Posted: Thursday, September 22, 2011 9:00 AM
Administration seeks renewed funding for disaster aid, end to direct payments
BY JERRY HAGSTROM
For the Capital Press
WASHINGTON -- The pressure is mounting in the nation's capital to rewrite at least part of the farm bill this year as Congress considers a huge piece of legislation to create jobs and reduce the deficit.
President Barack Obama proposed Sept. 20 the continuation of disaster aid programs that expire on Sept. 30 and $33 billion in farm program cuts over 10 years by eliminating the direct payments program and reducing the budget for crop insurance and conservation.
A day later, Senate Budget Committee Chairman Kent Conrad, D-N.D., said it would be better for the joint committee on deficit reduction to include his proposal to create a new farm program by merging the countercyclical subsidies, the average crop revenue election program known as ACRE and disaster aid programs.
Whether there is any movement on farm programs this fall depends on whether the 12-member super-committee composed of six Democrats and six Republicans from both houses can come up with a viable proposal to cut the deficit by $1.5 trillion over 10 years. If no package passes Congress by Dec. 23, automatic cuts to domestic and military spending totaling $1.2 trillion over 10 years will go into effect in 2013.
Disaster aid programs for crop, forage, livestock, tree, honey and farm-raised fish producers expire on Sept. 30, but Obama said those programs should continue, particularly in light of the many disaster programs around the country.
But he also noted that the farm economy has been prosperous in recent years and proposed that the direct payments program be eliminated. Direct payments cost the government $4.8 billion per year, but the cost savings would be only $3 billion per year because the administration anticipates that many farmers would sign up for the ACRE program if they lose their direct payments.
Obama also said that even though Congress and the administration have cut payments to crop insurance companies, the government could save another $8.3 billion over 10 years by reducing crop insurance company profits and other payments and lowering the subsidy that the government provides to producers who get more than a 50 percent subsidy on their premiums by two basis points.
Obama proposed to save another $2 billion over 10 years by cutting conservation programs.
Many members of Congress and lobbyists, particularly those in the crop insurance industry, said the cuts to agriculture were too deep.
Conrad, who has been working on a farm bill proposal for several months, told Capital Press that, while the agriculture economy is strong, the agriculture budget is "going to have to provide savings." But he added that agriculture's contribution should be "savings that are attached to policy that makes sense so you have an entire package that can hold together that can be implemented."
Conrad has not released his proposal, but said he is now "vetting" it with both colleagues and farm leaders and getting "a positive reaction." He said he does not have an "official" score for the proposal.
"Most people understand in this budget environment that agriculture has to be part of the solution, but the cuts should not be disproportionate," Conrad said.
Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., said that any decisions on cuts should be made by the Agriculture committee and that farmers need both crop insurance and conservation programs.
House Agriculture Committee Chairman Frank Lucas, R-Okla., and Senate Agriculture ranking member Pat Roberts, R-Kan., were critical of the Obama proposal in a joint statement.
"The president's policy priorities reveal a lack of knowledge of production agriculture and fail to recognize how wholesale changes to farm policy would impact the people who feed us," the statement said.