President’s Budget Proposals Could Harm Farm Safety Net, NCGA Notes (2-7-06)

President George W. Bush’s proposed reductions for fiscal year 2007 in U.S. Department of Agriculture (USDA) spending programs –-- including across-the-board cuts in crop payments to farmers by 5 percent – could harm the farm safety net put in place by the 2002 farm bill, the National Corn Growers Association (NCGA) states.

NCGA President Gerald Tumbleson said growers are concerned with the proposals in the president’s budget pertaining to protecting the 2002 farm bill and enhancing agriculture’s role in improving the economy.

“Growers need a budget that will continue to protect the integrity and safety net of the current farm bill and its programs,” he said. “Growers understand the United States is facing a deficit and harder financial constraints. However, a strong agriculture industry and good policies are vital to growing the economy of this country.”

In addition to reduced crop payments, the budget proposal also calls for lowering the cap on farm payments to $250,000 per year for all commodity payments, including all types of marketing loan gains, while removing the three-entity rule and making marketing loans recourse above the payment limit; reducing crop insurance premium subsidies for farmers; and lowering the amount paid to reimburse insurance companies for administrative costs. In an effort to reduce the need for ad hoc disaster assistance, it would require all producers receiving direct crop payments to purchase crop insurance. 

USDA's discretionary programs account for the remaining 23 percent, or $21.5 billion, of expenditures in 2007, a decrease of $1.2 billion from 2006. Discretionary programs include the women, infants and children (WIC) program; rural development loans and grants; research and education; soil and water conservation technical assistance; management of national forests; and domestic marketing assistance.

Tumbleson also noted agriculture has a tremendous amount to offer and by limiting farm programs, the United States is limiting grower’s ability to continue to be a leader in renewable energy and biodegradable products.

“Agriculture will continue to lead this country in providing energy and protein,” he said. “Producers are unable to move the country forward if we do not have the programs that allow this to happen. We must have the agriculture policy in place to continue adding value to agriculture.”