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Published:February 1st, 2007 02:54 EST
The Bush Administration Proposes Cutting Farm Subsidies

The Bush Administration Proposes Cutting Farm Subsidies

By SOP newswire

Washington -- The Bush administration is proposing to reduce its farm support programs over the next five years by tying commodity subsidies to farmers' incomes.

The new farm bill proposal the administration has sent to Congress would make U.S. farmers more competitive in the global agriculture marketplace while tightening spending, Agriculture Secretary Mike Johanns said during a January 31 briefing for reporters.

"The time has come to move forward with a farm program that is market-oriented," Johanns said.

The agriculture secretary said that while the proposed farm bill would increase spending for some specialty crop, agricultural research and conservation programs, overall it would result in a $10 billion savings from the amount spent on farm programs during the previous five years, excluding disaster aid funds.

Savings would be achieved, in part, by making farmers who earn more than a specified income ineligible for farm support payments.

Instead, farmers would receive some income protection during periods when crop yield is low by linking payments to revenue rather than price. In this way, farmers suffering from such calamities as drought or floods would get more payments than they currently do under those situations.

If changes are not made in a new farm bill, federal spending would increase by $5 billion over the next five years, Johanns said.

The change would allow the U.S. Department of Agriculture (USDA) to continue to meet its World Trade Organization (WTO) commitments, USDA said.

In a speech in New York the same day, President Bush said the bill "provides a strong safety net while tightening spending and cutting subsidies."

"These proposals recognize the dramatic changes in agriculture since 2002 [when the current farm bill went into effect] and present policy ideas that are reform-minded and fiscally responsible and that provide strong support of agriculture in a global economy," Johanns said in a letter to the heads of the House of Representatives and Senate agriculture committees.

The current farm bill expires at the end of the 2007 crop year. It was developed when commodity prices were low, exports had decreased for five years and U.S. farmers were dealing with significant debt problems, Johanns said.

Now, he said, prices are "strong" for most commodity crops and exports have increased -- to a record $68.7 billion in 2006 -- and are expected to reach $77 billion in 2007.

Reaction to the proposals was mixed, according to news reports.

Maize growers, who are experiencing high prices because of increased demand for their product for ethanol production, support the proposed change, but soy, wheat, rice and cotton farmers say it would mostly benefit the maize growers.

Oxfam America, an international relief and development organization, said the proposal is an "encouraging step toward meaningful farm program reform."

It said that the current subsidy programs encourage overproduction, with the surplus "dumped on the international market."

The Bush proposal would provide $1.6 billion for ethanol and other renewable energy research, development and production.

It would expand involvement in world trade standard-setting bodies such as the international food safety convention Codex Alimentarius and the World Animal Health Organization.

It also would expand trade capacity, food safety and agricultural extension programs; provide $1 billion for research targeting fruits and vegetables; and provide help for "disadvantaged farmers," particularly new and women farmers.

The administration's farm proposal and a transcript of Johanns' briefing are available on the USDA Web site.

(USINFO is produced by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

By Kathryn McConnell
USINFO Staff Writer