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Obama would cut ag programs

When it comes to farm policy, Congress often ignores White House proposals. It passed the 2008 Farm Bill over President George W. Bush’s veto and it’s possible both parties will ignore some of the ideas put forth Monday in President Barack Obama’s Economic Growth and Deficit Reduction Plan.

Obama didn’t ignore agriculture, however. He wants to eliminate or reduce these ag programs:

  • Eliminate Direct Payments. The White House says they’re not needed at a time of high farm income, adding that “Economists have shown that direct payments have priced young Americans out of renting or owning the land needed to enter into farming.” It would save $3 billion per year.
  • Crop Insurance. The Administration is looking for more cuts here. It says currents costs are $8 billion per year, with $2.3 billion going to insurance companies and $5.7 billion to farmers as premium subsidies. USDA has already trimmed $600 million a year from support for insurers and hasn’t touched subsidies of farmer premiums. Obama’s deficit cutting plan would trim another 200 million a year from insurance companies, arguing that they would still have a return on investment of 12%. Farmer premium subsidies for coverage at the 50% catastrophic level would not change but premium subsidies on higher levels over coverage would be shaved by two basis points, or $200 million per year (a 3,.5% cut from current levels).
  •  Conservation. Obama would cut conservation programs by $200 million a year “by better targeting conservation funding to the most cost-effective and environmentally- beneficial programs and practices.” Even with those cuts, conservation assistance is projected to grow by $60 billion over the next 10 years.

The Administration would also extend the permanent disaster program known as SURE, or the Supplemental Revenue Assistance Program.

You’ll find Obama’s ideas on ag spending on pages 17-19 of his Plan here.

The President’s proposals didn’t get a widespread response in the ag community Monday, but the National Corn Growers Association expressed disappointment at the idea of making more cuts to crop insurance. The group’s president, Bart Schott, released this statement:

“NCGA strongly supports the effort to get our federal budget under control and the need for shared sacrifice in order to achieve an equitable, balanced approach.  We appreciate the recognition in President Obama’s plan of how important reliable effective risk management tools are to farmers and rural communities.  While NCGA agrees the fiscal challenges before us require even greater efficiency in the delivery of farm safety net programs, we are deeply concerned by proposals that would directly undermine a farmer’s ability to purchase adequate insurance coverage at a time of heightened volatility in commodity markets.  

“In addition, NCGA recently unveiled the Agriculture Disaster Assistance Program (ADAP), a plan that transfers a significant portion of direct payments for deficit reduction, with the remaining funds put toward an improved risk management program that better complements federal crop insurance.”

NCGA also says it supports letting the House and Senate ag committees write the next farm bill.



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