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USDA farm bill proposals 'more equitable,' Johanns says

Agriculture.com Staff 01/31/2007 @ 10:29am

Agriculture Secretary Mike Johanns rolled out a 2007 farm bill proposal that he says was inspired by comments from farmers and ranchers at listening sessions in 48 states.

The USDA farm bill would save $10 billion compared to spending under the 2002 farm bill. Yet it provides $5 billion more than if the current farm law was just extended for another 5 years. That's partly because current high commodity prices would just be stretched out in a 10-year projection for budgeting purposes and would result in less money for an extended farm law.

But the savings would also come from putting some limits on spending for commodity programs. If you sold an apartment complex in Chicago and bought a farm in Nebraska under a Section 1031 tax-deferred property exchange, you would not be allowed to participate in commodity programs on that farm.

An even bigger savings, projected at about $1.5 billion, would come from not allowing anyone with more than $200,000 in adjusted gross income to participate in commodity programs. That would be income from both farming and off-farm jobs or investments.

"These proposals, we believe, are more equitable," Johanns said, after recalling passionate discussions from farmers and ranchers for or against tougher payment limits and complaints about how Section 1031 exchanges have driven land prices beyond the reach of even larger farmers in some areas.

Johanns also said the USDA proposal would eliminate the three-entity rule that allows a chain of farm enterprises to receive greater amounts of program payments. And he would cap payments at $360,000.

Some of the savings would be used to increase spending on conservation, energy research, and USDA purchases of fruits and vegetables. The proposal also includes several changes in USDA loans and payments to assist beginning farmers. A 20% greater direct payment would go to beginning farmers for the first five years of their production.

USDA proposes significant changes in the commodity title, reducing loan rates for the marketing loan program to levels proposed by the House Agriculture Committee during the 2002 Farm Bill debate, and raising direct payments, with most of the increase going to cotton farms during the first two years of the farm bill. Corn and soybean direct payments would increase by about 7% in years three through five of the farm bill.

Johanns also proposes replacing the current countercyclical program with a revenue-based payment that would compensate farmers who have low levels of production caused by drought.

Agriculture Secretary Mike Johanns rolled out a 2007 farm bill proposal that he says was inspired by comments from farmers and ranchers at listening sessions in 48 states.

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