6062 7 U.S.C. §1308(a)(3). 7 U.S.C. §1308(a)(3).
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arrangements. Ownership shares in a multiperson legal entity are tracked via a person’s SSN or EIN as reported in CCC-901 and CCC-902. Identification at the individual payment recipient level is critical for assessing the cumulative payments of each individual against the annual payment limit. Direct attribution was original y authorized in the 2008 farm bil (§1603(b)(3)).Direct attribution was original y authorized in the 2008 farm bil (§1603(b)(3)).6163 Al farm Al farm
program payments made directly or indirectly to an individual associated with a specific farming program payments made directly or indirectly to an individual associated with a specific farming
operation are combined with any other payments received by that same person from any other operation are combined with any other payments received by that same person from any other
farming operation—based on that person’s pro rata interest in those other operations. It is this farming operation—based on that person’s pro rata interest in those other operations. It is this
accumulation of an individual’s payments—tracked through four levels of ownership in accumulation of an individual’s payments—tracked through four levels of ownership in
multiperson legal entities—that is subject to the annual payment limit (see text box below). multiperson legal entities—that is subject to the annual payment limit (see text box below).
The first level of attribution is an individual’s personal farming operation. Subsequent levels of The first level of attribution is an individual’s personal farming operation. Subsequent levels of
attribution are related to those legal entities in which an individual has an ownership share. If a attribution are related to those legal entities in which an individual has an ownership share. If a
person meets his or her payment limit at the first level of attribution (i.e., on his or her own person meets his or her payment limit at the first level of attribution (i.e., on his or her own
personal farming operation), then any payments to legal entities at lower levels of attribution are personal farming operation), then any payments to legal entities at lower levels of attribution are
reduced by that person’s pro rata share. reduced by that person’s pro rata share.
Direct Attribution Examples
Suppose an individual operator (farmer #1) owns and farms 500 acres of cropland (operation #1) but owns farm Suppose an individual operator (farmer #1) owns and farms 500 acres of cropland (operation #1) but owns farm
equipment that is better suited to a much larger farming operation. To benefit from the surplus farming equipment that is better suited to a much larger farming operation. To benefit from the surplus farming
equipment, farmer #1 is also a member of a partnership that farms an additional 2,000 acres of farmland equipment, farmer #1 is also a member of a partnership that farms an additional 2,000 acres of farmland
(operation #2). Assuming that farmer #1 meets al qualifying eligibility criteria for operation #2, then farmer #1 (operation #2). Assuming that farmer #1 meets al qualifying eligibility criteria for operation #2, then farmer #1
would be eligible for payments from both operation #1 and the partnership’s operation #2 . Any payments due would be eligible for payments from both operation #1 and the partnership’s operation #2 . Any payments due
farmer #1 from the activities on operation #2 would be combined with program payments from the activities on farmer #1 from the activities on operation #2 would be combined with program payments from the activities on
operation #1 and subject to a single payment limit. If farmer #1’s program payments from activities on operation operation #1 and subject to a single payment limit. If farmer #1’s program payments from activities on operation
#1 reach the personal payment limit, then any payments due from activities on operation #2 would be reduced to #1 reach the personal payment limit, then any payments due from activities on operation #2 would be reduced to
zero. Any payments received by farmer #1 as a member of the partnership would be attributed as second -level zero. Any payments received by farmer #1 as a member of the partnership would be attributed as second -level
payments. payments.
As a second example, suppose that farmer #1 is also a member of a limited liability corporation (LLC) that runs a As a second example, suppose that farmer #1 is also a member of a limited liability corporation (LLC) that runs a
third farming operation (operation #3). Assuming that farmer #1 meets al qualifying eligibility criteria for third farming operation (operation #3). Assuming that farmer #1 meets al qualifying eligibility criteria for
operation #3, then farmer #1 would be eligible for payments from operation #1, the partnership’s operation #2, operation #3, then farmer #1 would be eligible for payments from operation #1, the partnership’s operation #2,
and the corporation’s operation #3—with the latter being on a pro rata basis reflecting ownership share in the and the corporation’s operation #3—with the latter being on a pro rata basis reflecting ownership share in the
corporation. If farmer #1’s program payments from activities on operations #1 and #2 reached the personal corporation. If farmer #1’s program payments from activities on operations #1 and #2 reached the personal
payment limit, then any pro rata payments due from farmer #1’s share of the corporation’s activities on operation payment limit, then any pro rata payments due from farmer #1’s share of the corporation’s activities on operation
#3 would be reduced to zero in this case. #3 would be reduced to zero in this case.
Suppose that the LLC in the second example was itself a member of the partnership from the first example. Then, Suppose that the LLC in the second example was itself a member of the partnership from the first example. Then,
any payments that farmer #1 would receive as a member of the LLC from the farming activity of the partnership any payments that farmer #1 would receive as a member of the LLC from the farming activity of the partnership
would be third-level attribution of payments. Farm payments are tracked through four levels of attribution. would be third-level attribution of payments. Farm payments are tracked through four levels of attribution.
Payment Limits
When the eligibility criteria—including AEF, AGI, conservation compliance, and others—are When the eligibility criteria—including AEF, AGI, conservation compliance, and others—are
met, the cumulative benefits across certain farm programs are subject to specific annual payment met, the cumulative benefits across certain farm programs are subject to specific annual payment
limits (detailed in limits (detailed in Table A-1) that can be received by an individual or legal entity in a year. that can be received by an individual or legal entity in a year.
Explicit payment limits date back to the 1970s. Explicit payment limits date back to the 1970s.6264 Despite their longevity, payment limits are not Despite their longevity, payment limits are not
universal among programs. Payment limits are also enforced differently for different types of universal among programs. Payment limits are also enforced differently for different types of
~~legal entities (as mentioned earlier and summarized below). For example, certain program limits~~
~~may be expanded depending on the number of participants, or they may be subject to exceptions,~~
~~or they may not exist. The major categories of farm program support and the applicability of~~
~~annual payment limits, if any, are briefly discussed below.~~

61 63 Prior to the 2008 farm bill, farmers were subject to the “three-entity rule” for determining whether an individual was Prior to the 2008 farm bill, farmers were subject to the “three-entity rule” for determining whether an individual was
within annual payment limits. Under this law, a person was permitted to receive payments up to the full cap on the first within annual payment limits. Under this law, a person was permitted to receive payments up to the full cap on the first
farm in which farm in which ~~the~~t he person had a substantial beneficial interest and up to half the full cap on each of two additional person had a substantial beneficial interest and up to half the full cap on each of two additional
farms. T he 2008 farm bill replaced this rule with direct attribution. farms. T he 2008 farm bill replaced this rule with direct attribution.
6264 Carl Zulauf, “ Farm Payment Limits: History and Observations,” Carl Zulauf, “ Farm Payment Limits: History and Observations,” Farmdoc Daily, June 21, 2012. , June 21, 2012.
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legal entities (as mentioned earlier and summarized below). For example, certain program limits may be expanded depending on the number of participants, or they may be subject to exceptions, or they may not exist. The major categories of farm program support and the applicability of annual payment limits, if any, are briefly discussed below. Farm Support Programs Subject to Annual Payment Limits
Traditional y, much attention focuses on the annual payment limits for the Title I commodity Traditional y, much attention focuses on the annual payment limits for the Title I commodity
programs, largely because this has historical y been the conduit for the majority of farm program programs, largely because this has historical y been the conduit for the majority of farm program
expenditures. Title I commodity program payment limits were first included in a farm bil in 1970 expenditures. Title I commodity program payment limits were first included in a farm bil in 1970
(Agricultural Act of 1970 [P.L. 91-524], §101) but have evolved substantial y since that initial (Agricultural Act of 1970 [P.L. 91-524], §101) but have evolved substantial y since that initial
efforteffort (Table A-1). Recently, the amount of payments made under ad hoc revenue support . Recently, the amount of payments made under ad hoc revenue support
programs has surpassed payments made under Title I commodity programs. As these ad hoc programs has surpassed payments made under Title I commodity programs. As these ad hoc
programs are created by USDA, so too are the payment limits imposed. This has shifted attention programs are created by USDA, so too are the payment limits imposed. This has shifted attention
to the payment limits developed by USDA, rather than those established by Congress. to the payment limits developed by USDA, rather than those established by Congress.
Farm Bill Support Programs
Several farm support programs—as defined by specific titles of the 2018 farm bil —are currently Several farm support programs—as defined by specific titles of the 2018 farm bil —are currently
subject to annual payment limits. For example, the following three program categories each have subject to annual payment limits. For example, the following three program categories each have
their own separate payment limit. their own separate payment limit.6365
  Title I (Subtitle A): ARC and PLC. Payments for the two revenue-support Payments for the two revenue-support
programs—Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC)— programs—Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC)—
must be combined for al covered commodities (except peanuts) and reduced by must be combined for al covered commodities (except peanuts) and reduced by
any sequestration66~~any sequestration64~~ prior to assessing whether they are within the $125,000 prior to assessing whether they are within the $125,000
annual payment limit for an individual. Peanuts are a notable exception to this annual payment limit for an individual. Peanuts are a notable exception to this
rule in that ARC and PLC payments for peanuts (after sequestration) are subject rule in that ARC and PLC payments for peanuts (after sequestration) are subject
to their own annual payment limit of $125,000 per individual.to their own annual payment limit of $125,000 per individual.6567
  Title I (Subtitle E): LFP. The LFP program is subject to an annual limit of The LFP program is subject to an annual limit of
$125,000 per person. $125,000 per person.6668
  Title I (Subtitle F): NAP.6769 Available for crops not currently eligible for crop Available for crops not currently eligible for crop
insurance. Payments for catastrophic coverage are limited to $125,000 per crop insurance. Payments for catastrophic coverage are limited to $125,000 per crop
year per individual or entity. Payments for additional coverage (referred to as year per individual or entity. Payments for additional coverage (referred to as
buy-up coverage) have a separate limit of $300,000 per crop year per individual buy-up coverage) have a separate limit of $300,000 per crop year per individual
or entity. or entity.

6365 T he programs discussed in this report do not represent a comprehensive list of farm programs and benefits. Instead, T he programs discussed in this report do not represent a comprehensive list of farm programs and benefits. Instead,
this report focuses on the most common programs and benefits deemed relevant to a discussion of program eligibility this report focuses on the most common programs and benefits deemed relevant to a discussion of program eligibility
and payment limits. For a more comprehensive list of U.S. and payment limits. For a more comprehensive list of U.S. ~~f arm~~farm programs, see CRS Report R45525, programs, see CRS Report R45525, The 2018 Farm
Bill (P.L. 115-334): Sum mary and Side-by-Side Com parison. .
6466 §1703(a)(3) of the 2018 farm bill. §1703(a)(3) of the 2018 farm bill.
6567 Combined ARC and PLC payments are subject to an annual limit of $125,000 per person Combined ARC and PLC payments are subject to an annual limit of $125,000 per person . For more information on . For more information on
commodity programs, potential benefits, eligible program crops, and other details, see CRS Report R45730, commodity programs, potential benefits, eligible program crops, and other details, see CRS Report R45730, Farm
Com m odity Provisions in the 2018 Farm Bill (P.L. 115 -334). .
6668 Following the 2014 farm bill, all four disaster assistance programs included some form of a payment limit. T he Following the 2014 farm bill, all four disaster assistance programs included some form of a payment limit. T he
Bipartisan Budget Act of 2018 (§20101, P.L. 115-123) removed the payment limit requirements for T AP and LIP. T he Bipartisan Budget Act of 2018 (§20101, P.L. 115-123) removed the payment limit requirements for T AP and LIP. T he
2018 farm bill (§1501(e)) removed the payment limit requirement for ELAP. For more information, see CRS Report 2018 farm bill (§1501(e)) removed the payment limit requirement for ELAP. For more information, see CRS Report
RS21212, RS21212, Agricultural Disaster Assistance. .
6769 CRS Report RS21212, CRS Report RS21212, Agricultural Disaster Assistance. .
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Ad Hoc Farm Revenue Support Programs
In addition to commodity programs authorized in periodic farm bil s, the Secretary of Agriculture In addition to commodity programs authorized in periodic farm bil s, the Secretary of Agriculture
has broad authority under the CCC charter to make payments in support of U.S. agriculture.has broad authority under the CCC charter to make payments in support of U.S. agriculture.6870
These payments may be purely ad hoc in nature, or they may be made according to a formula as These payments may be purely ad hoc in nature, or they may be made according to a formula as
part of a temporary program. Payments under this type of authority may or may not be subject to part of a temporary program. Payments under this type of authority may or may not be subject to
payment limits in accordance with the program’s specification. For example, neither of the payment limits in accordance with the program’s specification. For example, neither of the
underlying authorities used to initiate the MFP and CFAP ad hoc programs—primarily the CCC underlying authorities used to initiate the MFP and CFAP ad hoc programs—primarily the CCC
Charter Act, but also the CARES Act for CFAP-1—require payment limits. Applying payment Charter Act, but also the CARES Act for CFAP-1—require payment limits. Applying payment
limits was done at USDA’s discretion. Benefits received under farm bil support programs such limits was done at USDA’s discretion. Benefits received under farm bil support programs such
as the ARC and PLC are not added to MFP or CFAP payments when calculating payment limits. as the ARC and PLC are not added to MFP or CFAP payments when calculating payment limits.
In other words, payment limits for MFP and CFAP are independent of other farm program In other words, payment limits for MFP and CFAP are independent of other farm program
benefits received by a farm. benefits received by a farm.
Ad hoc programs that have been initiated at the discretion of USDA since 2016—all subject to Ad hoc programs that have been initiated at the discretion of USDA since 2016—all subject to
annual payment limits—include the following. annual payment limits—include the following.
1. 1. Cotton Ginning Cost Share (CGCS) Program. TheThe CGCS program has been CGCS program has been
available only in the 2016 and 2018 crop years. available only in the 2016 and 2018 crop years.6971 Payments under the CGCS Payments under the CGCS
program were subject to an annual payment limit of $40,000 per person. program were subject to an annual payment limit of $40,000 per person.
2. 2. 2018 MFP. USDA established the MFP program in August 2018 as a one-time USDA established the MFP program in August 2018 as a one-time
payment program to help offset the financial losses associated with lost payment program to help offset the financial losses associated with lost
agricultural exports to China as a result of a trade dispute with the United agricultural exports to China as a result of a trade dispute with the United
States. States.7072 MFP payments were subject to a per-person payment limit of $125,000. MFP payments were subject to a per-person payment limit of $125,000.
Furthermore, the MFP payment limit applied separately to each of three Furthermore, the MFP payment limit applied separately to each of three
categories of commodities—field crops (corn, sorghum, soybeans, upland cotton, categories of commodities—field crops (corn, sorghum, soybeans, upland cotton,
and wheat); livestock (dairy and hogs); and specialty crops (shel ed almonds and and wheat); livestock (dairy and hogs); and specialty crops (shel ed almonds and
fresh, sweet cherries). Thus, a recipient could potential y receive 2018 MFP fresh, sweet cherries). Thus, a recipient could potential y receive 2018 MFP
payments of up to $375,000 in combined payments under the three commodity payments of up to $375,000 in combined payments under the three commodity
categories. categories.
3. 3. 2019 MFP. In July 2019 USDA established a second round of MFP payments, In July 2019 USDA established a second round of MFP payments,
again subject to per-person payment limits, but at a higher rate of $250,000 per again subject to per-person payment limits, but at a higher rate of $250,000 per
commodity category with an overal cap of $500,000 per person. commodity category with an overal cap of $500,000 per person.7173 The three The three
eligible categories included non-specialty crops (primarily grain and oilseed eligible categories included non-specialty crops (primarily grain and oilseed
crops), specialty crops (selected tree nuts, cranberries, ginseng, sweet cherries, crops), specialty crops (selected tree nuts, cranberries, ginseng, sweet cherries,
and table grapes), and livestock (hogs and dairy). and table grapes), and livestock (hogs and dairy).
4. 4. CFAP-1. Under the CFAP-1, payments were available for over 120 different Under the CFAP-1, payments were available for over 120 different
commodities. commodities.7274 Total combined CFAP-1 payments, for al commodities, were Total combined CFAP-1 payments, for al commodities, were
limited to $250,000 per person—this limit was entirely unique and separate from limited to $250,000 per person—this limit was entirely unique and separate from
other farm program payment limitations, including those for the MFP programs. other farm program payment limitations, including those for the MFP programs.
In addition, USDA made an exception for corporate entities with multiple In addition, USDA made an exception for corporate entities with multiple
shareholders that contributed at least 400 hours of personal labor or management shareholders that contributed at least 400 hours of personal labor or management

