SBA official says definition of small agricultural enterprise by receipts is too low
July 25, 2014 | 05:24 PM
By ALEX GANGITANO
The government’s definition of the size of a small agricultural enterprise by annual receipts is too low, a Small Business Administration official and business leaders testified Thursday before the House Small Business Agriculture, Energy and Trade Subcommittee.
The definition is important for small enterprises because it determines whether a business is qualified for SBA programs such as federal contracting and loans. The current size standard is $750,000 in receipts, which Congress raised in 2000 from a standard of $500,000 that was set in 1985.
“The $750,000 standard is currently the lowest revenue-based standard for any industry, and it simply has not kept pace with inflation or the changes in the farming sector of the economy,” said subcommittee Chairman Scott Tipton, R-Colo., in opening the hearing.
“By lumping all small agricultural enterprises into one size standard, we also aren’t accurately capturing distinctions between the various industries.”
John Shoraka
John Shoraka, SBA associate administrator for government contracting and business development, noted that the size standard for agricultural enterprises is the only one that Congress sets and that the agency determines those for other industries and has the power to update those standards.
“SBA is capable of conducting the analysis to establish small business size standards for agricultural enterprises, as SBA would use the same process that it currently uses to establish size standards for business concerns in other industries,” Shoraka said.
“If SBA were mandated to review agricultural size standards, adjustments for inflation and other economic conditions could be made.”
Mark Oestman, a farmers and rancher from Greeley, Colo., said farming has consolidated in recent years and that the level needs to be raised.
“We want to bring sons back into the operations,” added Ken Keesaman, owner of KK Farms Red Angus near Osborn, Mo. “We’ve had to change and SBA needs to change and our Congress needs to change. Ag is a different breed.”
Robert Guenther
Robert Guenther, a vice president of the United Fresh Produce Association, noted that some agencies use SBA size standards to assess the impact of their proposed regulations in accordance with the Regulatory Flexibility Act.
“We would suggest that Congress and the administration consider alternatives that would eliminate the current standard and allow SBA to review industries currently considered to be small agriculture businesses,” Guenther said.
“Following that review, SBA could then propose new size standards through the normal regulatory process, which would allow agriculture operators to comment and provide recommendations for a new standard.”
Rep. Patrick Murphy, D-Fla., asked what level the size standard should increased to.
“It needs to be adjusted to reflect the last 15 years since it’s been done,” Guenther said.
Members of the subcommittee expressed sympathy with the farmers’ needs.
“Andrew Jackson once said that the American farmer is the bone and sinew of our country, so we need to make sure that the policies we create help rather than hinder small farmers,” Tipton said.
“I always tell people, you think going to Las Vegas is a real gamble? Go be a farmer for a while,” said Rep. Blaine Luetkemeyer, R-Mo.
The government’s definition of the size of a small agricultural enterprise by annual receipts is too low, a Small Business Administration official and business leaders testified Thursday before the House Small Business Agriculture, Energy and Trade Subcommittee.
The definition is important for small enterprises because it determines whether a business is qualified for SBA programs such as federal contracting and loans. The current size standard is $750,000 in receipts, which Congress raised in 2000 from a standard of $500,000 that was set in 1985.
“The $750,000 standard is currently the lowest revenue-based standard for any industry, and it simply has not kept pace with inflation or the changes in the farming sector of the economy,” said subcommittee Chairman Scott Tipton, R-Colo., in opening the hearing.
“By lumping all small agricultural enterprises into one size standard, we also aren’t accurately capturing distinctions between the various industries.”
John Shoraka, SBA associate administrator for government contracting and business development, noted that the size standard for agricultural enterprises is the only one that Congress sets and that the agency determines those for other industries and has the power to update those standards.
“SBA is capable of conducting the analysis to establish small business size standards for agricultural enterprises, as SBA would use the same process that it currently uses to establish size standards for business concerns in other industries,” Shoraka said.
“If SBA were mandated to review agricultural size standards, adjustments for inflation and other economic conditions could be made.”
Mark Oestman, a farmers and rancher from Greeley, Colo., said farming has consolidated in recent years and that the level needs to be raised.
“We want to bring sons back into the operations,” added Ken Keesaman, owner of KK Farms Red Angus near Osborn, Mo. “We’ve had to change and SBA needs to change and our Congress needs to change. Ag is a different breed.”
Robert Guenther, a vice president of the United Fresh Produce Association, noted that some agencies use SBA size standards to assess the impact of their proposed regulations in accordance with the Regulatory Flexibility Act.
“We would suggest that Congress and the administration consider alternatives that would eliminate the current standard and allow SBA to review industries currently considered to be small agriculture businesses,” Guenther said.
“Following that review, SBA could then propose new size standards through the normal regulatory process, which would allow agriculture operators to comment and provide recommendations for a new standard.”
Rep. Patrick Murphy, D-Fla., asked what level the size standard should increased to.
“It needs to be adjusted to reflect the last 15 years since it’s been done,” Guenther said.
Members of the subcommittee expressed sympathy with the farmers’ needs.
“Andrew Jackson once said that the American farmer is the bone and sinew of our country, so we need to make sure that the policies we create help rather than hinder small farmers,” Tipton said.
“I always tell people, you think going to Las Vegas is a real gamble? Go be a farmer for a while,” said Rep. Blaine Luetkemeyer, R-Mo.
