Farm groups fear Obama’s cost-cutting budget plan 05 Feb 2010

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February 5, 2010

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American farm groups were quick to voice opposition to cost-cutting measures proposed in President Barack Obama’s $149 billion budget plan for the US Department of Agriculture in fiscal year 2011. First and foremost were concerns about plans to cut farm subsidies, an issue that producer groups had considered settled—at least for a few more years—when Congress passed the 2008 farm bill. The USDA budget seeks to cut “wealthy farmers” off from USDA’s direct payment subsidies. Farmers are now excluded from direct payment subsidies if their non-farm-related adjusted gross income, or AGI, is more than $500,000 or their farm-related AGI is more than $750,000. The Obama plan would lower those income ceilings by $250,000 in each category. Lower maximum subsidies

The FY 2011 budget proposal would also prohibit any farmer from collecting more than $30,000 per year in subsidies, down from the current level of $40,000. National Association of Wheat Growers spokeswoman Melissa George Kessler said the subsidies have already been established by Congress and wheat farmers are counting on them. The American Soybean Association also railed at the idea of altering the 2008 farm bill. ASA President Rob Joslin insisted: “Cutting the farm safety net to achieve minimal savings would jeopardize an industry that continues to be a key driver for US economic recovery and export growth.” Cutting crop insurance

And Joslin, as well as National Farmers Union President Roger Johnson, were adamant that the Obama administration went too far with its goal of cutting billions of dollars of spending on subsidies for crop insurance companies. “The cut in crop insurance at $8 billion over 10 years comes as a disappointment, as crop insurance is part of the vital safety net for farmers and ranchers providing a safe and secure food supply,” Johnson said. The USDA, in an effort to scale back spending, is now in negotiations with crop insurance companies to overhaul the Federal Crop Insurance Program. USDA data show government payments to crop insurers have more than doubled in recent years, jumping from $1.8 billion in 2006 to $3.8 billion in 2009 while the total number of policies held by farmers has declined. “While there may be need for reform in crop insurance administrative payments to companies, any savings should be reinvested to make the program more widely accepted in parts of the country where farmers don’t participate,” ASA’s Joslin said.

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