6870 For details, see CRS Report R44606, For details, see CRS Report R44606, The Commodity Credit Corporation: In Brief. .
6971 For more information, see the FSA online site for “Cotton Ginning Cost Share Program” at For more information, see the FSA online site for “Cotton Ginning Cost Share Program” at
https://www.fsa.usda.gov/programs-and-services/cgcs/index. https://www.fsa.usda.gov/programs-and-services/cgcs/index.
7072 For details, see CRS Report R45310, For details, see CRS Report R45310, Farm Policy: USDA’s 2018 Trade Aid Package. .
7173 For details, see CRS Report R45865, For details, see CRS Report R45865, Farm Policy: USDA’s 2019 Trade Aid Package. .
7274 CRS Report R46395, CRS Report R46395, USDA’s Coronavirus Food Assistance Program ~~(CFAP) Direct Payments~~: Round One (CFAP-1). .
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time to the operation of the corporate entity. These corporate entities could time to the operation of the corporate entity. These corporate entities could
receive up to $750,000 in CFAP-1 payments based on the number of qualifying receive up to $750,000 in CFAP-1 payments based on the number of qualifying
shareholders (not to exceed three).shareholders (not to exceed three).
5. 5. CFAP-2. Under CFAP-2, USDA retained the same payment limit structure Under CFAP-2, USDA retained the same payment limit structure
established for CFAP-1; however, the limits applied uniquely to CFAP-2 established for CFAP-1; however, the limits applied uniquely to CFAP-2
payments and not to payments from other farm programs including the two MFP payments and not to payments from other farm programs including the two MFP
programs and CFAP-1.programs and CFAP-1.7375
When the farm program benefits for a qualifying recipient exceed the annual limits (as listed in When the farm program benefits for a qualifying recipient exceed the annual limits (as listed in
Table A-1) for a given year, then that individual is no longer eligible for further benefits under for a given year, then that individual is no longer eligible for further benefits under
that particular program during that year and is required to refund any payments already received that particular program during that year and is required to refund any payments already received
under that program that are in excess of the relevant payment limit for that year. under that program that are in excess of the relevant payment limit for that year.
Special Treatment of Family Farms
Under the 2018 farm bil (§1703(a)(1)), the definition of Under the 2018 farm bil (§1703(a)(1)), the definition of family member was extended beyond the was extended beyond the
direct lineal family unit (grandparents, parents, and children) to include first cousins, nieces, and direct lineal family unit (grandparents, parents, and children) to include first cousins, nieces, and
nephews. nephews. ~~Under the~~As mentioned earlier, under USDA’s August 24 rule, every adult member—18 years or older—of a family farm August 24 rule, every adult member—18 years or older—of a family farm
(except for spouses of qualifying members) (except for spouses of qualifying members) ~~must~~was required to meet the AEF requirements in order to be meet the AEF requirements in order to be
eligible to receive farm program payments in an amount up to eligible to receive farm program payments in an amount up to the individualthe individual payment limit.payment limit.7476 However, USDA removed this extension of AEF criteria to family members in a correcting amendment to its final rule.77
Thus, a family farm may qualify for multiple payment limits based on the number of immediate Thus, a family farm may qualify for multiple payment limits based on the number of immediate
and extended family membersand extended family members ~~that satisfy AEF criteria~~. For example, suppose that a farmer who . For example, suppose that a farmer who
is married with two adult children (both married) also has a neighboring married cousin with two is married with two adult children (both married) also has a neighboring married cousin with two
adult children (both married) who work part time on the farmer’s operation. This farm operation adult children (both married) who work part time on the farmer’s operation. This farm operation
could potential y be eligible for 12 individual payment limitscould potential y be eligible for 12 individual payment limits (six on the core farm operation and (six on the core farm operation and
six from the cousin’s six from the cousin’s family) for a total of $1.5 mil ionfamily) for a total of $1.5 mil ion in program payments. ~~in program payments. Six family~~
~~members would have to meet the AEF criteria, but the six spouses would be deemed to have met~~
~~the AEF requirement. However, the farming operation would have to be sufficiently large or~~
~~complex because each of the six family members subject to the AEF requirements must~~
~~necessarily perform at least 500 hours of personal labor or management work each year.~~
Multiple Payment Limits for a Partnership
A partnership’s potential payment limit is equal to the limit for a single person times the number A partnership’s potential payment limit is equal to the limit for a single person times the number
of persons or legal entities that comprise the ownership of the joint operation plus any additional of persons or legal entities that comprise the ownership of the joint operation plus any additional
exemptions or exceptions. Adding a new member can provide one or two (with qualifying exemptions or exceptions. Adding a new member can provide one or two (with qualifying
spouse) additional payment limits. spouse) additional payment limits.
Each member of a partnership or joint venture must meet the AEF criteria and must be within the Each member of a partnership or joint venture must meet the AEF criteria and must be within the
AGI limit. Furthermore, the partnership’s total payment limit is reduced by the share of each AGI limit. Furthermore, the partnership’s total payment limit is reduced by the share of each
single member who has already met his or her payment limit (or portion thereof) on another farm single member who has already met his or her payment limit (or portion thereof) on another farm
operation outside of the partnership. operation outside of the partnership.
~~Single Payment Limit for a Corporation~~
~~A corporation is treated as a single person for purposes of determining eligibility and payment~~
~~limits for farm bil authorized support programs75—provided that the entity meets the AEF~~

73 75 USDA, “Coronavirus Food Assistance Program, Final Rule,” 85 USDA, “Coronavirus Food Assistance Program, Final Rule,” 85 Federal Register 59380, September 22, 2020. 59380, September 22, 2020.
7476 USDA, “Payment Limitation and Payment Eligibility,” Final Rule, USDA, “Payment Limitation and Payment Eligibility,” Final Rule, 858 5 Federal Register 52033, August 24, 2020. 52033, August 24, 2020.
~~75 T hat is, farm programs authorized under omnibus farm legislation and subject to standard payment limits, such as~~
~~ARC and PLC~~77 USDA, “Payment Limitation and Payment Eligibility,” Correcting amendment, 8 5 Federal Register 73601, November 19, 2020. .
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Single Payment Limit for a Corporation A corporation is treated as a single person for purposes of determining eligibility and payment limits for farm bil authorized support programs78—provided that the entity meets the AEF criteria. Adding a new member to the corporation general y does not affect the payment limit but criteria. Adding a new member to the corporation general y does not affect the payment limit but
rather increases the number of members that share the single payment limit. However, as rather increases the number of members that share the single payment limit. However, as
described in the previous section, corporate entities are treated differently under the CFAP described in the previous section, corporate entities are treated differently under the CFAP
programs. programs.
Special Payment Limits Under CFAP for a Corporate Entity
Depending on the number of shareholders that contributed at least 400 hours of personal labor or Depending on the number of shareholders that contributed at least 400 hours of personal labor or
management time to the operation of a corporate entity, it may be eligible for up to three payment management time to the operation of a corporate entity, it may be eligible for up to three payment
limits or $750,000 in payments under each of CFAP-1 and CFAP-2. The “special payment limit” limits or $750,000 in payments under each of CFAP-1 and CFAP-2. The “special payment limit”
for corporate entities initial y created under CFAP-1 has been extended to CFAP-2 but with two for corporate entities initial y created under CFAP-1 has been extended to CFAP-2 but with two
changes in its application with respect to CFAP-2 payments: (1) the special payment limit is changes in its application with respect to CFAP-2 payments: (1) the special payment limit is
extended to trust and estates; and (2) the method of payment attribution for individuals within a extended to trust and estates; and (2) the method of payment attribution for individuals within a
corporate entity is altered such that an individual’s total payments are not reduced based on corporate entity is altered such that an individual’s total payments are not reduced based on
ownership share in the corporate entity. ownership share in the corporate entity.7679
Supplemental Assistance Programs Subject to Payment Limits
In FY2018 and FY2019, Congress provided several supplemental appropriations for production In FY2018 and FY2019, Congress provided several supplemental appropriations for production
losses resulting from natural disasters and not covered by NAP or crop insurance. The majority of losses resulting from natural disasters and not covered by NAP or crop insurance. The majority of
the supplemental funding has been administered by USDA through two versions of a similar the supplemental funding has been administered by USDA through two versions of a similar
program—the Wildfires and Hurricanes Indemnity Program (WHIP). Losses occurring in 2017 program—the Wildfires and Hurricanes Indemnity Program (WHIP). Losses occurring in 2017
were eligible for the “2017 WHIP.”were eligible for the “2017 WHIP.”7780 An expanded set of losses occurring in 2018 and 2019 are An expanded set of losses occurring in 2018 and 2019 are
eligible for “WHIP Plus” (referred to as WHIP+).eligible for “WHIP Plus” (referred to as WHIP+).7881 In addition to WHIP+, USDA implemented In addition to WHIP+, USDA implemented
two other ad hoc programs—the On-Farm Storage Loss Program and the Milk Loss Program—as two other ad hoc programs—the On-Farm Storage Loss Program and the Milk Loss Program—as
wel as block grants with states.wel as block grants with states.7982 USDA established payment limits for WHIP under authority USDA established payment limits for WHIP under authority
granted to the Secretary in authorizing legislation. granted to the Secretary in authorizing legislation.8083
Payment limits for 2017 WHIP and WHIP+ are based on an individual’s or entity’s average AGI Payment limits for 2017 WHIP and WHIP+ are based on an individual’s or entity’s average AGI
over a three-year period depending on how much of that income is derived from farmingover a three-year period depending on how much of that income is derived from farming (Table
3). Producers are assumed to be in the lowest payment limit category unless an exception to the . Producers are assumed to be in the lowest payment limit category unless an exception to the
payment limit is filed using a USDApayment limit is filed using a USDA form and documentation from a certified public accountant form and documentation from a certified public accountant
or attorney that at least 75% of the person’s or legal entity’s average AGI was from adjusted gross or attorney that at least 75% of the person’s or legal entity’s average AGI was from adjusted gross
farm income.farm income.8184 Unlike the aforementioned AGI consent form (CCC-941), verification of payment Unlike the aforementioned AGI consent form (CCC-941), verification of payment
~~limit exceptions is not submitted to the IRS for the WHIP programs. Direct attribution applies for~~
~~both payment limits and for determining average AGI.~~

