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Budget Committee passes resolution with no cuts in ag spending

In a move that is becoming increasingly common in Washington, the Senate Budget Committee largely ignored the Bush administration’s spending reduction proposals for agriculture when it approved the committee’s fiscal 2007 budget resolution.

President Bush had called for a 5 percent across-the-board reduction in commodity program payments for savings of $1 billion in fiscal 2007 and $7.7 billion over the next 10 years. The president’s budget plan also included reducing payments limits to $250,000 per farmer.

The Senate Budget Committee voted to do none of those after the chairman and ranking member of the Senate Committee on Agriculture, Nutrition and Forestry asked that the fiscal 2007 budget resolution not require a new round of reductions in mandatory spending programs.

“We strongly believe it is simply not realistic, substantively or politically, to expect additional reductions from these mandatory spending programs this year,” said Ag Committee Chairman Saxby Chambliss, R-Ga., and ranking member Tom Harkin, D-Iowa, in a letter to the Budget Committee chairman and ranking member.

“Many farmers are facing reduced income prospects this year due to higher production expenses related, in part, to higher fuel and energy prices and due to lower market prices expected for many commodities. Reductions in farm commodity programs at this time would worsen farm income prospects further.”

They said further reductions were also not warranted for mandatory funding for conservation, rural development, research and energy programs, given their importance to farmers and rural communities.

In last year’s budget proposal, the president asked Congress to reduce farm spending by $9 billion over five years by reducing farm program payments and tightening payment limits. But Chambliss persuaded Budget Committee Chairman Judd Gregg, R-Vt., to limit the reductions to $3 billion over five years.

A House-Senate Conference Committee later shifted the $3 billion in cuts from commodity programs to spending for conservation programs.

In their letter to Gregg and Sen. Kent Conrad, D-N.D., ranking member of the Budget Committee, Chambliss and Harkin noted that the annual cost to the taxpayer had been less under the current farm bill than under the 1996 “Freedom to Farm” law.

Commodity Credit Corp. farm income stabilization support and related outlays, including farm disaster payments, have averaged $14.2 billion over the four-year period since the 2002 farm bill was enacted, 28 percent lower than the average for the four preceding years when Congress passed several emergency disaster spending bills.

“Moreover, it is possible that new disciplines will be imposed on farm support programs both here and abroad as part of a new World Trade Organization Doha Round agricultural trade agreement, which negotiators are seeking to conclude by the end of 2006,” the letter said.

“If so, the Agriculture Committee may need to adjust U.S. farm income support programs to conform to a new WTO agreement. However, any required changes need not be considered until at least 2007.”

Chambliss and Harkin noted that the Congressional Budget Office is projecting that mandatory spending under the Agriculture Committee’s jurisdiction will grow slowly – only 1.6 percent per year – from fiscal 2005’s $69.248 billion to $82.86 billion in fiscal 2016, assuming that current law remains unchanged.

“By contrast, all other mandatory spending in the federal budget was $1.251 trillion in fiscal 2005, and CBO projects this non-Agriculture Committee mandatory spending will grow considerably more rapidly – 6.3 percent per year – to $2.444 trillion by fiscal 2016,” they said.

The CBO baseline also does not reflect the provisions of Senate Bill 1932, the Deficit Reduction Act of 2005 recently signed by the president, according to the two top senators on the Agriculture Committee.

“Agriculture Committee programs provided $2.709 billion, or 7 percent, of the bill’s $38.810 billion in savings over the five-year period covering fiscal 2006 to fiscal 2010 even though our programs account for only 4.7 percent of all mandatory spending projected over that period.”

The Deficit Reduction Act made significant multi-year reductions in agriculture Committee mandatory spending for several programs, the senators said. “These are in addition to annual reductions in many of these programs in recent agriculture appropriations bills, including a cut of $1.666 billion in budget authority in mandatory programs in the fiscal 2006 agricultural appropriations bill enacted last fall.”

The senators also asked that the fiscal 2007 budget resolution provide for adequate discretionary spending for programs that rely on annual appropriations. The president’s budget request assumes reduced levels of discretionary funding along with offsets from mandatory spending and new users fees.

“The fiscal 2007 budget resolution should allow for adequate levels of discretionary spending for programs within our Committee’s jurisdiction to avoid impairing our mandatory programs and to allow the Department of Agriculture and other agencies to fulfill their critical responsibilities.”

In one example, the National Cotton Council complained that proposed changes to federal cotton research and Extension programs could undercut the U.S. cotton industry’s ability to compete in the global marketplace.

Specifically, the budget proposes to close USDA cotton ginning laboratories in Lubbock, Texas, and Las Cruces, N.M. Research aimed at irrigation efficiency, improved integrated pest management and fiber quality enhancement in Florence, S.C.; Clemson, S.C.; Tifton, Ga.; Auburn, Ala.; Stoneville, Miss.; College Station, Texas; Lubbock; and Shafter, Calif., would also feel the impact.

“The Bush Administration’s 2007 budget proposal would slash more than $8.3 million from USDA Agricultural Research Service programs related to cotton – a 15 percent cut of the total allocation from this agency,” NCC Chairman Allen Helms said in a speech at the Mid-South Farm and Gin Show.

“The budget also proposes shifts of USDA funds allocated to agricultural experiment stations and Extensions that could strike at the foundations of those state and regional programs.”

“These proposed changes come at a time when the U.S. cotton industry is exporting 70 percent of its fiber but is competing fiercely against foreign cotton growths and man-made fibers,” said Sid Brough, an Edroy, Texas, ginner who chairs the NCC’s Research and Education Committee.

“These changes would undermine research and Extension activities essential to improving production and processing efficiency, which is critical to our competitiveness and profitability.”

The Senate Budget Committee proposed spending plan was expected to be considered by the full Senate the week of March 13. The House Budget Committee postponed its mark-up of the fiscal 2007 budget resolution that had been scheduled for the week of March 3.

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