President Bush has once again asked Congress to make across-the board cuts in farm programs, and congressional leaders once again are telling the President they have no intention of doing so.
The fiscal year 2007 budget proposal the President presented on Feb. 6 includes a 5 percent reduction in all commodity payments for savings of nearly $1 billion the first year and $7.7 billion over the next 10 years. Additional savings would come from assessments on the sugar and milk programs and tighter payment limits.
As he did last year when he outlined the administration plan, Agriculture Secretary Mike Johanns said the proposed cuts are necessary to help reduce the federal deficit, which is projected to reach $400 billion in FY 2007, after hitting $319 billion in FY 2006.
“Reducing the deficit will strengthen the economy, and it will create jobs in much the same way that a tax cut would,” he said. “Farmers and ranchers across America know the importance of a healthy economy. It increases demand for their products, and it raises income. The President is committed to keeping the economy strong.”
Senate Agriculture Committee Chairman Saxby Chambliss, who led efforts to rebuff similar administration proposals for cutting the agriculture budget in 2005, said he expected Congress to reject them again.
“We will continue to work for deficit reduction that will not burden farmers, particularly after the high fuel costs and extreme weather of the 2005 crop year, and without harming the mutually-beneficial relationship between farmers and food stamp families,” the Georgia Republican said.
Farmers have been willing to share in deficit reduction in “manageable” amounts, said Chambliss, noting that crop program spending through 2005 is $13 billion less than projected by the Congressional Budget Office in 2002.
Speaking at a press briefing, Johanns said the Bush administration expects total USDA expenditures to decrease from about $96 billion to $93 billion in fiscal year 2007 because of assumptions that fiscal year 2006 emergency disaster assistance funding will not be needed again and because of its deficit reduction proposals.
Those savings, he said, will allow the Bush administration to fund “the nation's priorities,” which he defined as preparing for avian influenza, the potential fight against bio-terrorism and energy programs.
“We've been closely monitoring the very alarming spread of highly pathogenic avian influenza overseas,” he said. “USDA is a full partner in the government-wide effort to prepare the country for the potential pandemic and the worldwide effort to stop the spread of H5N1 virus at its source overseas.”
The 2007 proposal includes $82 million for avian influenza and additional $127 million for the USDA component of the Food and Agriculture Defense Initiative, which will bring the USDA total for the latter to $322 million.
As promised in the State of the Union Address, the President's 2007 budget also provides substantial new funding for energy programs, including $345 million for loans, grants and other support for energy projects from USDA.
“I recently announced a comprehensive energy strategy to help producers with high energy costs,” Johanns noted. “I am pleased that this budget continues to provide tools that help producers manage the impact of high energy costs. This budget also funds the development of renewable energy resources and new energy efficient technology.”
He said the administration's proposals would also lower the payment limit cap for individuals to $250,000 for commodity payments, including all types of marketing loan gains; reducing crop and dairy payments to farmers by 5 percent, requiring the dairy price-support program to minimize expenditures; and imposing a 1.25 percent sugar marketing assessment to be paid by sugar processors on all processed sugar and implementing a small assessment on milk marketed by producers.
The plan also seeks to reduce expenditures for crop insurance, which, he said, have grown nearly 50 percent between 2001 and 2007 while “producers have continued to receive disaster payments through ad hoc disaster programs.” The administration wants to enhance crop insurance coverage while reducing costs to deliver the program.
The President's proposal does call for spending $4 billion to continue implementation of conservation programs authorized in the 2002 farm bill, including $400 million to improve and protect at least 3 million acres of wetlands over a five-year period ending in 2009. It would also support the enrollment of an additional 23 million acres, mostly through the Environmental Quality Incentives Program.
Democrats were quick to call the President's proposals “full of gimmicks and low on common sense,” as Rep. Collin Peterson, ranking member of the House Agriculture Committee said.
“The plan does nothing to address escalating federal spending or this Administration's unending record of deficits,” he said. “For agriculture, at best, this budget is a rehash of the President's strategy of sacrificing farm support for a sell-at-any-cost international trade policy.”
Sen. Blanche Lincoln, D-Ark., said the proposals will harm southern farmers economically at a time when they're trying to recover from droughts, hurricanes and high energy and fertilizer prices.
Besides the 5-percent-cut in commodity program payments, she said, the proposal will eliminate the “three-entity rule” in the 2002 farm bill's payment limit rules, force further consolidation of county Farm Service Agency offices and cut funding of the Clarksdale, Miss.-based Delta Regional Authority to $5.94 million.
“Further reductions in support for American growers undercut their competitiveness in the global marketplace,” she said. “President Bush has shown the nation that southern farmers are not a priority. His desire to rewrite the farm bill by imposing payment limits and eliminating the three-entity rule would cut the feet out from under southern farmers.”
Southern-based farm groups also criticized the proposals, saying they amounted to rewriting the farm bill a year before it is scheduled to expire in 2007.
“We are disappointed that the administration has again proposed cuts to agriculture programs, particularly after Congress just last week gave final approval to the Deficit Reduction Act of 2005 that, among other items, reduced agriculture program funding by $2.7 billion over the next five years,” said USA Rice Producers' Group Chairman Paul Combs.
“It is inappropriate to propose further cuts to agriculture for fiscal year 2007, especially since this will be the last year of the 2002 farm bill,” Combs said. “In light of the incredibly damaging policy proposals in the budget, many of which seem squarely targeted at Sunbelt agriculture — including rice — proposing further changes in the last year of this six-year commitment to America's farmers and rural America is misguided.”
The National Cotton Council also issued a statement criticizing a budget that it said would disrupt current farm programs and undercut American agriculture, including the nation's cotton producers.
“Agriculture should not be asked to bear a disproportionate share of the federal deficit trimming process,” NCC Chairman Woods Eastland said. “We urge Congress to carefully weigh options in the budget debate so that U.S. agriculture is not weakened.”
Eastland said the nation's farmers already are making planting decisions for 2006, and adding uncertainty to their eligibility for program support could cause many to make decisions based on unclear, ill-defined prospective changes in federal legislation, rather than market signals.
“Agriculture should not be asked for greater sacrifice than other federal departments, and certainly no farm sector or region should be targeted,” Eastland said. “Altering the safety net of the farm law before its scheduled expiration creates enormous uncertainty for farmers who already must contend with market instability, unpredictable weather and variable fuel, energy and other supply costs. This is not the time for major changes in U.S. farm law.”
Eastland said the administration needs to be reminded that the stability provided by the 2002 farm bill has allowed unprecedented growth in farm investment, while underpinning an industry that contributes 15 percent of the nation's GDP.
“Federal budget deficits adversely impact the entire American economy and efforts to address deficits should strive for equity in sharing the pain of adjustment,” Eastland said. “Spending on commodity and conservation agriculture programs account for less than 1.5 percent of total mandatory spending, yet commodity programs are being asked to shoulder more than 8 percent of required reductions. Agriculture should not be singled out or asked for greater sacrifice than other federal departments.”