Farm subsidies face $30B hit under GOP budget plan

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[April 11, 2011]  MINNEAPOLIS (AP) -- The Republican head of the House Budget Committee has proposed cutting agriculture subsidies by $30 billion over the next 10 years as part of a broad effort to slash federal spending, but it remains to be seen whether his ideas will be incorporated in legislation that sets funding for agriculture programs.

That legislation is handled by a different committee that's dominated by lawmakers from states where farmers have historically received big government handouts.

The $3.5 trillion budget plan put forward by Rep. Paul Ryan, R-Wis., has grabbed headlines because of its proposed revamps of Medicare and Medicaid and its tax cuts, but it also would reduce spending on agriculture and a wide range of other federal programs. It awaits a floor vote in the House but has no chance in the Democratic controlled Senate. Still, it's framing the budget debate and some of its proposals could make it into other legislation, including the 2012 farm bill.

Rep. Frank Lucas, R-Okla., chairman of the House Agriculture Committee, commended Ryan for "taking the first serious step in reining in our deficit" but was quick to add that the policy proposals "are simply suggestions. At the end of the day, members of the House Agriculture Committee and I will write the next farm bill."

The Environmental Working Group, which contends subsidies are corporate welfare that foster ecologically unsound farming practices, welcomed the subsidy cuts while expressing reservations about what might happen to conservation programs, which the plan doesn't address.

"We think it's a great start. It's a real gift to the subsidy reform effort. ... Of course this is just his vision. There's nothing compelling anyone to implement any of these changes," EWG analyst David DeGennaro told The Associated Press.

DeGenarro said the GOP plan would go farther in cutting farm subsidies than President Barack Obama's deficit commission, which called for $10 billion in savings from farm programs over 10 years.

"It's a real platform to work from," he said.

The 72-page report laying out Ryan's plan said crop prices and deficits are both hitting new highs. It noted that net farm income this year is forecast to hit the second-highest total in 35 years, and that farmers' five most profitable years in the last 35 have all been in the past decade.

"The record-breaking prosperity of American farmers and farm communities is to be celebrated," the report said. "But it also calls for a re-examination of federal agricultural programs that spend billions each year, to ensure that taxpayers aren't funding support for a sector that is more than capable of thriving on its own."

Ryan has proposed cutting $30 billion over 10 years by spending less on a crop subsidy program called direct payments and giving smaller subsidies to crop insurance. Direct payments were already expected to be a major target in the 2012 farm bill.

Farmers who sign up for direct payments get them regardless of how much they grow or what happens to crop prices in any given year. The fixed per-acre payments are based on a farm's historic production of eligible crops, such as corn or cotton, and don't shrink when crop prices are high, as they are now. Lucas has been a strong defender of the program, which costs about $5 billion a year but is popular with Southern farmers.

The government will spend close to $8 billion this year to subsidize crop insurance, which helps cover farmers' losses due to bad weather and disasters. The Agriculture Department last year renegotiated its agreement with insurance companies to save an estimated $6 billion over 10 years, but Ryan seeks further savings "so that agricultural producers assume the same kind of responsibility for managing risk that other businesses do."

Ryan's plan leaves the details of how to achieve those savings up to Lucas' committee and presumes the changes won't take effect until the next five-year farm bill, which Lucas plans to write next year.

While farm groups said their members are ready to do their part to help balance the budget, they were noncommittal on the details in their statements last week.

"It is vital that decisions to cut farm program spending be made with a recognition of the cyclical nature of our farm economy and its ties to a global economy that can be even more volatile," American Farm Bureau Federation President Bob Stallman said.

Some state Farm Bureaus and the National Farmers Union have called for spending less on direct payments to free up money for other programs, such as expanded crop insurance, but delegates to the Farm Bureau's national convention in January were unable to reach a consensus.

"If there's any sure thing in agriculture, it is that high prices are always followed by low prices. Too many times, policymakers have declared a new era in farm commodity prices only to watch prices plummet soon after," National Farmers Union President Roger Johnson warned.

But the National Corn Growers Association sounded a more supportive note.

"These cuts are significant, but so is our nation's out-of-control budget deficit. What is important is that farmers are not singled out -- the cuts proposed for agriculture are proportional to those proposed for other areas of the federal budget," said its president, Bart Schott.

[Associated Press; By STEVE KARNOWSKI]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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