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Corn+Soybean Digest

Obama Budget Riles Farm Groups

The Obama administration is continuing to push for a $500,000 cap on direct payments, a new limit on total farm program payments and a reduction in crop insurance subsidies in its budget proposals for fiscal year (FY) 2010.

Although the House and Senate Budget Committees rejected the proposals in the FY 2010 budget resolution Congress passed in April, administration officials again called for the reductions in the formal unveiling of their 2010 budget requests on May 6. The latest blueprint calls for Congress to eliminate direct payments to farmers with gross sales in excess of $500,000. That could mean a farmer with 625 acres of corn might no longer be eligible for direct payments, according to budgets compiled by land-grant universities.

The administration plan also would retain the $40,000/person limit on direct payments and the $65,000 limit on counter-cyclical payments in the 2008 Farm Bill and institute a new $145,000 limit on marketing loan gains. (The 2008 law places no cap on loan deficiency payments or marketing loan gains.)

“As part of an effort to transition large farms from direct payments provided to owners of base acres to increased income derived from emerging markets for environmental services, the budget phases out direct payments over three years to farmers with sales revenue of more than $500,000 annually,” a USDA fact sheet said.

Large farmers are “well positioned to replace payments with alternate sources of income from emerging markets for environmental services, such as carbon sequestration, renewable energy production and providing clean air, clean water and wildlife habitat.”

Farm groups said they would continue to argue against the administration’s attempt to change the direction of farm programs.

“Since February, USA Rice Federation has led and will continue to lead commodity coalition opposition to changing the 2008 Farm Bill that Congress approved and paid for last June,” says USA Rice Federation Chairman Jamie Warshaw. “Congress’ recently adopted 2010 budget resolution does not require farm bill changes. USA Rice will urge Congress to uphold that decision by not opening the farm bill during its 2010 appropriations debate.”

Besides the changes in the amount of farm program payments, the administration proposals would also reduce the premium subsidies for federal crop insurance coverage by 5 percentage points for all coverage levels. Cotton producers also would no longer receive help with payments for keeping cotton in approved government warehouses while it is being held in the Commodity Credit Corp. loan, a change that could result in more cotton coming on the market and further reducing prices.

Conservation groups, which are said to be commanding more influence in the new administration, gave a thumbs up to administration requests for increased funding for rural economic development and farm credit programs in the 2010 FY. But the National Sustainable Agriculture Coalition (NSAC) criticized administration plans to reduce conservation program spending by $680 million from the mandatory funding baseline for the 2008 Farm Bill and redirect the savings to other programs.

“This is unacceptable,” says Ferd Hoefner, policy director for the NSAC. “We strongly oppose the singling out of the conservation title of the farm bill for cuts and urge Congress to reject the President’s proposal.”

The conservation cuts would include $250 million from the Environmental Quality Incentives Program (EQIP), $43 million from the Wildlife Habitat Incentives Program, $30 million from the Farm and Ranchland Protection Program and $350 million from the Wetlands Reserve Program. The Conservation Stewardship Program, Grassland Reserve Program, Conservation Reserve Program and other smaller programs were left unchanged. On the FY 2009 agricultural appropriations, Congress left all the farm bill conservation programs intact with the exception of a $270 million cut in EQIP.

The savings in farm programs are part of the administration’s efforts to trim $17 billion from the federal budget for FY 2010, which begins Oct. 1. Total federal spending is expected to exceed $3.4 trillion due to spending for federal bailout programs and the economic stimulus package along with the wars in Iraq and Afghanistan.

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