76 78 T hat is, farm programs authorized under omnibus farm legislation and subject to standard payment limits, such as ARC and PLC. 79 USDA, “Coronavirus Food Assistance Program, Final Rule,” 85 USDA, “Coronavirus Food Assistance Program, Final Rule,” 85 Federal Register 59380, September 22, 2020. 59380, September 22, 2020.
7780 Funding was authorized in the Bipartisan Budget Act of 2018 (P.L. 115-123). T he FY2020 Further Consolidated Funding was authorized in the Bipartisan Budget Act of 2018 (P.L. 115-123). T he FY2020 Further Consolidated
Appropriations Act (P.L. 116-94) rescinded the unobligated balance of 2017 WHIP and repurposed the funding to the Appropriations Act (P.L. 116-94) rescinded the unobligated balance of 2017 WHIP and repurposed the funding to the
current WHIP+, which was further amended by the act. current WHIP+, which was further amended by the act.
7881 Funding was authorized in the Additional Supplemental Appropriations for Disaster Relief Act of 2019 ( Funding was authorized in the Additional Supplemental Appropriations for Disaster Relief Act of 2019 ( P.L. 116-P.L. 116-
20). For more information, see CRS In Focus IF11245, 20). For more information, see CRS In Focus IF11245, FY2019 Supplemental Appropriations for Agriculture. .
7982 Eligibility requirements and payment limits for subprograms and block grants may vary from the WHIP programs. Eligibility requirements and payment limits for subprograms and block grants may vary from the WHIP programs.
For more information, see CRS Report RS21212, For more information, see CRS Report RS21212, Agricultural Disaster Assistance. .
8083 See footnot See footnote 7780 and footnot and footnote 7881. .
8184 Farm income includes income received or obtained from farming, ranching, and forestry operations. Farm income includes income received or obtained from farming, ranching, and forestry operations.
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limit exceptions is not submitted to the IRS for the WHIP programs. Direct attribution applies for both payment limits and for determining average AGI. Table 3. Wildfires and Hurricanes Indemnity Program Payment Limits

2017 WHIP
WHIP+
Tax years used to calculate AGI Tax years used to calculate AGI
2013, 2014, 2015 2013, 2014, 2015
2015, 2016, 2017 2015, 2016, 2017
If average AGI is:
Then the payment limit is:
Then the payment limit is:
Less than 75% from farming Less than 75% from farming
$125,000, for combined crop years $125,000, for combined crop years
$125,000, for combined crop years $125,000, for combined crop years
2017 and 2018 2017 and 2018
2018, 2019, and 2020 2018, 2019, and 2020
More than 75% from farming More than 75% from farming
$900,000, for combined crop years $900,000, for combined crop years
$250,000, for each crop year, not to $250,000, for each crop year, not to
(Exception) (Exception)
2017 and 2018 2017 and 2018
exceed $500,000 combined for crop exceed $500,000 combined for crop
years 2018, 2019, and 2020 years 2018, 2019, and 2020
Form required for exception Form required for exception
FSA-892 FSA-892
FSA-896 FSA-896
Source: CRS using 7 C.F.R. §760.1500 et seq. CRS using 7 C.F.R. §760.1500 et seq.
Conservation Programs Subject to Payment Limits
Payment limits on conservation programs existed long before limits were applied to farm support Payment limits on conservation programs existed long before limits were applied to farm support
programs.programs.8285 Most current conservation programs include some limit on the amount of funding a Most current conservation programs include some limit on the amount of funding a
participant may receive, but these limits vary by program. Some programs have multiple limits participant may receive, but these limits vary by program. Some programs have multiple limits
that vary based on activity or practice implemented. Several major conservation programs in Title that vary based on activity or practice implemented. Several major conservation programs in Title
II of the 2018 farm bil are currently subject to payment limits. II of the 2018 farm bil are currently subject to payment limits.8386
  Conservation Reserve Program (CRP). Payments for CRP can vary based on Payments for CRP can vary based on
the type of contract and type of payment. In general, annual rental payments for the type of contract and type of payment. In general, annual rental payments for
general enrollment contracts and continuous enrol ment contracts are limited to general enrollment contracts and continuous enrol ment contracts are limited to
85% and 90% of the average county rental rate, respectively, and not more than 85% and 90% of the average county rental rate, respectively, and not more than
$50,000 total per year per person. Cost-share payments and incentive payments $50,000 total per year per person. Cost-share payments and incentive payments
are also limited and may be waived or applied at different levels under are also limited and may be waived or applied at different levels under
subprograms of CRP, such as land enrolled under the Conservation Reserve subprograms of CRP, such as land enrolled under the Conservation Reserve
Enhancement Program or the Soil Health and Income Protection Pilot.Enhancement Program or the Soil Health and Income Protection Pilot.8487
  Environmental Quality Incentives Program (EQIP). Total cost-share and Total cost-share and
incentive payments are limited to $450,000 for al EQIP contracts entered into by incentive payments are limited to $450,000 for al EQIP contracts entered into by
a person or legal entity between FY2019 and FY2023. Additional limits apply to a person or legal entity between FY2019 and FY2023. Additional limits apply to
select EQIP contract payments, including incentive contract payments, which are select EQIP contract payments, including incentive contract payments, which are
limited to a total of $200,000 between FY2019 and FY2023; payments for EQIP limited to a total of $200,000 between FY2019 and FY2023; payments for EQIP
conservation practices related to organic production, which are limited to a total conservation practices related to organic production, which are limited to a total
of $140,000 between FY2019 and FY2023; and eligible water management of $140,000 between FY2019 and FY2023; and eligible water management
~~entity payments, which are limited to a total of $900,000 between FY2019 and~~
~~FY2023.~~
~~ Conservation Stewardship Program (CSP). A person or legal entity may not~~
~~receive more than a total of $200,000 for al CSP contracts between FY2019 and~~

8285 For example, the Agricultural Adjustment Act of 1938 (P.L. 75 -430, §102) amended the Soil Conservation and For example, the Agricultural Adjustment Act of 1938 (P.L. 75 -430, §102) amended the Soil Conservation and
Domestic Allotment Act (49 Stat. 1149; 50 Stat. 329) to limit payments for soil conservation assistance to $10,000 per Domestic Allotment Act (49 Stat. 1149; 50 Stat. 329) to limit payments for soil conservation assistance to $10,000 per
year per person. year per person.
8386 T he programs discussed in this section do not represent a comprehensive list of conservation programs and benefits. T he programs discussed in this section do not represent a comprehensive list of conservation programs and benefits.
Instead, this section focuses on the largest programs (by funding level). For a more comprehensive list of conservation Instead, this section focuses on the largest programs (by funding level). For a more comprehensive list of conservation
programs and provisions under the conservation title of the 2018 farm bill, see CRS Report R45698, programs and provisions under the conservation title of the 2018 farm bill, see CRS Report R45698, Agricultural
Conservation in the 2018 Farm Bill. .
8487 Cost-share and incentive payments are typically one-time payments under CRP and therefore not discussed in detail Cost-share and incentive payments are typically one-time payments under CRP and therefore not discussed in detail
in this report. For additional information on these limits, see CRS Report R45698, in this report. For additional information on these limits, see CRS Report R45698, Agricultural Conservation in the
2018 Farm Bill. .
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entity payments, which are limited to a total of $900,000 between FY2019 and FY2023.  Conservation Stewardship Program (CSP). A person or legal entity may not receive more than a total of $200,000 for al CSP contracts between FY2019 and FY2023. A CSP contract with any joint operation is limited to $400,000 over the FY2023. A CSP contract with any joint operation is limited to $400,000 over the
term of the contract period. These limits do not apply to the CSP Grassland term of the contract period. These limits do not apply to the CSP Grassland
Conservation Initiative, in which annual payments are limited to $18 per acre, not Conservation Initiative, in which annual payments are limited to $18 per acre, not
to exceed the number of base acres on a farm. to exceed the number of base acres on a farm.
Exceptions That Avoid Payment Limits
Payments under certain Title I and Title II programs in the 2018 farm bil are excluded from Payments under certain Title I and Title II programs in the 2018 farm bil are excluded from
annual payment limits. These programs without payment limits are described below, by farm bil annual payment limits. These programs without payment limits are described below, by farm bil
title and subtitle. Another exception to payment limits could result if the principal operator of a title and subtitle. Another exception to payment limits could result if the principal operator of a
farm operation, or a major partner, dies during the course of a program year and any associated farm operation, or a major partner, dies during the course of a program year and any associated
program benefits for the deceased are transferred to another farm operator or partner (seeprogram benefits for the deceased are transferred to another farm operator or partner (see “Death
of a Principal Operator” later in this report for details). later in this report for details).
Selected Farm Programs Without Payment Limits
Certain farm programs are not subject to annual payment limits. This includes any benefits Certain farm programs are not subject to annual payment limits. This includes any benefits
obtainable under the Marketing Assistance Loan (MAL) program, the sugar program, the dairy obtainable under the Marketing Assistance Loan (MAL) program, the sugar program, the dairy
program, and three of the four disaster assistance programs (ELAP, LIP, and TAP). Also, benefits program, and three of the four disaster assistance programs (ELAP, LIP, and TAP). Also, benefits
from crop insurance premium subsidies and indemnity payments on loss claims are not subject to from crop insurance premium subsidies and indemnity payments on loss claims are not subject to
any limits. Final y, any payments made under the Emergency Watershed Protection Program any limits. Final y, any payments made under the Emergency Watershed Protection Program
(EWP) are not subject to payment limits. (EWP) are not subject to payment limits.
  Title I (Subtitle B) MAL program. Benefits under the MAL program include Benefits under the MAL program include
loan deficiency payments (LDP), marketing loan gains (MLG), and gains under loan deficiency payments (LDP), marketing loan gains (MLG), and gains under
forfeiture or commodity certificate exchanges. Traditional y, MAL benefits in the forfeiture or commodity certificate exchanges. Traditional y, MAL benefits in the
form of LDPs and MLGs have been subject to payment limits, whereas MAL form of LDPs and MLGs have been subject to payment limits, whereas MAL
benefits derived from forfeiting to the CCC the quantity of a commodity pledged benefits derived from forfeiting to the CCC the quantity of a commodity pledged
as collateral for a marketing assistance loan, or from use of commodity as collateral for a marketing assistance loan, or from use of commodity
certificates to repay a marketing assistance loan, have traditional y been excluded certificates to repay a marketing assistance loan, have traditional y been excluded
from payment limits. However, the 2018 farm bil (§1703(a)(2)) excluded al from payment limits. However, the 2018 farm bil (§1703(a)(2)) excluded al
MAL benefits from payment limits. MAL benefits from payment limits.
  Title I (Subtitle C) sugar program. The U.S. sugar program does not rely on The U.S. sugar program does not rely on
direct payments from USDA and general y operates with no federal budget direct payments from USDA and general y operates with no federal budget
outlays. outlays.8588 Instead, the sugar program provides indirect price support to producers Instead, the sugar program provides indirect price support to producers
of sugar beets and sugarcane and direct price guarantees to the processors of both of sugar beets and sugarcane and direct price guarantees to the processors of both
crops in the form of a marketing assistance loan at statutorily fixed prices.crops in the form of a marketing assistance loan at statutorily fixed prices.8689
Congress has directed USDA to administer the U.S. sugar program at no Congress has directed USDA to administer the U.S. sugar program at no
budgetary cost to the federal government by limiting the amount of sugar budgetary cost to the federal government by limiting the amount of sugar
supplied for food use in the U.S. market, thus indirectly supporting market prices. supplied for food use in the U.S. market, thus indirectly supporting market prices.
This indirect subsidy is implicit and not subject to budgetary restrictions. This indirect subsidy is implicit and not subject to budgetary restrictions.
~~Furthermore, there is no citizenship requirement for a sugar processor, but the~~
~~sugarcane and sugar beets being processed under the U.S. sugar program price~~
~~guarantees must be of U.S. origin.~~

8588 For more information, see CRS Report R43998, For more information, see CRS Report R43998, U.S. Sugar Program Fundamentals. .
8689 Both sugar and dairy producers receive additional indirect price support in the form of tariff -rate quota (T RQ) Both sugar and dairy producers receive additional indirect price support in the form of tariff -rate quota (T RQ)
protection from imports. However, T RQ-related indirect support is not considered in this discussion because T RQs are protection from imports. However, T RQ-related indirect support is not considered in this discussion because T RQs are
not based on policy set in the farm bill. not based on policy set in the farm bill.
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Furthermore, there is no citizenship requirement for a sugar processor, but the sugarcane and sugar beets being processed under the U.S. sugar program price guarantees must be of U.S. origin.   Title I (Subtitle D) dairy program. The margin-based dairy support program The margin-based dairy support program
was first established under the 2014 farm bil (§§1401-1431) without payment was first established under the 2014 farm bil (§§1401-1431) without payment
limits as the Margin Protection Program (MPP) for dairy.limits as the Margin Protection Program (MPP) for dairy.8790 The MPP was revised The MPP was revised
and renamed as the Dairy Margin Coverage (DMC) program by the 2018 farm and renamed as the Dairy Margin Coverage (DMC) program by the 2018 farm
bil . Under the DMC, participants benefit from two potential types of support: an bil . Under the DMC, participants benefit from two potential types of support: an
implicit premium subsidy and an indemnity-like payment made when program implicit premium subsidy and an indemnity-like payment made when program
price triggers are met. The fees or premiums charged for participating in the price triggers are met. The fees or premiums charged for participating in the
DMC are set in statute rather than being set annual y based on historical data and DMC are set in statute rather than being set annual y based on historical data and
market conditions. Thus, the subsidy is implicit to the premium paid with no market conditions. Thus, the subsidy is implicit to the premium paid with no
limit on the level of participation. Similarly, any payments made under the DMC limit on the level of participation. Similarly, any payments made under the DMC
are not subject to payment limits. are not subject to payment limits.
  Title I (Subtitle E) disaster assistance programs: ELAP, LIP, and TAP. .
Payments under three of the disaster assistance programs in Title I of the 2018 Payments under three of the disaster assistance programs in Title I of the 2018
farm bil are excluded from any payment limits. This includes ELAP, LIP, and farm bil are excluded from any payment limits. This includes ELAP, LIP, and
TAP.TAP.8891
  Title II conservation programs. Total payments under certain conservation Total payments under certain conservation
programs are limited to the value or cost of the specific conservation measure programs are limited to the value or cost of the specific conservation measure
that the program is paying for rather than a fixed dollar limit. Under the that the program is paying for rather than a fixed dollar limit. Under the
Agricultural Conservation Easement Program and the EWP program, payments Agricultural Conservation Easement Program and the EWP program, payments
are limited to a portion of the total cost of the easement or project rather than a are limited to a portion of the total cost of the easement or project rather than a
dollar amount. In the case of the Regional Conservation Partnership Program dollar amount. In the case of the Regional Conservation Partnership Program
(RCPP), USDA may make payments to producers in an amount necessary to (RCPP), USDA may make payments to producers in an amount necessary to
achieve the purposes of the program with no statutory limit on the total amount. achieve the purposes of the program with no statutory limit on the total amount.
  Title XI crop- and livestock-related insurance premium subsidies and
indemnity payments. The principal support provided for farmers under the The principal support provided for farmers under the
federal crop insurance program are federal premium subsidies for both federal crop insurance program are federal premium subsidies for both
catastrophic and buy-up insurance coverage.catastrophic and buy-up insurance coverage.8992 Premium subsidies are not subject Premium subsidies are not subject
to any limit on the level of participation or underlying value. Crop insurance to any limit on the level of participation or underlying value. Crop insurance
indemnities are payments made to cover insurable losses and thus are not subject indemnities are payments made to cover insurable losses and thus are not subject
to any payment limit. To be eligible to purchase catastrophic risk protection to any payment limit. To be eligible to purchase catastrophic risk protection
coverage, the producer must be a “person” as defined by USDA, be eligible to coverage, the producer must be a “person” as defined by USDA, be eligible to
purchase any other plan of insurance (such as buy-up coverage, among others), purchase any other plan of insurance (such as buy-up coverage, among others),
and be at least 18 years of age and have a bona fide insurable interest in a crop as and be at least 18 years of age and have a bona fide insurable interest in a crop as
an owner-operator, landlord, tenant, or sharecropper. an owner-operator, landlord, tenant, or sharecropper.
~~Death of a Principal Operator~~
~~A noteworthy exception to payment limits may occur if the principal operator should die during~~
~~the crop year. In particular, payments received directly or indirectly by a qualifying person (i.e.,~~
~~someone who meets AEF, AGI, and any other eligibility requirements) may exceed the applicable~~

