Economic Impact of a Proposed AGI Means Test on Representative Crop Farms

The Administration has proposed revising the AGI means test for eligibility to farm program payments. The 2002 farm bill excludes producers from farm program payments (CCP, DP, and MLG/LDP) if their average adjusted gross income (AGI) for three preceding years exceeds $2.5 million and less than 75% of their AGI comes from farming, ranching or forestry operations. The revised means test would reduce the AGI cut-off to $200,000 and repeal the 75% exclusion. The purpose of this report is to estimate the impacts of the AGI proposal on average annual government payments and real net worth in 2014 for representative crop farms. The AFPC maintains a data base of 64 representative commercial family farms in major production regions across the United States. The farms represent a full-time, commercial operation that is typical of farms in a particular area. The farmers who participate in the bi-annual farm update interviews are selected by the county agent based on farm size (typical for the area), crop mix and farming practices (typical for the area), and being full-time farmers (not employed off the farm). The farms were constructed with no off-farm income to illustrate the changes in wellbeing due to farm policy changes. To the extent that a farm has off-farm income, the results will be conservative