Historical Background on
Payment Limitations
Edward G. Smith
Associate Director for Agriculture
& Natural Resources
Texas Cooperative Extension
National Public Policy Education Conference
Salt Lake City, Utah
September 22, 2003
Presentation Outline
• Brief History of Payment Limitations
• Goals of Farm Programs
• Goals Advanced for Payment Limitations
Brief History of Payment Limitations
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Payment limit debate began in late 1960s
Limits first enacted in 1970 farm bill at $55,000
1973 farm bill lowered to $20,000
1977 farm bill increased to $40,000
1985 farm bill raised to $50,000 per “person”
– Initiated 3 entity rule
• 1990 farm bill established separate limits of $50,000
for deficiency payments, $75,000 for MLG & LDP
– Total limit $250,000
Brief History (Continued)
• 1996 farm bill set AMTA limit at $40,000 and
MLG/LDP at $75,000
• 1999-2001 increased MLG/LDP limit to $150,000
• 2002 farm bill set direct payment limit at $40,000,
CCP at $65,000, and MLG/LDP at $75,000
– Introduced means testing for first time
• $2.5 million AGI limitation (3 year avg) unless
75% came from Ag.
– Peanuts subject to separate limit
– Maintained 3 entity rule
Goals of Farm Programs
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Foster an abundant supply of food and fiber
Support and stabilize farm income
Help producers get access to credit
Expand agricultural exports
Conserve natural resources
Maintain the family farm and the vitality of rural
communities
• Capitalize on the multiple functions of agriculture
• Counter the protection provided to agriculture in
other countries
Goals Advanced for Payment Limitations
• Reduce government spending
• Prevent large operators from receiving excessive
support
• Prevent wealthy non-producers from receiving
payments
• Slow down farm consolidation and the bidding up
of land values
• Redistribute agricultural program spending