87 90 See CRS Report R43465, See CRS Report R43465, Dairy Provisions in the 2014 Farm Bill (P.L. 113-79). .
8891 See footnot See footnote 6668 for a narrative of when these limits were removed. For more information on the disaster assistance for a narrative of when these limits were removed. For more information on the disaster assistance
programs, see CRS Report RS21212, programs, see CRS Report RS21212, Agricultural Disaster Assistance. .
8992 USDA’s Risk Management Agency pays for a portion of the premium cost to purchase crop insurance coverage. T his USDA’s Risk Management Agency pays for a portion of the premium cost to purchase crop insurance coverage. T his
subsidy has averaged $6.4 billion per year from 2011 to 2018. Premiums are charged on a per-acre basis and rise with subsidy has averaged $6.4 billion per year from 2011 to 2018. Premiums are charged on a per-acre basis and rise with
the value of the insured crop. As a result, larger farmers receive greater premium subsidy support than do smaller the value of the insured crop. As a result, larger farmers receive greater premium subsidy support than do smaller
farmers. However, Congress has refrained from imposing any payment limits on the premium subsidy out of concern farmers. However, Congress has refrained from imposing any payment limits on the premium subsidy out of concern
that such a limit would discourage participation. For more information, see CRS Report R43758, that such a limit would discourage participation. For more information, see CRS Report R43758, Farm Safety Net
Program s: Background and Issues. .
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Death of a Principal Operator A noteworthy exception to payment limits may occur if the principal operator should die during the crop year. In particular, payments received directly or indirectly by a qualifying person (i.e., someone who meets AEF, AGI, and any other eligibility requirements) may exceed the applicable limitation if al of the following apply: ownership interest in farmland or agricultural limitation if al of the following apply: ownership interest in farmland or agricultural
commodities was transferred because of death, the new owner is the successor to the previous commodities was transferred because of death, the new owner is the successor to the previous
owner’s contract, and the new owner meets al other eligibility requirements. This provision also owner’s contract, and the new owner meets al other eligibility requirements. This provision also
applies to an ownership interest in a legal entity received by inheritance if the legal entity was the applies to an ownership interest in a legal entity received by inheritance if the legal entity was the
owner of the land enrolled in an annual or multiyear farm program contract or agreement at the owner of the land enrolled in an annual or multiyear farm program contract or agreement at the
time of the shareholder’s death. time of the shareholder’s death.
The new owner cannot exceed the payment amount that the previous owner was entitled to The new owner cannot exceed the payment amount that the previous owner was entitled to
receive under the applicable program contracts at the time of death. However, the new payment receive under the applicable program contracts at the time of death. However, the new payment
limit associated with this transfer would be in addition to the payment limit of the person’s own limit associated with this transfer would be in addition to the payment limit of the person’s own
farm operation. If the new owner meets al program and payment eligibility requirements, this farm operation. If the new owner meets al program and payment eligibility requirements, this
provision applies for one program year for ARC and PLC. This reflects the idea that individual provision applies for one program year for ARC and PLC. This reflects the idea that individual
resources were committed by both farming operations (the deceased’s and the inheritor’s) during resources were committed by both farming operations (the deceased’s and the inheritor’s) during
the growing season with no expectation of death and that individual payment limits should reflect the growing season with no expectation of death and that individual payment limits should reflect
that resource commitment and not impose an unnecessary and unexpected burden on the inheritor. that resource commitment and not impose an unnecessary and unexpected burden on the inheritor.
Issues for Congress
Limitations on farm program payments raise a number of issues that have led to debate among Limitations on farm program payments raise a number of issues that have led to debate among
farm policymakers and agricultural stakeholders and may continue to be of interest to Congress as farm policymakers and agricultural stakeholders and may continue to be of interest to Congress as
it considers issues of equity and efficiency in farm programs. it considers issues of equity and efficiency in farm programs.
Payment Limits and Market Signals
Theoretical y, market prices—based on relative supply and demand conditions under competitive Theoretical y, market prices—based on relative supply and demand conditions under competitive
market market ~~conditions90~~conditions93—provide the most useful signals for al ocating scarce resources. In other —provide the most useful signals for al ocating scarce resources. In other
words, in a situation where no policy support is available, most producers would make production words, in a situation where no policy support is available, most producers would make production
decisions based primarily on market conditions. If these conditions hold, then tighter payment decisions based primarily on market conditions. If these conditions hold, then tighter payment
limits (i.e., a smal er role for government support policies and production incentives) would limits (i.e., a smal er role for government support policies and production incentives) would
imply that more land would be farmed based on market conditions and less land would be farmed imply that more land would be farmed based on market conditions and less land would be farmed
based on policy choices. based on policy choices.
Supporters of payment limits use both economic and political arguments to justify tighter limits. Supporters of payment limits use both economic and political arguments to justify tighter limits. 9194
Economical y, they contend that large payments facilitate consolidation of farms into larger units, Economical y, they contend that large payments facilitate consolidation of farms into larger units,
raise the price of land, and put smal er, family-sized farming operations and beginning farmers at raise the price of land, and put smal er, family-sized farming operations and beginning farmers at
a disadvantage. Even though tighter limits would not redistribute benefits to smal er farms, they a disadvantage. Even though tighter limits would not redistribute benefits to smal er farms, they
contend that tighter limits could help indirectly by reducing incentives to expand, thus potential y contend that tighter limits could help indirectly by reducing incentives to expand, thus potential y
reducing upward price pressure on land markets. This could help smal and beginning farmers reducing upward price pressure on land markets. This could help smal and beginning farmers
~~buy and rent land. Political y, they believe that large payments are costly and undermine public~~
~~support for farm subsidies. In the past, newspapers have published stories critical of farm~~
~~payments and how they are distributed to large farms, non-farmers, or landowners.92 Limits~~

9093 Competitive market conditions include transparent, easily accessible knowledge of market conditions by all Competitive market conditions include transparent, easily accessible knowledge of market conditions by all
participants; no barriers to entry or exit; relatively homogeneous goods; a large number of market participants, all of participants; no barriers to entry or exit; relatively homogeneous goods; a large number of market participants, all of
which behave rationally and are price takers; no externalities; and the absence of intrusive government regulation. Paul which behave rationally and are price takers; no externalities; and the absence of intrusive government regulation. Paul
Krugman and Robin Wells, Krugman and Robin Wells, Microeconom ics, 2nd ed. (New York: Worth Publishers, 2009). , 2nd ed. (New York: Worth Publishers, 2009).
9194 For example, see National Sustainable Agriculture Coalition, “2014 Farm Bill Drilldown: Subsidy Reform and Fair For example, see National Sustainable Agriculture Coalition, “2014 Farm Bill Drilldown: Subsidy Reform and Fair
Competition,” February 14, 2014, http://sustainableagriculture.net/blog/farm-bill-subsidy-reform/. Competition,” February 14, 2014, http://sustainableagriculture.net/blog/farm-bill-subsidy-reform/.
~~92 For example, see the Washington Post series “Harvesting Cash,” published in 2006, at~~
~~http://www.washingtonpost.com/wp-srv/nation/interactives/farmaid/.~~
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Congressional Research Service 23 U.S. Farm Programs: Eligibility and Payment Limits buy and rent land. Political y, they believe that large payments are costly and undermine public support for farm subsidies. In the past, newspapers have published stories critical of farm payments and how they are distributed to large farms, non-farmers, or landowners.95 Limits increasingly tend to appeal to urban lawmakers and have advocates among smal er farms and increasingly tend to appeal to urban lawmakers and have advocates among smal er farms and
social interest groups. social interest groups.
Critics of payment limits (and thus supporters of higher limits or no limits) counter that al farms Critics of payment limits (and thus supporters of higher limits or no limits) counter that al farms
are in need of support, especial y when market prices decline, and that larger farms should not be are in need of support, especial y when market prices decline, and that larger farms should not be
penalized for the economies of size and efficiencies they have achieved. They say that farm penalized for the economies of size and efficiencies they have achieved. They say that farm
payments help U.S. agriculture compete in global markets and that income testing is at odds with payments help U.S. agriculture compete in global markets and that income testing is at odds with
federal farm policies directed toward improving U.S. agriculture and its competitiveness. federal farm policies directed toward improving U.S. agriculture and its competitiveness.
In addition to these concerns, this section briefly reviews other selected payment limit issues and In addition to these concerns, this section briefly reviews other selected payment limit issues and
eligibility requirements. eligibility requirements.
Distributional Impacts on Farm Size
The majority of farm payments go to a smal share of large operators. According to USDA’s 2017 The majority of farm payments go to a smal share of large operators. According to USDA’s 2017
Agricultural Census, farms with market revenue equal to or greater than $250,000 accounted for Agricultural Census, farms with market revenue equal to or greater than $250,000 accounted for
12% of farm households but produced 90% of the value of total U.S. agricultural production and 12% of farm households but produced 90% of the value of total U.S. agricultural production and
received 62% of federal farm program payments. received 62% of federal farm program payments.
Selecting a particular dollar value as a limit on annual government support payments involves a Selecting a particular dollar value as a limit on annual government support payments involves a
fundamental choice about who should benefit from farm program payments. This has important, fundamental choice about who should benefit from farm program payments. This has important,
but complex, policy implications. For example, numerous academic studies have shown that but complex, policy implications. For example, numerous academic studies have shown that
government payments are usual y capitalized into cropland values, thus raising rental rates and government payments are usual y capitalized into cropland values, thus raising rental rates and
land prices. Higher land values disfavor beginning and smal farmers, who general y have limited land prices. Higher land values disfavor beginning and smal farmers, who general y have limited
access to capital. As a result, proponents of tighter payment limits contend that there is a lack of access to capital. As a result, proponents of tighter payment limits contend that there is a lack of
equity and fairness under the current system of farm program payments that appears to favor equity and fairness under the current system of farm program payments that appears to favor
large operations over smal and that payment limits are real y about farm size. large operations over smal and that payment limits are real y about farm size.
In contrast, supporters of the current system argue that larger farms tend to be more efficient In contrast, supporters of the current system argue that larger farms tend to be more efficient
operators and that altering the system in favor of smal er operators may create inefficiencies and operators and that altering the system in favor of smal er operators may create inefficiencies and
reduce U.S. competitiveness in international markets. Furthermore, they contend that tightening reduce U.S. competitiveness in international markets. Furthermore, they contend that tightening
payment limits wil have different effects across crops, thus resulting in uneven and potential y payment limits wil have different effects across crops, thus resulting in uneven and potential y
harmful regional effects. harmful regional effects.
Potential Crop and Regional Effects of Tighter Payment Limits
Tighter payment limits do not affect al crops and regions equal y. As limits are tightened, they Tighter payment limits do not affect al crops and regions equal y. As limits are tightened, they
wil likely first impact those crops with higher per-unit and per-acre production value. Among the wil likely first impact those crops with higher per-unit and per-acre production value. Among the
major U.S. program crops, higher valued crops include rice, peanuts, and cotton, al of which tend major U.S. program crops, higher valued crops include rice, peanuts, and cotton, al of which tend
to be produced in the Southeast, the Mississippi Delta, and western states. to be produced in the Southeast, the Mississippi Delta, and western states.9396
Furthermore, payment limits may influence local economic activity. In particular, payment limits Furthermore, payment limits may influence local economic activity. In particular, payment limits
are likely to have a larger economic impact in regions where agricultural production accounts for are likely to have a larger economic impact in regions where agricultural production accounts for
a larger share of economic output—that is in rural, agriculture-based counties—and where there a larger share of economic output—that is in rural, agriculture-based counties—and where there
~~may be fewer opportunities for diversification to offset any payment-limit-induced reduction in~~
~~agricultural incomes.~~

