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$736M Farm Subsidy Loopholes Reward Absentee Managers

BOSTON (TheStreet) -- This month, the U.S. Government Accountability Office released a report that found about half of the $1.5 billion in farm subsidies distributed last year were to people not "actively engaged" in farming.

In other words, about $736 million in farm subsidies went to people who don't take part in a farm's daily operation and are very often not at the farm. In fact, many farm subsidy recipients do not even live near the farms they get subsidies for -- sometimes they're not even living in the same state, since the agency's guidelines don't require a manager to actually visit the farm operation to be eligible.

The USDA's Farm Services Agency, which is responsible for the distribution of the subsidies, requires that a prospective recipient must be "actively engaged" in the farming operation to qualify for funding. But the GAO found that the agency defines "actively engaged" too broadly, and what constitutes as a "management" role.

"The requirements say the management contribution must be critical to the profitability of a farming operation, but Farm Service Agency officials told the GAO that making that kind of determination is difficult and subject to interpretation," the report says.

Furthermore, the GAO found that some farming operations were getting multiple subsidies for managerial positions.

In one instance, the GAO found that a farm in the Midwest got $400,000 in subsidy payments last year distributed among 11 members of the same family who all claimed management contributions, and two live in south Florida.

The Environmental Working Group, a nonprofit advocating for reform of the Farm Bill and monitoring farm subsidy distributions, found that more than $24 million in direct payment farm subsidies were distributed to residents of America's 54 largest cities, including New York City, San Francisco and Chicago, regardless of whether they had ever worked on a farm.

Direct payments are based on a farm's historical production, meaning someone can still get funding under the program regardless of need or even whether a farm produces a crop. Even though land converted to non-farm uses is legally ineligible for direct payment subsidies, the GAO found that the USDA does a poor job of tracking land use changes.