UNITED STATES-FARM SUBSIDIES TO BE CUT.
President Barack Obama’s fiscal year 2009 agriculture budget proposal, released Thursday, increases spending for child nutrition programs while phasing out direct payments to the nation’s biggest farmers -- specifically those with $500,000 per year in adjusted gross income.
Agriculture Secretary Tom Vilsack said at the USDA Outlook Conference just outside of Washington Thursday that President Obama is committed to addressing childhood obesity by improving children’s diets, and feeding children more fruits, vegetables, nuts and other nutritious foods costs more money. He noted that budget issues came down to questions of "if you have one dollar" should it go to child nutrition, maintenance and fire fighting in the Forest Service or to a farmer with a high-income operation?
The biggest savings in the budget would come from a phase-out of direct payments to the largest farmers, specifically those with more than $500,000 per year in adjusted gross income averaged over three years. The cut, which would have to be approved by Congress, would save a total of $3.6 billion over five years and $9.8 billion over 10 years, reducing the $5.2 billion in direct payments by $85 million in fiscal-year 2010, $480 million in 2011, $625 million in 2012, and $1.2 billion in each year between 2013 and 2019.
The budget also includes unspecified reductions in "payments to high-income farmers" of $58 million in 2010 and lesser amounts in future years for a total of $108 million in savings over five years and $126 million over 10 years.
Under the new farm bill, farmers become ineligible for payments based on the following, averaged over three years:
-- If non-farm income averages more than $500,000, then the person or entity is not eligible for direct payments, counter-cyclical payments or marketing loan gains. If farm income averages more than $750,000, the farmer or entity is not eligible for direct payments.
-- After direct payments, the second biggest source of savings in agriculture would come from a reduction in spending on crop insurance premiums and underwriting gains and by increasing fees. The crop insurance savings would begin in 2011 and total $2.1 billion over five years and $5.2 billion over 10 years.
-- Eliminating cotton storage payments would save $279 million over five years and $570 million over 10 years. The administration would also create $158 million in savings over five years and $358 million over 10 years by eliminating promotion of branded agricultural products in the Market Access Program.
Leaders of corn, soybean and wheat groups meeting Thursday just outside Dallas, Texas, at the Commodity Classic convention said they would oppose the recommended cuts in direct payments. Leaders of those groups also said they were concerned about comments made by Obama and Vilsack that were critical of farmers receiving direct payments.
Bob Dickey, president of the National Corn Growers Association, said he was skeptical about the way Obama referred to "agribusinesses" in his speech Tuesday night and was unclear about what the president meant. Dickey, a farmer from Laurel, Neb., said current NCGA policy is to resist further cuts in commodity programs.
"We’ll make a strong stand to defend our corn producers," Dickey said.
Tennessee farmer Johnny Dodson, president of the American Soybean Association, said ASA’s position is that policymakers should stick with the caps and policy laid out in the 2008 farm bill. Dodson said farmers are just now getting a handle on payment caps and income eligibility in the farm bill.
"We oppose anything that would be outside what was passed in the farm bill," Dodson said.
John Thaemert, past president of the National Association of Wheat Growers, and a grower from Sylvan Grove, Kan., said he wasn’t too concerned about the Obama administration proposal, especially given comments from House Agriculture Committee Chairman Collin Peterson, D-Minn., and Senate Agriculture Committee ranking member Saxby Chambliss, R-Ga., opposing any notion of reopening the farm bill.
"You are always going to see and hear that kind of news, I think, but it remains to be seen what actually happens," Thaemert said. "It will have an impact, but the thing people have to keep in mind is the total agricultural budget, the amount set for ag support is one-third of 1 percent of the federal budget. Are you going to balance the federal budget if you cut that? It’s miniscule. It’s a drop in the ocean, but it’s very important to our producers to have that kind of safety net in these uncertain times."
Senator Chambliss issued a statement questioning Obama’s budget plan and impact on the farm safety net. Chambliss stated the budget suggests that the current economic downturn has had no impact on our agriculture sector.
"Efforts to cut direct payments and make other sweeping changes to current farm policy will only inject additional uncertainty into the farm economy and will be met with my strong opposition," Chambliss said. "Our focus should be on offering producers the certainty they expect and work with the agriculture community at the appropriate time to make any changes in the current farm safety net. I believe it is unwise to completely alter the makeup of this farm safety net before we have the opportunity to assess the effects of the reforms included in the 2008 farm bill."
Beyond cuts, the administration also proposed enacting user fees for services provided by the Grain, Inspection, Packers and Stockyards Administration, the Animal and Plant Health Inspection Service and the Food Safety and Inspection Service, for total savings of about $300 million over five years.
The administration proposed a total of $26 billion in USDA discretionary spending in fiscal year 2010, $138.6 billion over five years and $299 billion over 10 years. Discretionary spending does not include food stamps or farm subsidies, which are mandatory spending for eligible recipients.
The budget reflects Obama’s campaign promises, rewards groups that supported him in the election and emphasizes statements that Agriculture Secretary Tom Vilsack has made about the administration’s priorities.
During the campaign, Obama said he would use the Packers and Stockyards Act to address small farmers’ concerns that big meat packers and other big businesses were using unfair and illegal tactics to take advantage of them. He also spoke positively about organic and locally grown food. Although Obama supported the farm bill, he also criticized payments to big farmers during the campaign, and in his speech to Congress last Tuesday, said that his budget would "end direct payments to large agribusinesses that don’t need them."
The Obama administration’s biggest budget proposal for the agriculture department would be a $1 billion annual increase in child nutrition programs, which are scheduled for congressional reauthorization this year. The increase would begin with $850 million in 2010 and increase to $1 billion in each year thereafter. The budget also includes the $20 billion increase in spending for the Supplemental Nutrition Assistance Program (SNAP -- the new name for food stamps) that was passed in the stimulus package and enough money for all applicants to the special nutrition program for women, infants and children known as WIC.
Outside of nutrition, the biggest budget increase is $50 million for deferred maintenance in the national forests. The text of the budget book also stated funds would go toward enforcement of the Packers and Stockyards Act and the Na