93 95 For example, see the Washington Post series “Harvesting Cash,” published in 2006, at http://www.washingtonpost.com/wp-srv/nation/interactives/farmaid/. 96 Food and Agricultural Policy Research Institute, Food and Agricultural Policy Research Institute, Stricter Payment Limits, June 17, 2003; and , June 17, 2003; and Stricter Payment
Lim its: Additional Inform ation, June 24, 2003. , June 24, 2003.
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may be fewer opportunities for diversification to offset any payment-limit-induced reduction in agricultural incomes. Separate Payment Limit for Peanuts
Under current law, peanuts have a separate program payment limit—a consequence of the 2002 Under current law, peanuts have a separate program payment limit—a consequence of the 2002
federal quota buyout (P.L. 107-171, §1603).federal quota buyout (P.L. 107-171, §1603).9497 This separate payment limit affords peanut This separate payment limit affords peanut
production an advantage over production of other program crops that are subject to combined production an advantage over production of other program crops that are subject to combined
payments for ARC and PLC under a single limit. As a result of this feature, a farmer who grows payments for ARC and PLC under a single limit. As a result of this feature, a farmer who grows
multiple multiple program crops including peanuts has essential y two different program payment limits: program crops including peanuts has essential y two different program payment limits:
1. $125,000 per person for an aggregation of ARC and PLC program payments 1. $125,000 per person for an aggregation of ARC and PLC program payments
made to al program crops other than peanuts, and made to al program crops other than peanuts, and
2. $125,000 per person for ARC and PLC program payments made exclusively to 2. $125,000 per person for ARC and PLC program payments made exclusively to
peanuts. peanuts.
Thus, under an extreme scenario involving large payments for both peanuts and other program Thus, under an extreme scenario involving large payments for both peanuts and other program
crops, this could potential y double a peanut farmer’s payment limits to as much as $250,000. crops, this could potential y double a peanut farmer’s payment limits to as much as $250,000.
No Payment Limit on MAL Benefits
The 2018 farm bil (§1703) excluded MAL benefits from any payment limit while also raising the The 2018 farm bil (§1703) excluded MAL benefits from any payment limit while also raising the
MAL rates for several program crops (§1202), including barley, corn, grain sorghum, oats, extra-MAL rates for several program crops (§1202), including barley, corn, grain sorghum, oats, extra-
long-staple cotton, rice, soybeans, dry peas, lentils, and smal and large chickpeas. long-staple cotton, rice, soybeans, dry peas, lentils, and smal and large chickpeas.
Raising MAL rates has two potential program effects. First, since MAL rates function as floor Raising MAL rates has two potential program effects. First, since MAL rates function as floor
prices for eligible loan commodities, higher rates increase the potential for greater USDA outlays prices for eligible loan commodities, higher rates increase the potential for greater USDA outlays
under MAL. Second, MAL rates are used to establish the floor price in calculating the maximum under MAL. Second, MAL rates are used to establish the floor price in calculating the maximum
payment under PLC. Thus, raising the loan rate for a program commodity lowers its potential payment under PLC. Thus, raising the loan rate for a program commodity lowers its potential
PLC program payment rate. PLC program payment rate.
The absence of a limit on benefits received under the MAL program creates the potential for The absence of a limit on benefits received under the MAL program creates the potential for
unlimited,unlimited, fully coupled USDA farm support outlays. As a result, an apparent equity issue fully coupled USDA farm support outlays. As a result, an apparent equity issue
emerges when comparing program benefits of a producer facing a hard cap for ARC and PLC emerges when comparing program benefits of a producer facing a hard cap for ARC and PLC
payments as compared to a producer with access to MAL benefits. payments as compared to a producer with access to MAL benefits.
Because MAL payments are fully coupled—that is, tied to the production of a specific crop— Because MAL payments are fully coupled—that is, tied to the production of a specific crop—
MAL program outlays count directly against U.S. amber box spending limits under World Trade MAL program outlays count directly against U.S. amber box spending limits under World Trade
Organization (WTO) commitments.Organization (WTO) commitments.9598 To the extent that such program outlays might induce To the extent that such program outlays might induce
surplus production and depress market prices, they could result in potential chal enges under the surplus production and depress market prices, they could result in potential chal enges under the
WTO’s dispute settlement mechanism. WTO’s dispute settlement mechanism.96
~~Policy Design Considerations~~
~~When eligibility requirements or payment limits are changed, economically rational producers are~~
~~likely to alter their behavior to make adjustments to optimize net revenue under the new set of~~
~~policy and market circumstances. For example, new eligibility requirements or tighter payment~~
~~limits may result in~~99

9497 For details, see CRS Report R44156, For details, see CRS Report R44156, U.S. Peanut Program and Issues; and Eric Dohlman et al., “ T he Post-Buyout ; and Eric Dohlman et al., “ T he Post-Buyout
Experience: Peanut and T obacco Sectors Adapt to Policy Reform ,” ERS, November 2009. Experience: Peanut and T obacco Sectors Adapt to Policy Reform ,” ERS, November 2009.
9598 According to WT O classifications, amber box programs are the most market -distorting type of programs and thus are According to WT O classifications, amber box programs are the most market -distorting type of programs and thus are
subject to strict aggregate annual spending limits. T he United States has committed to an annual spending limit of subject to strict aggregate annual spending limits. T he United States has committed to an annual spending limit of
$19.1 billion for amber box outlays. For more information, see CRS Report R45305, $19.1 billion for amber box outlays. For more information, see CRS Report R45305, Agriculture in the WTO: Rules
and Lim its on U.S. Dom estic Support. .
9699 See CRS Report R43817, See CRS Report R43817, 2014 Farm Bill Provisions and WTO Compliance. .
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Policy Design Considerations When eligibility requirements or payment limits are changed, economical y rational producers are likely to alter their behavior to make adjustments to optimize net revenue under the new set of policy and market circumstances. For example, new eligibility requirements or tighter payment limits may result in  a reorganization of the farm operation to increase the number of eligible persons  a reorganization of the farm operation to increase the number of eligible persons
or to lower the income that counts against a new AGI limit or the farm program or to lower the income that counts against a new AGI limit or the farm program
payments that count against a smal er payment limit; payments that count against a smal er payment limit;
 a change in the crop and program choices or marketing practices, for example, to  a change in the crop and program choices or marketing practices, for example, to
take advantage of the absence of a payment limit on MAL benefits; take advantage of the absence of a payment limit on MAL benefits;
 a change in crop choices, as agronomic and marketing opportunities al ow, to  a change in crop choices, as agronomic and marketing opportunities al ow, to
favor a crop with an expanded limit (e.g., peanuts) over crops with more favor a crop with an expanded limit (e.g., peanuts) over crops with more
restricted program payment opportunities; or restricted program payment opportunities; or
 a change in land use, such as instead of farming the same acreage, renting out or  a change in land use, such as instead of farming the same acreage, renting out or
sel ing some land to farmers who have not reached their payment limits. sel ing some land to farmers who have not reached their payment limits.
Payment limits applied per unit or per base acre represent an alternative to per-person payment Payment limits applied per unit or per base acre represent an alternative to per-person payment
limits that may mitigate some potential distortions to producer behavior. An example of such a limits that may mitigate some potential distortions to producer behavior. An example of such a
per-unit payment limit is the 85% payment reduction factor applied to base per-unit payment limit is the 85% payment reduction factor applied to base ~~acres97~~acres100 receiving receiving
payments under either the PLC or ARC programs. The reduction factor is applied equal y across payments under either the PLC or ARC programs. The reduction factor is applied equal y across
al program payments irrespective of crop choice, farm size, AGI, or total value of payments. al program payments irrespective of crop choice, farm size, AGI, or total value of payments.
AGI Limit Concerns: On- versus Off-Farm Income
The 2018 farm bil retained the $900,000 AGI limit established under the 2014 farm bil . This The 2018 farm bil retained the $900,000 AGI limit established under the 2014 farm bil . This
AGI limit applies to al farm income whether earned on the farm or off.AGI limit applies to al farm income whether earned on the farm or off.98101 Under the 2008 farm Under the 2008 farm
bil , the AGI limit was divided into two components: a $500,000 AGI limit for farm-earned bil , the AGI limit was divided into two components: a $500,000 AGI limit for farm-earned
income and a $750,000 AGI cap on nonfarm-earned income. income and a $750,000 AGI cap on nonfarm-earned income.
Analysis by USDA published in 2016 found that fewer farms are affected by the single AGI cap Analysis by USDA published in 2016 found that fewer farms are affected by the single AGI cap
($900,000) compared with the multiple farm ($500,000) and nonfarm ($750,000) AGI caps of the ($900,000) compared with the multiple farm ($500,000) and nonfarm ($750,000) AGI caps of the
2008 farm bil .2008 farm bil .99102 Thus, it is likely that consolidating the separate AGI farm and nonfarm limits Thus, it is likely that consolidating the separate AGI farm and nonfarm limits
into a single AGI limit with a higher bound has restored eligibility for farm program payments to into a single AGI limit with a higher bound has restored eligibility for farm program payments to
some farm operations that had previously been disqualified. Other exemptions from the AGI limit some farm operations that had previously been disqualified. Other exemptions from the AGI limit
include state and local governments and agencies, federal y recognized Indian tribes, and waivers include state and local governments and agencies, federal y recognized Indian tribes, and waivers
under RCPP. under RCPP.
The 2014 farm bil shifted the farm safety net focus away from traditional revenue support The 2014 farm bil shifted the farm safety net focus away from traditional revenue support
programs and toward crop insurance programs, which are not subject to the AGI cap. The 2018 programs and toward crop insurance programs, which are not subject to the AGI cap. The 2018
farm bil maintains this emphasis on crop insurance as the foundational farm safety net program. farm bil maintains this emphasis on crop insurance as the foundational farm safety net program.
During the eight-year period of 2011-2018, federal crop insurance premium subsidies averaged During the eight-year period of 2011-2018, federal crop insurance premium subsidies averaged
~~$6.4 bil ion annual y as compared to $7.6 bil ion under traditional revenue support programs.100~~
~~Extending the AGI cap to crop insurance subsidies was considered during both the 2014 and 2018~~
~~farm bil debates. However, concerns were raised that the elimination of subsidies for higher-~~

97 100 See footnot See footnote 16 for a description of base acres. for a description of base acres.
98101 As noted i As noted in Table A-2, an exception to this AGI rule has been made for both the 2018 and 2019 MFP payments if at an exception to this AGI rule has been made for both the 2018 and 2019 MFP payments if at
least 75% of AGI originates from farm, ranch, or forestry -related activities. least 75% of AGI originates from farm, ranch, or forestry -related activities.
99 102 Ron Durst and Robert Williams, “Farm Bill Income Cap for Program Payment Eligibility Affects Few Farms,” Ron Durst and Robert Williams, “Farm Bill Income Cap for Program Payment Eligibility Affects Few Farms,”
Am ber Waves, August 1, 2016. T he authors found that , while federal income tax data are not available for the $900,000 , August 1, 2016. T he authors found that , while federal income tax data are not available for the $900,000
cap level, from published data from 2013—a year of record-high farm income—about 0.7% of all farm sole proprietors cap level, from published data from 2013—a year of record-high farm income—about 0.7% of all farm sole proprietors
and share rent landlords reported total AGI in excess of $1 million. and share rent landlords reported total AGI in excess of $1 million.
~~100 Crop insurance premium subsidies are from USDA, RMA, Summary of Business data; revenue support programs~~
~~include ARC, PLC, MPP, MAL, agricultural disaster assistance, and miscellaneous programs from USDA, ERS, farm~~
~~income database.~~
~~Congressional Research Service~~

26

~~U.S. Farm Programs: Eligibility and Payment Limits~~

Congressional Research Service 26 U.S. Farm Programs: Eligibility and Payment Limits $6.4 bil ion annual y as compared to $7.6 bil ion under traditional revenue support programs.103 Extending the AGI cap to crop insurance subsidies was considered during both the 2014 and 2018 farm bil debates. However, concerns were raised that the elimination of subsidies for higher-income participants could affect overal participation in crop insurance and damage the soundness income participants could affect overal participation in crop insurance and damage the soundness
of the entire program. According to USDA estimates, in most years less than 0.5% of farms and of the entire program. According to USDA estimates, in most years less than 0.5% of farms and
less than 1% of premiums would be affected by the $900,000 income cap on farm program less than 1% of premiums would be affected by the $900,000 income cap on farm program
payments if it were extended to crop insurance subsidies. payments if it were extended to crop insurance subsidies.~~101~~104

~~101~~103 Crop insurance premium subsidies are from USDA, RMA, Summary of Business data; revenue support programs include ARC, PLC, MPP, MAL, agricultural disaster assistance, and miscellaneous programs from USDA, ERS, farm income database. 104 Durst and Williams, “Farm Bill Income Cap.” Durst and Williams, “Farm Bill Income Cap.”
Congressional Research Service Congressional Research Service

27 27

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Appendix A. Supplementary Tables
Table A-1. U.S. Farm Program Eligibility Requirements and Payment Limitations
U.S.
AGI
Conservation
Program Payment Type
AEFa Citizenb
Limit
Compliance
Payment Limit
Commodity Programs

Combined PLC and ARC payments (al except peanuts Combined PLC and ARC payments (al except peanuts)c
X X
— —
X X
X X
$125,000 per CY per person $125,000 per CY per person
PLC and ARC payments for peanuts PLC and ARC payments for peanuts
X X
— —
X X
X X
$125,000 per CY per person for peanuts $125,000 per CY per person for peanuts
Benefits under the MAL progra Benefits under the MAL programd
X X
— —
X X
X X
Unlimited Unlimited
Cotton Ginning Cost-Share Progra Cotton Ginning Cost-Share Programe
X X
— —
X X
X X
$40,000 per CY per person $40,000 per CY per person
Dairy Margin Coverage Program Dairy Margin Coverage Program
— —
— —
— —
X X
Unlimited Unlimited
Sugar Program (implicit price support benefits Sugar Program (implicit price support benefits)f
— —
— —
— —
— —
Unlimited Unlimited
MFP

