The Small Business Subcommittee on Agriculture, Energy and Trade, under the chairmanship of Rep. Scott Tipton (R-CO), today held a hearing to examine the small business size standard for agricultural businesses. The purpose of the hearing was to determine whether the current standard accurately reflects the structural and economic realities of modern small agriculture production operations and evaluate whether it should be changed to better fit today’s industry and increase participation in federal procurement, as well as improve regulatory analysis of how new rules affect small businesses.
The Small Business Act authorizes the Small Business Administration (SBA) to establish small business size standards, which are normally either employee or revenue-based. Unlike the size standards established for all other industries by the SBA, the size standard for agriculture enterprises are statutorily established. In 1984, SBA lowered the size standard for small agricultural enterprises to $100,000 in annual receipts from $500,000. Congress believed this was too low, and would exclude the vast majority of family farms, so in 1985 the size standard was increased to $500,000. In 2000, Congress updated the size standard to $750,000 in annual receipts.
"Today’s hearing provided a necessary dialogue about whether the agriculture size standard is adequate for today’s economy,” said Chairman Tipton. “The wrong size standard may harm legitimately small agricultural producers by denying them access to SBA programs, such as the federal contracting programs and loan programs. Additionally, many federal agencies view these standards as the default small business size standard when considering their obligations under the Regulatory Flexibility Act, which requires agencies to analyze how their rules will affect small entities. In the coming months, this Committee will continue exploring solutions to the problems we heard today, including whether the current statutory standard needs be updated and the best process for doing so.”
Materials from the hearing are available on the Committee’s website HERE.
Mark Oestman, Owner of Oestman Farms, LLC in Eckley, Colorado said, “I believe that the Small Business Administration should seriously consider substantially raising the arbitrary $750,000 [size standard] in receipts that currently exists for agriculture producers. The dynamics of today’s farms and farmers, especially those who farm as their sole source of income, have changed dramatically and I believe the limit should as well. Due to factors largely out of a farmer’s control, my total receipts and expenses can change dramatically from year to year, and I believe that SBA standards should take many of those factors into consideration and increase the standard."
Ken Keesaman, Owner of KK Farms Red Angus in Osborn, Missouri said, “The evolution of today’s livestock industry has shifted and in order for family businesses to survive we have expanded and diversified our operations. In terms of agriculture, today’s small business has changed and it is appropriate for the size standards applied by the Small Business Administration to more accurately represent today’s small operations. It is my understanding that agriculture is the only industry where the statute establishes our size standard. With that being the case, Congress must change the statue and consider alternatives to the current size standards so they more accurately reflect today’s small businesses.”