Wednesday, February 16, 2011

Just in from Capitol Hill

President’s Budget Ends Payments to Top-Earning Farmers

Washington--In the President's fiscal 2012 budget plan just released, President Barack Obama proposed eliminating federal farm payments to U.S. farmers with the highest adjusted gross incomes (AGI). President Obama argued that under the current system, payments distort the farm sector and some farmers are paid even when no crops are grown.

The plan would save $2.6 billion over 10 years, affecting about 30,000 people out of 1.2 million who currently receive farm payments. Once implemented over a three-year phase-in period, payments would be made only to people with less than $500,000 AGI from agriculture or less than $250,000 off-farm AGI. (The current cut-off is $750,000 on-farm AGI; $500,000 non-farm AGI.) A cut in direct payments from $80,000 per farm to $60,000 also was proposed, in addition to a revision to the crop insurance program that would save $1.8 billion over 10 years by reducing payments to insurers for policies against catastrophic losses.

Legislators last year rejected an identical proposal to cut farmer subsidies based on AGI. AFBF is reviewing the president’s budget proposal to determine how it would affect farmers and ranchers if implemented.

House Republicans proposeda more aggressive reduction in federal spending earlier this month, a $30 billion cut to the overall budget for the remainder of the 2011 fiscal year, with a 14 percent reduction in agriculture spending. That comes out to $20.1 billion for agriculture programs in 2011 vs. $23.3 billion appropriated in 2010.

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