2018 MFP
2019 MFP
Non-specialty crop Non-specialty cropsg
X X
— —
Xh
X X
$125,000 per person $125,000 per person
$250,000 per person $250,000 per person
Hogs and dairy Hogs and dairy
X X
— —
X X
X X
$125,000 per person $125,000 per person
$250,000 per person $250,000 per person
Specialty crop Specialty cropsi
X X
— —
X X
X X
$125,000 per person $125,000 per person
$250,000 per person $250,000 per person
Aggregate payment limit across al MFP commodity groups Aggregate payment limit across al MFP commodity groups

$375,000 per person $375,000 per person
$500,000 per person $500,000 per person
Coronavirus Food Assistance Programs

CFAP-1 CFAP-1
—j
— —
X X
X X
$250,000 per person; for corporate entities, $250,000 per person; for corporate entities,
$250,000 per shareholder contributing 400+ $250,000 per shareholder contributing 400+
hours, up to 3 shareholders or $750,000. hours, up to 3 shareholders or $750,000.
CFAP-2 CFAP-2
—j —j
— —
X X
X X
$250,000 per person; for corporate entities, $250,000 per person; for corporate entities,
$250,000 per shareholder contributing 400+ $250,000 per shareholder contributing 400+
hours, up to 3 shareholders or $750,000. hours, up to 3 shareholders or $750,000.
Disaster Assistance Programs

Livestock Forage Disaster Program Livestock Forage Disaster Program
— —
X X
X X
X X
$125,000 per CY per person $125,000 per CY per person
Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish
— —
X X
X X
X X
Unlimited Unlimited
Program Program
Livestock Indemnity Program Livestock Indemnity Program
— —
X X
X X
X X
Unlimited Unlimited
Tree Assistance Program Tree Assistance Program
— —
X X
X X
X X
Unlimited Unlimited
CRS-28 CRS-28

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U.S.
AGI
Conservation
Program Payment Type
AEFa Citizenb
Limit
Compliance
Payment Limit
NAP: Catastrophic NAP: Catastrophic
— —
X X
X X
X X
$125,000 per CY per person $125,000 per CY per person
NAP: Additional Coverage NAP: Additional Coverage
— —
X X
X X
X X
$300,000 per CY per person $300,000 per CY per person
2017 Wildfires and Hurricanes Indemnity Program (2017 WHIP) 2017 Wildfires and Hurricanes Indemnity Program (2017 WHIP)
— —
X X
—k
X X
$900,000 per person (based on income)n $900,000 per person (based on income)n
Wildfires and Hurricanes Indemnity Program Plus (WHIP+) Wildfires and Hurricanes Indemnity Program Plus (WHIP+)
— —
X X
— —
X X
$500,000 per person (based on income) $500,000 per person (based on income)
On-Farm Storage Loss Program On-Farm Storage Loss Program
X X
— —
X X
X X
$125,000 per loss year per person $125,000 per loss year per person
Milk Loss Program Milk Loss Program
— —
— —
X X
X X
$125,000 per loss year per person $125,000 per loss year per person
Landscape Assistance Programs

Emergency Conservation Program Emergency Conservation Program
— —
— —
X X
X X
$500,000 per disaster event per person $500,000 per disaster event per person
Emergency Forest Restoration Program Emergency Forest Restoration Program
— —
— —
X X
X X
$500,000 per disaster event per person $500,000 per disaster event per person
Emergency Watershed Protection Progra Emergency Watershed Protection Programl
— —
— —
— —
X X
Based on project amount Based on project amount
Conservation Programs

Conservation Reserve Progra Conservation Reserve Programm
— —
— —
X X
X X
$50,000 total rental and incentive payments $50,000 total rental and incentive payments
per fiscal year per person per fiscal year per person
Conservation Stewardship Program Conservation Stewardship Program
$200,000 al contracts, FY2019-FY2023, per $200,000 al contracts, FY2019-FY2023, per
— —
— —
X X
X X
person person
Environmental Quality Incentives Progra Environmental Quality Incentives Programn
$450,000 al contracts, FY2019-FY2023, per $450,000 al contracts, FY2019-FY2023, per
— —
— —
X X
X X
person person
Agricultural Management Assistance Agricultural Management Assistance
— —
— —
X X
X X
$50,000 per fiscal year per person $50,000 per fiscal year per person
Agricultural Conservation Easement Program Agricultural Conservation Easement Program
— —
— —
X X
X X
Based on easement value Based on easement value
Regional Conservation Partnership Program Regional Conservation Partnership Program
— —
— —
Xo
X X
Unlimited Unlimited
Risk Management Programs

Crop insurance premium subsidies on individual policies Crop insurance premium subsidies on individual policies
— —
— —
— —
X X
Unlimited Unlimited
Crop insurance indemnity payment Crop insurance indemnity paymentsp
— —
— —
— —
X X
Unlimited Unlimited
Miscellaneous

Trade Adjustment Assistance for Farmers Trade Adjustment Assistance for Farmers
X X
X X
X X
— —
$12,000 over 36 months per person $12,000 over 36 months per person
Source: Compiled by CRS from various public sources cited in footnotes throughout the text of this report. Compiled by CRS from various public sources cited in footnotes throughout the text of this report.
CRS-29 CRS-29

Notes: “X” implies the column’s requirement must be met to be eligible for a payment under the particular program. “—” implies that it is not a necessary requirement. “X” implies the column’s requirement must be met to be eligible for a payment under the particular program. “—” implies that it is not a necessary requirement.
AEF = actively engaged in farming; AGI = adjusted gross income; ARC = Agricultural Risk Coverage; CY = crop year; MAL = Marketing Assistance Loan; MFP = Market AEF = actively engaged in farming; AGI = adjusted gross income; ARC = Agricultural Risk Coverage; CY = crop year; MAL = Marketing Assistance Loan; MFP = Market
Facilitation Program; NAP = Noninsured Crop Disaster Assistance Program; PLC = Price Loss Coverage. Facilitation Program; NAP = Noninsured Crop Disaster Assistance Program; PLC = Price Loss Coverage.
a. For details on AEF requirements, see CRS Report R44656, a. For details on AEF requirements, see CRS Report R44656, USDA’s Actively Engaged in Farming (AEF) Requirement. .
b. U.S. citizenship or resident alien status required, assuming that any AEF requirements are met. b. U.S. citizenship or resident alien status required, assuming that any AEF requirements are met.
c. Combined payments for al covered commodities except peanuts, which has its own separate payment limit. c. Combined payments for al covered commodities except peanuts, which has its own separate payment limit.
d. Potential benefits under the MAL program are available when the repayment rate is below the loan rate. For details, see CRS Report R45730, d. Potential benefits under the MAL program are available when the repayment rate is below the loan rate. For details, see CRS Report R45730, Farm Commodity
Provisions in the 2018 Farm Bil (P.L. 115-334). .
e. The Cotton Ginning Cost-Share Program to date has been available only in the 2016 and 2018 program years. e. The Cotton Ginning Cost-Share Program to date has been available only in the 2016 and 2018 program years.
f. f.
The U.S. sugar program provides indirect price supports to the producers of sugar beets and sugarcane through direct price guarantees to the processors of both The U.S. sugar program provides indirect price supports to the producers of sugar beets and sugarcane through direct price guarantees to the processors of both
crops (provided the crops are of U.S. origin) and import restrictions based on tariff rate quota formula and an import limitation and minimum price agreement that crops (provided the crops are of U.S. origin) and import restrictions based on tariff rate quota formula and an import limitation and minimum price agreement that
applies to sugar from Mexico. USDA is to administer the U.S. sugar program at no budgetary cost to the federal government by limiting the amount of sugar applies to sugar from Mexico. USDA is to administer the U.S. sugar program at no budgetary cost to the federal government by limiting the amount of sugar
supplied for food use in the U.S. market. Thus, the subsidy provides implicit price support and is not subject to payment limitations. supplied for food use in the U.S. market. Thus, the subsidy provides implicit price support and is not subject to payment limitations.
g. Eligible non-specialty crops include corn, sorghum, soybeans, upland cotton, and wheat under the 2018 MFP program and alfalfa hay, barley, canola, corn, crambe, g. Eligible non-specialty crops include corn, sorghum, soybeans, upland cotton, and wheat under the 2018 MFP program and alfalfa hay, barley, canola, corn, crambe,
dried beans, dry peas, extra-long-staple cotton, flaxseed, lentils, long- and medium-grain rice, mil et, mustard seed, oats, peanuts, rapeseed, rye, safflower, sesame dried beans, dry peas, extra-long-staple cotton, flaxseed, lentils, long- and medium-grain rice, mil et, mustard seed, oats, peanuts, rapeseed, rye, safflower, sesame
seed, smal and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, triticale, upland cotton, and seed, smal and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, triticale, upland cotton, and ~~wheat~~wh eat under the 2019 MFP program. under the 2019 MFP program.
h. The enacted FY2019 Supplemental Appropriations for Disaster Relief Act (P.L. 116-20) amended the original USDA calculation for the average AGI for purposes of h. The enacted FY2019 Supplemental Appropriations for Disaster Relief Act (P.L. 116-20) amended the original USDA calculation for the average AGI for purposes of
assessing eligibility for MFP payments. Under the FY2019 supplemental, MFP-relevant AGI criteria include (1) the tax years 2013, 2014, and 2015 are to be used to assessing eligibility for MFP payments. Under the FY2019 supplemental, MFP-relevant AGI criteria include (1) the tax years 2013, 2014, and 2015 are to be used to
calculate the average AGI and (2) producers with an average AGI greater than $900,000 may receive MFP payments if at least 75calculate the average AGI and (2) producers with an average AGI greater than $900,000 may receive MFP payments if at least 75 % of their AGI came from farming, % of their AGI came from farming,
ranching, or forestry-related activities. ranching, or forestry-related activities.
i. i.
Eligible specialty crops include shel ed almonds and fresh sweet cherries under the 2018 MFP program and, under the 2019 MFP program, nuts (almonds, hazelnuts, Eligible specialty crops include shel ed almonds and fresh sweet cherries under the 2018 MFP program and, under the 2019 MFP program, nuts (almonds, hazelnuts,
macadamia nuts, pecans, pistachios, and walnuts), cranberries, ginseng, sweet cherries, and table grapes. macadamia nuts, pecans, pistachios, and walnuts), cranberries, ginseng, sweet cherries, and table grapes.
j. j.
Each payment recipient must share in the risk of profit or loss from the farming operation. This requirement is less stringent than normal AEF criteria. Each payment recipient must share in the risk of profit or loss from the farming operation. This requirement is less stringent than normal AEF criteria.
k. Use of AGI for 2017 WHIP and WHIP+ apply to determining the payment limit, not eligibility, and are different between WHIP programs. (1) Combined 2017 k. Use of AGI for 2017 WHIP and WHIP+ apply to determining the payment limit, not eligibility, and are different between WHIP programs. (1) Combined 2017
WHIP payments (for 2017 and 2018 crop years) may not exceed $125,000 per person if less than 75% of AGI is from farm income or $900,000 per person if more WHIP payments (for 2017 and 2018 crop years) may not exceed $125,000 per person if less than 75% of AGI is from farm income or $900,000 per person if more
than 75% of AGI is from farm income. Average AGI for 2017 WHIP is calculated based on 2013, 2014than 75% of AGI is from farm income. Average AGI for 2017 WHIP is calculated based on 2013, 2014 , and 2015 tax years. (2) Combined WHIP+ payments (for , and 2015 tax years. (2) Combined WHIP+ payments (for
2018, 2019, and 2020 crop years) may not exceed $125,000 per person if less than 75% of AGI is from farm income. If more than2018, 2019, and 2020 crop years) may not exceed $125,000 per person if less than 75% of AGI is from farm income. If more than 75% of AGI is from farm income, 75% of AGI is from farm income,
then WHIP+ payments are limited to $250,000 per person per year and cumulatively $500,000 in total over the 2018, 2019, and 2020 crop years. Average AGI for then WHIP+ payments are limited to $250,000 per person per year and cumulatively $500,000 in total over the 2018, 2019, and 2020 crop years. Average AGI for
WHIP+ is calculated based on 2015, 2016, and 2017 tax years. WHIP+ is calculated based on 2015, 2016, and 2017 tax years.
l. l.
The conservation compliance requirement applies only to the floodplain easement The conservation compliance requirement applies only to the floodplain easement component of the Emergency Watershed Protection Program. component of the Emergency Watershed Protection Program.
m. An AGI waiver for select eligible entities is available. m. An AGI waiver for select eligible entities is available.
n. Within the general Environmental Quality Incentives Program payment limit, component activities have their own limits: organic production practices are limited to n. Within the general Environmental Quality Incentives Program payment limit, component activities have their own limits: organic production practices are limited to
a total of $140,000 between FY2019 and FY2023; incentive contract payments are limited to a total of $200,000 between FY2019 and FY2023; and eligible water a total of $140,000 between FY2019 and FY2023; incentive contract payments are limited to a total of $200,000 between FY2019 and FY2023; and eligible water
management entity payments are limited to a total of $900,000 between FY2019 management entity payments are limited to a total of $900,000 between FY2019 ~~an d~~and FY2023. AGI limits may be waived for eligible water management entities. FY2023. AGI limits may be waived for eligible water management entities.
o. The chief of NRCS may waive the AGI limitation if it is necessary to fulfil the objectives of the program (7 C.F.R. §1464.2(d)). o. The chief of NRCS may waive the AGI limitation if it is necessary to fulfil the objectives of the program (7 C.F.R. §1464.2(d)).
p. To receive an indemnity, a person must first acquire a policy that includes a premium subsidy and the associated conservationp. To receive an indemnity, a person must first acquire a policy that includes a premium subsidy and the associated conservation compliance requirement. compliance requirement.
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Table A-2. History of Adjusted Gross Income (AGI) Eligibility Limits for Programs
AGI Limit
If AGI Exceeds Limit, Then Ineligible for These Programs
Farm Security and Rural Investment Act of 2002 (2002 farm bill, P.L. 107-171P.L. 107-171), §1604
$2.5 mil ion for total AGI, unless 75% is $2.5 mil ion for total AGI, unless 75% is farm AGI farm AGI
Direct payments, countercyclical payments (CCP), marketing assistance loan benefits of Direct payments, countercyclical payments (CCP), marketing assistance loan benefits of
marketing loan gains (MLGs) and loan deficiency payments (LDPsmarketing loan gains (MLGs) and loan deficiency payments (LDPs),a and conservation programs. and conservation programs.
Food, Conservation, and Energy Act of 2008 (2008 farm bill, P.L. 110-246P.L. 110-246), §1604b
$500,000 for nonfarm AGI $500,000 for nonfarm AGI
Direct payments, CCP, average crop revenue election; marketing assistance loan MLGs and Direct payments, CCP, average crop revenue election; marketing assistance loan MLGs and
LDPs; Milk Income Loss Contract; Noninsured Crop Disaster Assistance Program (NAP); LDPs; Milk Income Loss Contract; Noninsured Crop Disaster Assistance Program (NAP);
Supplemental Revenue Assistance Payments program; Emergency Assistance for Livestock, Supplemental Revenue Assistance Payments program; Emergency Assistance for Livestock,
Honey Bees, and Farm-Raised Fish Program (ELAP); Livestock Forage Program (LFP); Livestock Honey Bees, and Farm-Raised Fish Program (ELAP); Livestock Forage Program (LFP); Livestock
Indemnity Program (LIP); and Tree Assistance Program (TAP). Indemnity Program (LIP); and Tree Assistance Program (TAP).
$750,000 for farm AGI $750,000 for farm AGI
Direct payments. Direct payments.
$1 mil ion on nonfarm AGI unless 66.6% of total AGI is farm AGI; $1 mil ion on nonfarm AGI unless 66.6% of total AGI is farm AGI;
Conservation programs. Conservation programs.
may be waived on a case-by-case basis if protecting environmental y may be waived on a case-by-case basis if protecting environmental y
sensitive land of special significance. sensitive land of special significance.
Agricultural Act of 2014 (2014 farm bill, P.L. 113-79P.L. 113-79), §1605
$900,000 for total AG $900,000 for total AGIc. Applied the changes starting with the 2014 Applied the changes starting with the 2014
Price Loss Coverage, Agriculture Risk Coverage, cotton transition assistance program, Price Loss Coverage, Agriculture Risk Coverage, cotton transition assistance program,
crop, fiscal, or program year as appropriate. crop, fiscal, or program year as appropriate.
marketing assistance loan MLGs and LDPs, NAP, ELAP, LFP, LIP, and TAP, and conservation marketing assistance loan MLGs and LDPs, NAP, ELAP, LFP, LIP, and TAP, and conservation
programs. programs.
Agricultural Improvement Act of 2018 (2018 farm bill, P.L. 115-334P.L. 115-334), §1704
$900,000 for total AG $900,000 for total AGIc; may be waived on a case-by-case basis if may be waived on a case-by-case basis if
Same programs as under the 2014 farm bil . Same programs as under the 2014 farm bil .
protecting environmental y sensitive land of special significance. protecting environmental y sensitive land of special significance.
2019 Supplemental Appropriations for Disaster Relief Act (P.L. 116-20P.L. 116-20; §103)d
$900,000 for average AGI for tax years 2013, 2014, and 2015; may $900,000 for average AGI for tax years 2013, 2014, and 2015; may
The Market Facilitation Program (MFP) initiated in 2018 by the Secretary of Agriculture using the The Market Facilitation Program (MFP) initiated in 2018 by the Secretary of Agriculture using the
be waived if at least 75% is farm-, ranch-, or forestry-related AGI. be waived if at least 75% is farm-, ranch-, or forestry-related AGI.
authority provided under Section 5 of CCC Charter Act of 1948. authority provided under Section 5 of CCC Charter Act of 1948.
CRS-31 CRS-31

