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Corn+Soybean Digest

Market News

House Passes Ag Budget Cuts

The House Agriculture Committee on Friday passed a spending plan that would cut the overall USDA budget by $3.7 billion and lower crop subsidies by about $1 billion over a five-year period.

The spending plan would also cut $760 million in spending on conservation programs, cut $844 million in spending on food stamps and eliminate the Step 2 cotton subsidy at the end of this cotton marketing year.

Passed on a party-line vote of 25-20, the package now will become part of an omnibus House budget cutting bill.

In the area of crop subsidies, the House Ag Committee plan includes a 1% reduction in direct payments to grain, cotton and soybean farmers for fiscal 2006-09, to save $212 million.

The plan would also reduce to 40% the amount farmers can collect as the maximum advance direct payment in fiscal 2006 and 2007, to save $513 million. The maximum now is 50%.

The cuts to conservation spending include lowering the cap on Conservation Security funding to $2.213 billion for fiscal 2006-10 and $5.729 billion for fiscal 2006-15, to save $504 million.

The plan would also reduce spending on agricultural research by $620 million.

Unlike the separate $3 billion budget cutting plan passed by the Senate Ag Committee last week, the House plan does not revive the Milk Income Loss Contract (MILC) program.

The Senate also chose not to cut any funding from the food stamp program.

The budget plans will now advance to votes before the full House and Senate and differences will wind up being worked out behind closed doors in a House-Senate conference committee.

Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at

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