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Opposition, skepticism greet Obama's USDA budget

President Barack Obama's Office of Management and Budget Thursday released highlights of the budget he'll request from Congress for the U.S. Department of Agriculture in 2010. It includes a three-year phaseout of direct payments to commodity growers with sales over $500,000, as well as cuts to crop insurance subsidies and export promotion.

Cutting direct payments has already drawn opposition from the ranking Republican on the House Agriculture Committee and the National Association of Wheat Growers, as well as misgivings even from a conservative "Blue Dog" Democrat in the House. And the policy director for an advocacy group that favors tougher payment limits wonders if the battle over direct payments may distract Congress and the Administration from payment reform.

The budget proposal won't be fleshed out until March or early April, Representative Stephanie Herseth Sandlin (D-SD) told reporters Thursday.

"I'll be interested in getting clarification from both the Secretary of Agriculture and administration officials as to what the President intends," she told Agriculture Online.

Herseth Sandlin, a leader of the Blue Dog Coalition, said she's not certain all members of her group would support cutting direct payments. She said she also has reservations about rewriting the 2008 farm bill if that's what it takes to change direct payments. She is a supporter of lowering payment limits for all commodity programs.

"I want to make sure my constituents aren't affected by cuts that are disproportionate to others," she said.

Representative Frank Lucas of Oklahoma, the ranking Republican on the House Agriculture Committee, told Agriculture Online Thursday that limiting direct payments would be a big change in a program that's been in farm legislation since 1996.

"It is the first step in a dramatic change in policy if it were to come to fruition," Lucas said.

He pointed out that $500,000 in sales doesn't mean a farm is profitable. In a letter to Agriculture Secretary Tom Vilsack, Lucas pointed out that U.S. net farm income is down 20% from last year at a time when many input costs haven't fallen. "It is irresponsible to even think of eliminating the one stable form of support for our producers," he told Vilsack.

Lucas said that direct payments help provide financial certainty for farmers and lenders.

Daren Coppock, CEO of the National Association of Wheat Growers, told Agriculture Online that his group also is against the administration's proposal.

"That's not something we're terribly excited about. It doesn't take a very large farm to get to $500,000 in sales," he said.

Direct payments are also considered "green box" payments under World Trade Organization rules. In other words, they aren't considered payments that will distort trade. Moving away from Direct Payments to other types of payments might open the U.S. to legal challenges under WTO rules.

NAWG also opposes cutting the Market Access Program by 20%, a program that U.S. Wheat Associates uses to promote wheat sales overseas. And the group was disappointed to see that subsidies to crop insurance companies would be cut, as would subsidies to grower-paid premiums.

Some of the administration's budget proposals do have support in Congress, too.

Besides phasing out direct payments to some farmers, Obama supports a $250,000 cap on all types of commodity program payments.

That drew praise from Senator Tim Johnson (D-SD), who said in a statement that "I am also pleased that the blueprint includes provisions to better target farm payments to our hardworking family farmers, who are struggling to provide for their families during particularly tough times."

President Barack Obama's Office of Management and Budget Thursday released highlights of the budget he'll request from Congress for the U.S. Department of Agriculture in 2010. It includes a three-year phaseout of direct payments to commodity growers with sales over $500,000, as well as cuts to crop insurance subsidies and export promotion.

Senate Agriculture Committee Chairman Tom Harkin (D-IA) has long been critical of the direct payment program. Without specifically endorsing the three-year phaseout released on Thursday, Harkin said in a statement that Obama was making tough choices and wise investments in the future.

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