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AGI Limit
If AGI Exceeds Limit, Then Ineligible for These Programs
2019 Market Facilitation Program (MFP)e
$900,000 for average AGI for tax years 2015, 2016, and 2017; may $900,000 for average AGI for tax years 2015, 2016, and 2017; may
The 2019 MFP program initiated in 2019 by the Secretary of Agriculture using the authority The 2019 MFP program initiated in 2019 by the Secretary of Agriculture using the authority
be waived if at least 75% is farm-, ranch-, or forestry-related AGI. be waived if at least 75% is farm-, ranch-, or forestry-related AGI.
provided under Section 5 of CCC Charter Act of 1948 (15 U.S.C. 714c). provided under Section 5 of CCC Charter Act of 1948 (15 U.S.C. 714c).
2020 Coronavirus Food Assistance Programs (CFAP-1 and CFAP-2)f
$900,000 for average AGI for tax years 2016, 2017, and 2018; may $900,000 for average AGI for tax years 2016, 2017, and 2018; may
CFAP-1 and CFAP-2 programs initiated in 2020 by the Secretary of Agriculture using the CFAP-1 and CFAP-2 programs initiated in 2020 by the Secretary of Agriculture using the
be waived if at least 75% is farm-, ranch-, or forestry-related AGI. be waived if at least 75% is farm-, ranch-, or forestry-related AGI.
authority provided under Section 5 of CCC Charter Act of 1948 (15 U.S.C. 714b and 714c); and authority provided under Section 5 of CCC Charter Act of 1948 (15 U.S.C. 714b and 714c); and
Division B, Title I, of the Coronavirus Aid, Relief, and Economic Stability Act (CARES Act; P.L. Division B, Title I, of the Coronavirus Aid, Relief, and Economic Stability Act (CARES Act; P.L.
116-136). 116-136).
Source: Compiled by CRS from the legislation listed in the table. Compiled by CRS from the legislation listed in the table.
Notes: The reference AGI is based on the average AGI for the previous three years preceding the most recently completed tax year (with the exception of the AGI The reference AGI is based on the average AGI for the previous three years preceding the most recently completed tax year (with the exception of the AGI
used for the 2018 MFP program, as noted in the table, and 2017 WHIP and WHIP+ payment limits, which are discussed further in the used for the 2018 MFP program, as noted in the table, and 2017 WHIP and WHIP+ payment limits, which are discussed further in the “Payment Limits” section). Those section). Those
tax years where the person or legal entity had no taxable income are excluded from the calculation of the AGI average. Not al programs included in this table are tax years where the person or legal entity had no taxable income are excluded from the calculation of the AGI average. Not al programs included in this table are
discussed in the report. For a discussion of farmdiscussed in the report. For a discussion of farm programs, see CRS Report R45525, programs, see CRS Report R45525, The 2018 Farm Bil (P.L. 115-334): Summary and Side-by-Side Comparison. .
“Conservation programs” refers to al Title II farm bil conservation programs in 2002, 2008, 2014, and 2018 and the Agricultural Management Assistance program in “Conservation programs” refers to al Title II farm bil conservation programs in 2002, 2008, 2014, and 2018 and the Agricultural Management Assistance program in
2008, 2014, and 2018. 2008, 2014, and 2018.
a. Two other benefits obtainable under the Marketing Assistance Loan program—that is, gains under commodity certificate exchanges and/or forfeiture—are not a. Two other benefits obtainable under the Marketing Assistance Loan program—that is, gains under commodity certificate exchanges and/or forfeiture—are not
covered by the AGI eligibility restriction. covered by the AGI eligibility restriction.
b. Section 1604 of the 2008 farm bil included a provision that al ows the AGI of a married couple to be divided as if separate tax returns were filed, thus potential y b. Section 1604 of the 2008 farm bil included a provision that al ows the AGI of a married couple to be divided as if separate tax returns were filed, thus potential y
al owing for a doubling of the AGI limits. al owing for a doubling of the AGI limits.
c. Both the 2014 and 2018 farm bil s retained the provision that al ows the AGI of a married couple to be divided as if separate tax returns are filed, thus potential y c. Both the 2014 and 2018 farm bil s retained the provision that al ows the AGI of a married couple to be divided as if separate tax returns are filed, thus potential y
al owing for a doubling of the AGI limits. al owing for a doubling of the AGI limits.
d. Section 103 amended the MFP-relevant AGI criteria. d. Section 103 amended the MFP-relevant AGI criteria.
e. USDA, “Trade Mitigation Program,” 84 e. USDA, “Trade Mitigation Program,” 84 Federal Register 36456, July 29, 2019. 36456, July 29, 2019.
f. f.
For CFAP-1, see USDA, “Coronavirus Food Assistance Program, Final Rule,” 85 For CFAP-1, see USDA, “Coronavirus Food Assistance Program, Final Rule,” 85 Federal Register 30825, May 21, 2020. For CFAP-2, see USDA, “Coronavirus Food 30825, May 21, 2020. For CFAP-2, see USDA, “Coronavirus Food
Assistance Program, Final Rule,” 85 Assistance Program, Final Rule,” 85 Federal Register 59380, September 22, 2020. 59380, September 22, 2020.

