Farm Bill Primer: Program Eligibility and Payment Limits

Farm Bill Primer: Program Eligibility and Payment Limits

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September 1, 2017
Farm Bill Primer: Program Eligibility and Payment Limits
Since 1970, Congress has used varying policies to address
and is also active though personal labor and/or personal
the issue of who should be eligible for farm payments and
management. Second, the person’s share of profits or losses
how much should an individual recipient be permitted to
is commensurate with their contribution to the operation.
receive in a single year. In recent years, congressional
Third, the person shares in the risk of loss from the farming
debate has focused on (1) ensuring that payments go to
operation. If a married person meets the AEF requirements,
persons or entities currently engaged in farming, (2)
any spouse will also be considered to have met the
attributing payments directly to individual recipients, (3)
requirements, thus effectively doubling the individual
capping the amount of payments that a qualifying recipient
payment limit. Another exception to AEF requirements is
may receive in any one year, and (4) excluding from
made for landowners provided they receive income based
payment eligibility those farmers or farming entities with
on the farm’s operating results.
incomes above a certain level as measured by their adjusted
Partnership. Under a partnership, each member must
gross income (AGI).
individually meet all program requirements, including AEF
and AGI requirements. Each qualifying member is
Most recently, the 2014 farm bill (Agricultural Act of 2014,
potentially eligible for payments up to the individual limit.
P.L. 113-79) specified eligibility requirements for benefits
under current farm programs and annual payment limits that
Corporation. A corporation is treated as a single person for
vary across different combinations of farm programs.
purposes of determining eligibility and payment limits,
Federal farm support programs, along with their current
provided that it meets the AEF and other eligibility criteria.
eligibility requirements and payment limits, are listed in
Thus, a corporation is subject to a single payment limit.
Table 1 (for more detail, see CRS Report R44739, U.S.
Conservation Compliance
Farm Program Eligibility and Payment Limits).
To be eligible for most farm program benefits, a producer
Program Eligibility
agrees to maintain a minimum level of conservation on
Some requirements are common across most programs,
highly erodible land and not to convert or make production
while others are specific to individual programs. Current
possible on wetlands. Collectively, these two provisions are
eligibility requirements specific to each program participant
referred to as conservation compliance (see CRS Report
but that affect multiple programs include the following:
R42459, Conservation Compliance and U.S. Farm Policy).

Adjusted Gross Income (AGI) Threshold
identification of every participating person or legal
entity—both U.S. and non-U.S.;
Persons with combined farm and nonfarm AGI in excess of
 the nature and extent of an individual’s participation
$900,000 are ineligible for most program benefits. AGI is
(i.e., actively engaged in farming criteria), including
measured from the previous three tax years, excluding the
ownership interests in multi-person entities and personal
most recent taxable year.
time commitments (whether as labor or management);
Direct Attribution and Payment Limits
 conservation compliance provisions; and
The process of tracking payments to an individual through
 means testing based on an AGI threshold.
various levels of ownership in single or multi-person legal
Is U.S. Citizenship Required?
entities—referred to as direct attribution—is critical for
assessing an individual’s cumulative payments against their
In general, if a foreign person or legal entity meets a
annual payment limit. Current law requires direct
program’s eligibility requirements, then they are eligible to
attribution through four levels of ownership in multi-person
participate. One exception is the permanent disaster
legal entities (see Table 1 for specific payment limits).
assistance programs—Emergency Assistance for Livestock,
Issues for Congress
Honeybees, and Farm-Raised Fish Program (ELAP),
Livestock Forage Disaster Program (LFP), Livestock
Eligibility requirements and payment limits strongly
Indemnity Program (LIP), Tree Assistance Program (TAP),
influence what size and type of farms are supported.
and the noninsured crop disaster assistance program
Congress has debated what annual payment limit amount is
(NAP)—under which non-resident aliens are excluded.
optimal and whether the limit should be specific to each
program or cumulative across all programs. Furthermore,
Actively Engaged in Farming (AEF)
program eligibility requirements and payment limits
Three categories of legal entities are subject to AEF
generate congressional interest because their effects differ
requirements for program payment eligibility: an
across regions and by type of commodities produced, and
individual, a partnership, and a corporation.
because a substantial amount of annual U.S. farm program
payments are at stake (see CRS Report R44914, Farm
Individual. To be considered AEF, an individual must meet
Safety-Net Payments Under the 2014 Farm Bill:
three criteria. First, the person makes a significant
Comparison by Program Crop).
contribution to the operation of capital, equipment, or land
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Table 1. Farm Program Eligibility Requirements and Payment Limitations Under the 2014 Farm Bill
U.S.
AGI
Conservation
Farm Program Type
AEF
Citizena
Limit
Compliance
Payment Limit
Commodity Programs

