Are the sharks circling farm programs?
 
Dan Looker
Business Editor
 
3/10/2005, 8:00 AM CST
 
 

In the unsettling movie, Open Water, two scuba divers are left behind by their dive boat in shark-infested waters. As the couple awaits their fate one is nipped by a fish. There is relief that it wasn't a shark, and fear of their remaining peril.

The agricultural community has been wondering, too, whether it's going to endure just some painful but survivable bites, or a real bloodletting as Congress considers cuts to agricultural spending in the Bush Administration's proposed budget for 2006.

This week they're getting some hints from the House and Senate budget committees. Both have proposed cutting spending for USDA over the next five years, with the House more closely aligned to targets than the Senate.

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Wednesday the Sustainable Agriculture Coalition praised Senate Budget Committee Chair Judd Gregg (R-NH) for limiting cuts to farm programs to $2.8 billion over the next five years.

"He's not taking cuts out of conservation. He's not taking cuts out of nutrition and he's come up with a number that puts Grassley (the Iowa Republican Senator who heads the Finance Committee) in reach of doing it with payment limitations," Ferd Hoefner, a lobbyist for the coalition, told Agriculture Online.

Grassley and Senator Byron Dorgan (D-ND) have introduced a bill that would cap farm program payments to $250,000 per farmer and close loopholes that allow big farms avoid limits on marketing loan gains. If passed, the change in the farm bill would save most of the money Gregg has targeted.

Of course, that proposal would hit cotton and rice farmers harder than midwestern corn and soybean farmers. Hoefner, whose group supports the Grassley bill, isn't counting on it succeeding. The Senate Agriculture Committee, headed by a southerner, Saxby Chambliss of Georgia, and the Senate Appropriations Committee, headed by Thad Cochran of Mississippi, are expected to fight payment limits. And those committees will have to decide how to slice up any smaller pie recommended by the Budget Committee.

The Sustainable Ag Coalition and other groups that back payment limits were encouraged when President Bush included them in his ag budget. However, the Bush proposal for farm program spending cuts wasn't clear on exactly how payment limits would be applied, so the Congressional Budget Office (CBO) left that part out of its own estimate of how Bush's plans would affect farm program spending, Hoefner said Wednesday. The Administration estimate shows its cuts of farm program spending only (not the entire USDA budget) would be $3.4 billion over 5 years. The CBO estimates that farm programs would be cut by $6.9 billion, mainly because Bush wants to cap loan deficiency payments [LDPs]-- limiting them to farms' historical yields from the 1980s, not the amount of bushels harvested. The Administration assumes market prices will be high enough after a couple of years that LDPs won't be needed.

House Budget Committee chair Jim Nussle (R-IA) has proposed cutting $5.3 billion over 5 years, but Hoefner wasn't certain whether those cuts are applied only to farm programs or to other portions of the USDA budget.

Most agriculture-related organizations, bobbing in an uncertain sea of federal red ink, are looking for an entirely different life preserver -- not cutting ag spending at all as Congress looks for ways to reduce the federal deficit.

On Tuesday of this week, a remarkable coalition of 218 organizations wrote the House and Senate budget committees, asking them to avoid cutting USDA spending, or, as the American Farm Bureau Federation put it in a press release, to preserve the agriculture budget for mandatory and discretionary programs. Mandatory programs include commodity programs.

The letter was signed by such occasional rivals as the American Corn Growers Association and the National Corn Growers Association, all other major commodity groups, the Nature Conservancy, the Welfare Law Center, several local food banks and real money banks such as Wells Fargo.

Some in Congress seem to be listening. House Ag Committee Chair Bob Goodlatte (R-VA) said in a statement Wednesday that "I am alarmed by the revised CBO estimates of the Administration's budget released recently. These estimates call for cuts of $9.1 billion in programs under the jurisdiction of the Agriculture Committee over five years. This is unacceptable. The level of reduction, which is proportionally far higher than in any other budget area, would seriously impair the functionality of the Committee's programs. I will work with my colleagues to insure that reductions of this magnitude do not stand." [That $9.1 billion estimate includes more than the $6.9 billion in cuts to farm programs alone.]

Daryll Ray, a University of Tennessee agricultural economist who follows farm policy, is not surprised to see farm programs under pressure in the Washington with the current federal deficit. Yet, he also doesn't believe the President will get all the cuts he wants.

"I don't think there's any chance at all that the reductions as he proposed will come through the Senate and the House," Ray told Agriculture Online. "I don't think that he [Bush] would want that, either. There's an awful lot of red states out there that are going to be madder than hell when they found out more about cuts to LDPs if prices happened to fall to where they were in 1998 and 1999."

Leaders of the National Corn Growers Association and the American Soybean Association said at the Commodity Classic, their joint annual meeting in late February, that the Administration's proposals to cap LDPs would hurt corn and soybean producers more than another other changes in its budget for USDA.



 


 

 

 

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