CRS-32 CRS-32

Table A-3. History of Annual Payment Limits for U.S. Farm Commodity Programs
Act
Payment Limit per Person
Description and Comments
Agricultural Act of 1970 (P.L. 91- Agricultural Act of 1970 (P.L. 91-
$55,000 for wheat. $55,000 for feed grains. $55,000 $55,000 for wheat. $55,000 for feed grains. $55,000
Applied to price support payments, set-aside payments, diversion payments, and Applied to price support payments, set-aside payments, diversion payments, and
524), §101 524), §101
for upland cotton. for upland cotton.
marketing certificates but not loans or purchases. Separate limits for each crop. marketing certificates but not loans or purchases. Separate limits for each crop.
Agricultural and Consumer Agricultural and Consumer
$20,000 for wheat, feed grains, and upland cotton $20,000 for wheat, feed grains, and upland cotton
Applied to deficiency, diversion, and disaster payments but not loans or purchases. Applied to deficiency, diversion, and disaster payments but not loans or purchases.
Protection Act of 1973 (P.L. 93-86), Protection Act of 1973 (P.L. 93-86),
combined. combined.
§101 §101
Rice Production Act of 1975 (P.L. Rice Production Act of 1975 (P.L.
$55,000 for rice. $55,000 for rice.
Added when deficiency payments were added for rice. Added when deficiency payments were added for rice.
94-214) 94-214)
Food and Agriculture Act of 1977 Food and Agriculture Act of 1977
$40,000 (1978); $45,000 (1979); $50,000 (1980-1981) Provided transition period as rice payment limit declined from $55,000 (1975) to $40,000 (1978); $45,000 (1979); $50,000 (1980-1981) Provided transition period as rice payment limit declined from $55,000 (1975) to
(P.L. 95-113), §101 (P.L. 95-113), §101
for wheat, feed grains, and upland cotton combined. for wheat, feed grains, and upland cotton combined.
$50,000 (1979) while the combined limit for other program crops rose from $40,000 $50,000 (1979) while the combined limit for other program crops rose from $40,000
$52,250 (1978); $50,000 (1979-1981) for rice. $52,250 (1978); $50,000 (1979-1981) for rice.
(1978) to $50,000 (1980). Applied to deficiency and diversion payments but not (1978) to $50,000 (1980). Applied to deficiency and diversion payments but not
disaster or loan payments. disaster or loan payments.
Agriculture and Food Act of 1981 Agriculture and Food Act of 1981
$50,000 for wheat, feed grains, upland cotton, and rice Applied to al program payments except disaster payments and loans or purchases. A $50,000 for wheat, feed grains, upland cotton, and rice Applied to al program payments except disaster payments and loans or purchases. A
(P.L. 97-98), §1101 (P.L. 97-98), §1101
combined. combined.
separate $100,000 limit applied to disaster payments. separate $100,000 limit applied to disaster payments.
Food Security Act of 1985 (P.L. 99- Food Security Act of 1985 (P.L. 99-
$50,000 for wheat, feed grains, upland cotton, extra- $50,000 for wheat, feed grains, upland cotton, extra-
Applied to al program payments such as deficiency payments, except the new Applied to al program payments such as deficiency payments, except the new
198), §1001 198), §1001
long-staple cotton, and rice combined. long-staple cotton, and rice combined.
marketing loan program, regular loans. A separate $100,000 limit applied to disaster marketing loan program, regular loans. A separate $100,000 limit applied to disaster
payments. Required attribution of payments to individuals and entities. payments. Required attribution of payments to individuals and entities.
Continuing Appropriations Act for Continuing Appropriations Act for
$250,000 combined limit as in the Food Security Act $250,000 combined limit as in the Food Security Act
Amended the 1985 farm bil to apply limits to marketing loan gains (MLGs) and loan Amended the 1985 farm bil to apply limits to marketing loan gains (MLGs) and loan
FY1987 (P.L. 99-591), §108(a)(1) FY1987 (P.L. 99-591), §108(a)(1)
of 1985 but including marketing loan gains (MLGs) and deficiency payments (LDPs). No limit on Marketing Assistance Loan (MAL) program of 1985 but including marketing loan gains (MLGs) and deficiency payments (LDPs). No limit on Marketing Assistance Loan (MAL) program
loan deficiency payments (LDPs). loan deficiency payments (LDPs).
benefits derived from commodity certificate exchanges or forfeiture of crops under benefits derived from commodity certificate exchanges or forfeiture of crops under
loan. loan.
Omnibus Budget Reconciliation Act Omnibus Budget Reconciliation Act
No change to amounts. No change to amounts.
Added Actively Engaged in Farming (AEF) provisions to further limit eligibility for Added Actively Engaged in Farming (AEF) provisions to further limit eligibility for
of 1987 (P.L. 100-203), §1301 et. seq of 1987 (P.L. 100-203), §1301 et. seq.
payments and three-entity rule, which limited payments to a person via maximum of payments and three-entity rule, which limited payments to a person via maximum of
three entities (including the individual), effectively al owing for a doubling of an three entities (including the individual), effectively al owing for a doubling of an
individual’s payment limit. individual’s payment limit.
Food, Agriculture, Conservation, and Food, Agriculture, Conservation, and
$75,000 for wheat, feed grains, upland cotton, rice, $75,000 for wheat, feed grains, upland cotton, rice,
Applied to al program payments, including deficiency payments, MLGs, and LDPs. No Applied to al program payments, including deficiency payments, MLGs, and LDPs. No
Trade Act of 1990 (P.L. 101-624), Trade Act of 1990 (P.L. 101-624),
and oilseeds combined. $200,000 for honey. $200,000 and oilseeds combined. $200,000 for honey. $200,000
limit on MAL program benefits from commodity certificate exchanges or forfeiture. limit on MAL program benefits from commodity certificate exchanges or forfeiture.
§1111 §1111
(1991); $175,000 (1992); $150,000 (1993); $125,000 (1991); $175,000 (1992); $150,000 (1993); $125,000
USDA was given discretionary authority to implement a rule al owing spouses to be USDA was given discretionary authority to implement a rule al owing spouses to be
(1994) for wool and mohair. (1994) for wool and mohair.
considered separate persons if certain requirements were met. considered separate persons if certain requirements were met.
Federal Agriculture Improvement Federal Agriculture Improvement
$40,000 for production flexibility contract payments. $40,000 for production flexibility contract payments.
Applied to wheat, feed grains, upland cotton, rice, and oilseeds combined. No limit Applied to wheat, feed grains, upland cotton, rice, and oilseeds combined. No limit
and Reform Act of 1996 (P.L. 104- and Reform Act of 1996 (P.L. 104-
$75,000 for MLGs and LDPs. $75,000 for MLGs and LDPs.
on MAL program benefits from commodity certificate exchanges or forfeiture. on MAL program benefits from commodity certificate exchanges or forfeiture.
127), §115 127), §115
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Act
Payment Limit per Person
Description and Comments
Agriculture Appropriations Act for Agriculture Appropriations Act for
$150,000 for MLGs and LDPs. No change to limit on $150,000 for MLGs and LDPs. No change to limit on
Increased the limit in response to low market prices, which increased program Increased the limit in response to low market prices, which increased program
FY2000 (P.L. 106-78), §813 FY2000 (P.L. 106-78), §813
PFC payments. PFC payments.
payments. payments.
Farm Security and Rural Investment Farm Security and Rural Investment
$40,000 for direct payments. $65,000 for $40,000 for direct payments. $65,000 for
Combined limit for al commodities except peanuts, which have separate but Combined limit for al commodities except peanuts, which have separate but
Act of 2002 (P.L. 107-171), §1603 Act of 2002 (P.L. 107-171), §1603
countercyclical payments (CCPs). $75,000 for MLGs countercyclical payments (CCPs). $75,000 for MLGs
identical limit. MLG and LDP limit for peanuts is combined with wool, mohair, and identical limit. MLG and LDP limit for peanuts is combined with wool, mohair, and
and LDPs. and LDPs.
honey. No limit on MAL program benefits from commodity certificate exchanges or honey. No limit on MAL program benefits from commodity certificate exchanges or
forfeiture. Required USDA to track benefits to individuals and entities. Established forfeiture. Required USDA to track benefits to individuals and entities. Established
Commission on Applications of Payment Limits for Agriculture to conduct studCommission on Applications of Payment Limits for Agriculture to conduct study.a
Food, Conservation, and Energy Act Food, Conservation, and Energy Act
$40,000 for direct payments. $65,000 for CCPs and $40,000 for direct payments. $65,000 for CCPs and
Eliminated the three-entity rule. Each limit applies to combined payments for al Eliminated the three-entity rule. Each limit applies to combined payments for al
of 2008 (P.L. 110-246), §1603 of 2008 (P.L. 110-246), §1603
ACRE. No limit on marketing loan program benefits. ACRE. No limit on marketing loan program benefits.
commodities except peanuts, which have separate but identical limits. Added more commodities except peanuts, which have separate but identical limits. Added more
Disaster payment limit of $125,000 for ELAP, LFP, and precision to AEF and direct attribution to individuals through four levels of Disaster payment limit of $125,000 for ELAP, LFP, and precision to AEF and direct attribution to individuals through four levels of
LIP combined. Separate disaster payment limit of LIP combined. Separate disaster payment limit of
ownership. Added special rules for minor children, tenants, and institutional ownership. Added special rules for minor children, tenants, and institutional
$125,000 each for TAP and NAP. $125,000 each for TAP and NAP.
arrangements. Eliminated commodity certificates arrangements. Eliminated commodity certificates.b
Agricultural Act of 2014 (P.L. 113- Agricultural Act of 2014 (P.L. 113-
$125,000 for PLC, ARC, LDP, and MLG. $40,000 for $125,000 for PLC, ARC, LDP, and MLG. $40,000 for
Combined limit for al commodities except peanuts, which have separate but Combined limit for al commodities except peanuts, which have separate but
79), §1603 79), §1603
cotton transition payments in 2014 and 2015 only. cotton transition payments in 2014 and 2015 only.
identical limits. Also, no limit on MAL program benefits from forfeiture. identical limits. Also, no limit on MAL program benefits from forfeiture.
FY2016 Consolidated Appropriations FY2016 Consolidated Appropriations
No limit on MAL program benefits under commodity No limit on MAL program benefits under commodity
Restored commodity certificates for MAL program. Restored commodity certificates for MAL program.
Act (P.L. 114-113), §740 Act (P.L. 114-113), §740
certificate exchanges. certificate exchanges.
Bipartisan Budget Act of 2018 (P.L. Bipartisan Budget Act of 2018 (P.L.
$125,000 for TAP and LIP is eliminated. $125,000 for $125,000 for TAP and LIP is eliminated. $125,000 for
Applied retroactively to losses incurred on or after January 1, 2017. Applied retroactively to losses incurred on or after January 1, 2017.
115-123), §20101 115-123), §20101
combined ELAP and LFP remains. combined ELAP and LFP remains.
Agricultural Improvement Act of Agricultural Improvement Act of
$125,000 for combined PLC and ARC. No limit on $125,000 for combined PLC and ARC. No limit on
Removed MAL program benefits from inclusion under individual payment limits. They Removed MAL program benefits from inclusion under individual payment limits. They
2018 (P.L. 115-334), §1703 2018 (P.L. 115-334), §1703
any MAL program benefits; effective in 2019. No any MAL program benefits; effective in 2019. No
remain subject to AGI criteria. The individual payment limit of $125,000 applies only remain subject to AGI criteria. The individual payment limit of $125,000 applies only
payment limit for ELAP. Separate disaster payment payment limit for ELAP. Separate disaster payment
to combined payments under ARC and PLC programs. to combined payments under ARC and PLC programs.
limit of $125,000 each for LFP and NAP remains. limit of $125,000 each for LFP and NAP remains.
2017 WHIP (83 FR 33795) 2017 WHIP (83 FR 33795)
$125,000, or $900,000 if over 75% of average AGI $125,000, or $900,000 if over 75% of average AGI
Applied to combined 2017 WHIP payments for crop years 2017 and 2018. Applied to combined 2017 WHIP payments for crop years 2017 and 2018.
was from adjusted gross farm incom was from adjusted gross farm income.c
2018 MFP (83 FR 44173) 2018 MFP (83 FR 44173)
$125,000 for each category. $125,000 for each category.
Applied to each of three categories of 2018 MFP payments: non-specialty crops, Applied to each of three categories of 2018 MFP payments: non-specialty crops,
specialty crops, and livestock. Seespecialty crops, and livestock. See Table A-1 for details. for details.
2019 MFP (84 FR 36456) 2019 MFP (84 FR 36456)
$250,000 for each category, subject to a combined $250,000 for each category, subject to a combined
Applied to each of three categories of 2019 MFP payments: non-specialty crops, Applied to each of three categories of 2019 MFP payments: non-specialty crops,
total of $500,000. total of $500,000.
specialty crops, and livestock. Se specialty crops, and livestock. See Table A-1 for details. for details.
Agricultural Disaster Indemnity Agricultural Disaster Indemnity
$125,000 for combined crop years, or $250,000 each $125,000 for combined crop years, or $250,000 each
Applied to combined WHIP+ payments for crop years 2018, 2019, and 2020. Applied to combined WHIP+ payments for crop years 2018, 2019, and 2020.
Programs; WHIP+ (83 FR 48518) Programs; WHIP+ (83 FR 48518)
crop year not to exceed $500,000 combined if over crop year not to exceed $500,000 combined if over
75% of average AGI was from farm-related incom75% of average AGI was from farm-related income.d
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Act
Payment Limit per Person
Description and Comments
2020 CFAP-1 (85 FR 3082 2020 CFAP-1 (85 FR 30825)e
$250,000 per person or entity; for corporate entities, $250,000 per person or entity; for corporate entities,
Applied to cumulative CFAP-1 payments across al commodities. Applied to cumulative CFAP-1 payments across al commodities.
$250,000 per shareholder contributing 400+ hours, up $250,000 per shareholder contributing 400+ hours, up
to 3 shareholders or $750,000. to 3 shareholders or $750,000.
2020 CFAP-2 (85 FR 59380) 2020 CFAP-2 (85 FR 59380)
$250,000 per person or entity; for corporate entities, $250,000 per person or entity; for corporate entities,
Applied to cumulative CFAP-2 payments across al commodities. Applied to cumulative CFAP-2 payments across al commodities.
$250,000 per shareholder contributing 400+ hours, up $250,000 per shareholder contributing 400+ hours, up
to 3 shareholders or $750,000. to 3 shareholders or $750,000.
Source: Compiled by CRS from legislation listed in the notes below and from FSA, “Legislative History of Payment Eligibility and Payment Limitation Provisions,” FSA Compiled by CRS from legislation listed in the notes below and from FSA, “Legislative History of Payment Eligibility and Payment Limitation Provisions,” FSA
Handbook, Handbook, Payment Eligibility, Payment Limitation, and Average Adjusted Gross Income—Agricultural Act of 2014, as of October 27, 2014. , as of October 27, 2014.
Notes: ACRE = Average Crop Revenue Election; ARC = Agricultural Risk Coverage; PLC = Price Loss Coverage; MFP = Market Facilitation Program; WHIP = Wildfire ACRE = Average Crop Revenue Election; ARC = Agricultural Risk Coverage; PLC = Price Loss Coverage; MFP = Market Facilitation Program; WHIP = Wildfire
and Hurricane Indemnity Program; and CFAP = Coronavirus Food Assistance Program. For a complete list of current payment limits across al farm programs, including and Hurricane Indemnity Program; and CFAP = Coronavirus Food Assistance Program. For a complete list of current payment limits across al farm programs, including
disaster assistance, landscape assistance, conservation, and other programs, seedisaster assistance, landscape assistance, conservation, and other programs, see Table A-1. Excludes discussion of other eligibility requirements such as type of entities Excludes discussion of other eligibility requirements such as type of entities
and actively engaged in farming. For such information, see CRS Report R44656, and actively engaged in farming. For such information, see CRS Report R44656, USDA’s Actively Engaged in Farming (AEF) Requirement. .
a. The commission released its study as the “Report by the Commission on the Application of Payment Limits for Agriculture,” August 2003, published by the USDA a. The commission released its study as the “Report by the Commission on the Application of Payment Limits for Agriculture,” August 2003, published by the USDA
Office of the Chief Economist. Office of the Chief Economist.
b. Commodity certificates received in exchange for MAL program benefits were eliminated at end of the 2009 crop year by the 2008 b. Commodity certificates received in exchange for MAL program benefits were eliminated at end of the 2009 crop year by the 2008 farm bil (P.L. 110-246, §1607). farm bil (P.L. 110-246, §1607).
However, they were reinitiated in the Consolidated Appropriations Act of 2016 (P.L. 114-113, §740), enacted in December 2015, which authorized the CCC to However, they were reinitiated in the Consolidated Appropriations Act of 2016 (P.L. 114-113, §740), enacted in December 2015, which authorized the CCC to
issue commodity certificates to agricultural producers in exchange for crops pledged under issue commodity certificates to agricultural producers in exchange for crops pledged under ~~marketin g~~marketing assistance loans beginning with the 2015 crop year. assistance loans beginning with the 2015 crop year.
c. The 2017 WHIP payment limit is calculated based on a person’s or legal entity’s average AGI from adjusted gross farm income in the 2013, 2014, and 2015 tax c. The 2017 WHIP payment limit is calculated based on a person’s or legal entity’s average AGI from adjusted gross farm income in the 2013, 2014, and 2015 tax
years. See years. See Table A-1 for details. for details.
d. The WHIP+ payment limit is calculated based on a person’s or legal entity’s average AGI from adjusted gross farm income in the 2015, 2016, and 2017 tax years. d. The WHIP+ payment limit is calculated based on a person’s or legal entity’s average AGI from adjusted gross farm income in the 2015, 2016, and 2017 tax years.
Limits for subprograms and block grants may vary from WHIP+. See Limits for subprograms and block grants may vary from WHIP+. See Table A-1 andand Table 3 for details. for details.
e. As amended by (85 FR 35799) and (85 FR 41328). e. As amended by (85 FR 35799) and (85 FR 41328).
CRS-35 CRS-35

U.S. Farm Programs: Eligibility and Payment Limits

Author Information

Randy Schnepf Randy Schnepf
Megan Stubbs Megan Stubbs
Specialist in Agricultural Policy Specialist in Agricultural Policy
Specialist in Agricultural Conservation and Natural Specialist in Agricultural Conservation and Natural

Resources Policy Resources Policy

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