Ag leaders oppose direct payment cut Obama seeks
Congress would need to include president’s proposal in budget

Jerry Hagstrom
For the Capital Press

Thursday, March 05, 2009

WASHINGTON, D.C. - With farm leaders opposing President Obama's budget proposal to phase out direct payments for farmers with more than $500,000 sales, the idea seems dead on arrival on Capitol Hill, but Agriculture Secretary Tom Vilsack is still trying to promote the idea.

Several farm leaders said they voiced their objections to the direct payments proposal in a Friday, Feb. 27, telephone call with Obama administration officials. The leaders said that the White House Office of Outreach arranged for Carole Jett, Vilsack's deputy chief of staff, and USDA Budget Director Scott Steele, to speak to the members of the private sector agricultural committee that backed Obama during the election season and to other farm leaders.

Nebraska Farmers Union President John Hansen said he told the USDA officials that the proposal to eliminate direct payments on farms with $500,000 in sales would eliminate payments for an average Nebraska corn farm of 1,000 acres but would not take into consideration that farm's cost of production.

Hansen noted that the National Farmers Union has supported the elimination of the direct payments program, but with the assumption that the money would be used for a better system of payments to farmers when prices are low.

"Our farmers are not wild speculators, trying to cut corners," Hansen said. "We are trying to make a living. We need the income safety net." The NFU is considered Democratic-leaning and the farm group closest to Obama.

Hansen and a Republican farm lobbyist on the call said the USDA officials described the proposal as part of a very large budget picture and that they did not react to the farm leaders' complaints.

Ferd Hoefner of the Sustainable Agriculture Coalition said his group would focus on the Obama administration's proposal to cap farm subsidies at $250,000 rather than the direct payments proposal.

The National Cotton Council, whose members would bear a large part of the cut, said in a news release that Obama's proposal to cut the direct payments penalizes the farms that the 2007 Census of Agriculture shows are responsible for producing three-quarters of the food and fiber supply in the United States.

"It is important to point out that sales above $500,000 do not equate to a measure of profitability," said Jay Hardwick, chairman of the National Cotton Council. "Today's farms bear extraordinary short-term and long-term expenses."

Hardwick also said that the cotton industry was disappointed by the proposal to eliminate cotton storage payments even though cotton is the only crop the government pays to store.

"Unlike other commodities, baled cotton lint is an identity-preserved product that requires off-farm storage in (Commodity Credit Corporation)-approved facilities," Hardwick said.

Senate Budget Committee Chairman Kent Conrad, D-N.D., who would have to include Obama's proposal in the congressional budget, said he would oppose the direct payments cut because it would affect far more than the megafarms that Obama said he was targeting.

"The farm bill passed by Congress last summer was completely paid for - not a dime was added to the deficit or the debt because of this farm bill," Conrad said in a statement shortly after the budget was released on Friday, Feb. 20. "This plan would phase out direct payments based on gross sales, which would mean a farmer could see a drop in farm income and still see a cut in their safety net support. That makes no sense."

Conrad played a central role in coming up with the budget for the 2008 Farm Bill and the compromises that led to its passage.

Sen. Byron Dorgan, D-N.D., said that Obama should pursue another budget proposal to limit farm subsidies to $250,000.

"Although I am not a big fan of the direct payment portion of the farm program, if we were going to try to end some payments in addition to the $250,000 limit, a gross sale cut-off is not the fairest way to do that," Dorgan said. "But, I commend (Obama) for pushing a $250,000 payment limitation in order to target the farm program payments to those farms that most need it. It is long overdue."

Dorgan has introduced a bill with Sen. Charles Grassley, R-Iowa, to limit subsidies to $250,000.

House Agriculture Committee Chairman Collin Peterson, D-Minn., in an e-mail took the same position as Conrad. "We just passed a fiscally responsible farm bill that made cuts to farm programs, so now is not the time to reopen it."

House Agriculture ranking member Frank Lucas, R-Okla., wrote to Vilsack, saying that the proposal would be "detrimental" to farmers' livelihoods.