PLC, ARC, LDP, and MLG payments (all commodities
Y
N
Y
Y
$125,000 per CY
combined, except peanuts)
PLC, ARC, LDP, and MLG payments for peanuts
Y
N
Y
Y
$125,000 per CY
MLGs with commodity certificates or forfeiture
Y
N
Y
Y
Unlimited
Cotton Transition Assistance Program (CTAP)
N
N
Y
Y
$50,000 per CY
Sugar Program (implicit price support benefits)
N
N
N
N
Unlimited
Dairy Margin Protection Program (MPP) payments
N
N
N
Y
Unlimited
Disaster Assistance Programs

ELAP, LFP, and LIP (all three programs combined)
N
Y
Y
Y
$125,000 per CY
Tree Assistance Program (TAP)
N
Y
Y
Y
$125,000 per CY
Noninsured Crop Disaster Assistance Program (NAP)
N
Y
Y
Y
$125,000 per CY
Crop Insurance Programs

Premium subsidies and indemnity payments
N
N
N
Y
Unlimited
Conservation Programs

Conservation Reserve Program (total rental payments)
N
N
Y
Y
$50,000 per FY
Conservation Stewardship Program (CSP)
N
N
Y
Y
$200,000b
Environmental Quality Incentives Program (EQIP)
N
N
Y
Y
$450,000b
Agricultural Management Assistance (AMA)
N
N
Y
Y
$50,000 per CY
Agricultural Conservation Easement Program (ACEP)
N
N
Y
Y
Based on easement
value
Regional Conservation Partnership Program (RCPP)
N
N
Y
Y
Subject to limitations of
EQIP, CSP, & ACEP
Landscape Assistance Programs

Emergency Conservation Program (ECP)
N
N
Y
Y
$200,000 per disaster
Emergency Forest Restoration Program (EFRP)
N
N
Y
Y
$500,000 per disaster
Emergency Watershed Protection Program (EWP)
N
N
N
Y
Unlimited
Miscellaneous

Trade Adjustment Assistance for Farmers (TAAF)
Y
Y
Y
N
$10,000 per CY
Source: Compiled by CRS from various sources. For details, see CRS Report R44739, U.S. Farm Program Eligibility and Payment Limits.
Notes: Y implies that this is a necessary requirement for payment eligibility, N implies that it is not a necessary requirement. AEF = Actively
Engaged in Farming criteria, AGI = Adjusted Gross Income limit, CY = crop year, FY = fiscal year, PLC = Price Loss Coverage, ARC =
Agricultural Risk Coverage, LDP = Loan Deficiency Payment, and MLG = Marketing Loan Gain.
a. U.S. citizenship or resident alien status required, assuming that any AEF requirements are met.
b. All contracts combined for the entire period of FY2014-FY2018.
Randy Schnepf, Specialist in Agricultural Policy
Megan Stubbs, Specialist in Agricultural Conservation and Natural Resources Policy
IF10722

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Farm Bill Primer: Program Eligibility and Payment Limits

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