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Mixed views of ag budget

Some farm groups are pushing back on Obama Administration proposals for the USDA budget but members of Congress aren't completely opposed.

Thursday, the American Soybean Association expressed opposition both to the President's proposal to cut spending on crop insurance and to allow more use of cash to buy commodities for overseas food aid.

Among the crop insurance changes advanced by the Administration is a $7.4 billion savings over 10 years that would come from trimming the level of premium subsidies by up to 5 percentage points.

"As ASA has said many times over, soybean farmers are willing to do our part to address the nation’s fiscal challenges, and we have a vested interest in ensuring that the cuts needed are made in a strategic manner, with all potential consequences taken into account. As many farmers still struggle to recover from the worst drought in generations, now is not the time to make such a deep cut to the federal crop insurance program," said a statement from Danny Murphy, ASA president and a soybean farmer from Canton, Mississippi.

ASA, along with National Farmers Union, also opposes changes to food aid that are part of the budget proposal.

According to the Soybean group, the proposed change would replace in-kind aid with cash vouchers for purchases of food aid from foreign suppliers instead of commodities grown by American farmers. The proposal would shift jurisdiction over $1.5 billion from the House and Senate Agriculture Committees to Foreign Operations, and provide that only 55 percent of food aid be purchased from American farmers.

"Federal food aid programs provide nutrition to impoverished people in developing countries, and we remain absolutely opposed to the replacement of in-kind aid with cash, which takes a key market away from American producers and places aid recipients at risk by allowing purchases from suppliers whose safety and quality are unknown. The proposal would also adversely affect shipping and logistics providers, packaging companies, and private voluntary organizations," ASA's president, Murphy, said.

Although there is resistance in Congress to changing food aid, some members seem open to giving the Executive Branch more flexibility to use either cash payments or commodities.

"We've been working on this for years," Senator Tom Harkin (D-IA) told during a press conference Thursday.

Harkin was chairman of the Agriculture Committee when a pilot program to allow the federal government to buy commodities overseas was added to the farm bill.

"My takeaway on this is there's probably a blend. Some areas need food aid they can buy locally. Others cry out for direct aid," Harkin said.

"There ought to be flexibility for any administration," he said.

Congress will review the idea, he said, adding that he's not certain whether the mix of cash purchases and commodity shipments should be 45% cash and 55% commodities, as the Administration has proposed, or something different, such as a 40% cash and 60% commodity split.

Asked if he thought Congress would be willing to cut back on the level of crop insurance premium subsidies, Harkin said, "something like that might happen."

Currently, the average subsidy of farmer premiums is about 62% of the cost of coverage. The farmer pays, on average, a little less than 38%.

The Administration budget proposes trimming all premium subsidies by 3 percentage points, more than the 2-point reduction it advanced a year ago. A new ideas in the budget would also trim another 2 percentage points from coverage that has a harvest price option, which increases the value of insured crops based on futures prices in October.

Harkin doesn't find that idea unreasonable. "If the prices of commodities go up, then the government exposure is more," he said.

But he said he wants to hear from farm groups and the insurance industry before making a decision on what the level of premium subsidies should be.

"My point is, some of that's okay, but don't take it too far," Harkin said.

On food aid, Harkin isn't the only member of Congress willing to look at changes.

Wednesday when the budget was released, Representative Ed Royce (R-CA), chairman of the House Foreign Affairs Committee, and  Representative Eliot Engel (D-NY), the committee’s ranking Democrat, issued a joint statement:   

"U.S. international food aid programs have long embodied the compassion of the American people.  After nearly 60 years of experience, we are encouraged by the President’s proposal to fundamentally alter our food aid program to reach more people, more quickly, at less cost.  Several recent studies have highlighted the need for reform.  We look forward to working with the Administration and our colleagues in Congress to modernize U.S. food aid programs while ensuring maximum impact and efficiency."

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