Budget resolutions leave farm income support payments of 2008 farm bill intact

by Jay Sjerven
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WASHINGTON — The House of Representatives and the Senate on April 2 passed fiscal year 2010 budget resolutions that left intact farm income support provisions of the 2008 farm bill, rebuffing the administration’s proposal to phase out direct payments to the largest farm operations. The resolutions provided general outlines and funding targets to guide Congress in the budget-making and appropriations process for the fiscal year that will begin Oct. 1.

President Barack Obama in his initial budget proposal for fiscal 2010 issued Feb. 26 called for phasing out over three years direct payments made to producers whose annual sales revenues exceed $500,000. Under the 2008 farm act, a person or legal entity with adjusted farm gross income of more than $750,000, averaged over the preceding three years, is not eligible to receive direct payments. President Obama’s budget also supported the implementation of a $250,000 commodity program payment limit.

The farm payment proposal generated considerable opposition from farm organizations and their supporters in Congress. Stoking the fires of the opposition was consternation over the use of a gross farm sales threshold, especially one so low, as opposed to an adjusted gross income limit for determining eligibility to receive direct payments.

A letter sent to the chairmen and ranking members of the House and Senate budget committees in mid-March by officials of 38 farm organizations said the president’s proposal threatened to change the rules midstream for American ranchers and farmers.

"The proposed budget cuts overlook the fact that producers and lenders alike have made long-term business decisions based upon the commitment made by Congress in the five-year farm bill and thus will exacerbate the current credit crisis, " the organizations told Congress.

A March 19 letter to Secretary of Agriculture Thomas Vilsack from eight Republican members of the Senate — Senators Saxby Chambliss of Georgia, Thad Cochran of Mississippi, John Cornyn of Texas, Mike Crapo of Idaho, James Risch of Idaho, Pat Roberts of Kansas, John Thune of South Dakota and David Vitter of Louisiana — complained the administration unfairly counterpoised the interests of those receiving support under the government’s nutrition programs to those of famers.

"The fiscal year 2010 budget proposal request provides a phase out of direct payments, one of our most trade compliant forms of support, to farms with sales above $500,000," the senators said. "Of the 2.2 million farms in the U.S., there are 120,859 with sales above $500,000, representing 74% of all production value in the U.S. Of those farms, the vast majority receive some form of government payments that will be impacted by the proposal." The senators asserted the sales threshold proposed by the administration disregarded the costs of producing the country’s food.

Mr. Vilsack on March 31, in his opening statement read during testimony before the House Committee on Appropriations’ Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, didn’t mention the administration’s $500,000 sales threshold for determining eligibility for direct payments. Mr. Vilsack’s prepared statement read, "In keeping with the president’s pledge to target farm payments, the budget proposes a hard cap on all payments of $250,000 and to phase out direct payments to the largest producers. Though controversial, we all need to pitch in to support the president’s goal to cut the deficit in half."

Senator Kent Conrad of North Dakota, chairman of the Senate budget committee, seemed to summarize the majority view in Congress in this Chairman’s Mark of the Senate budget resolution. Mr. Conrad said, "The Chairman’s Mark leaves the nutrition, conservation, renewable energy, and farm safety net improvements included in the 2008 farm bill unchanged. However, given our current fiscal situation, the Chairman’s Mark recognizes that all areas of the federal budget need to be examined for savings. Even though the 2008 farm bill received over 80 votes in the Senate and was fully paid for, the Chairman’s Mark would support targeted savings in agriculture, including the president’s proposal for market access, and some savings in the Environmental Quality Incentives Program and the federal crop insurance program."

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