Washington-President Barack Obama in late February released a budget proposal that would phase out direct payments to farmers with more than $500,000 in annual revenue, and establish a $250,000 cap on farm subsidy payments. The administration claims the cuts would save $9.8 billion over 10 years. “Roughly a third of farmers receive direct payments, which they receive regardless of whether they are producing anything or not,” said a senior administration official. “We would propose that for farms with revenue above $500,000 a year that we phase out those direct payments over time.” The proposal drew fire from farm groups almost immediately, who argue that it is poorly timed and aimed at growers who account for three-fourths of farm production. Roughly 126,000 U.S. farms have sales over $500,000 a year, according to the USDA. The Obama proposal faces an uphill fight in Congress as well, which last year enacted a five-year farm bill that rejected a proposed $250,000 payment cap but did ban crop subsidies to producers with more than $500,000 in income from non-farm sources. “We just passed a fiscally responsible farm bill that made cuts to farm programs, so now is not the time to reopen it,” said Rep. Collin Peterson (D-Minn.), chairman of the House Committee on Agriculture and one of the chief architects of the 2008 farm bill. Sen. Tom Harkin (D-Iowa) said he was willing to review the Obama plan, but suggested that the subsidy cap should be based on a producer’s adjusted gross income instead of on annual revenue, arguing that farmers could have high revenues but still face exorbitant input costs. The Agricultural Retailers Association also voiced concerns about the proposal when asked by Green Markets. “After a bill was thoroughly debated in the last congress, we don’t think its good policy to go back and start changing things already, particularly in this economic environment,” said Richard Gupton, ARA’s Vice President of Legislative Policy and Counsel. In addition to questions about the timing of the proposal, Gupton said subsidy reform should be considered in the context of a new farm bill, and noted that grower groups will have understandable concerns because it could impact small farmers even though it is intended for larger operations. “They’re trying to make cuts out of the farm programs to pay for other things, and there are already reforms made and cuts made last time around during the farm bill debate,” he said. Gupton also expressed doubts about the proposal’s chances in Congress in the form that the Obama administration has suggested. “But you’ve got a lot of new members who may not have a great appreciation for agriculture and don’t represent rural areas,” he cautioned. “So there’s a new effort to educate on what agriculture contributes to the economy. We have our work cut out for us to make sure there are not wholesale changes.”
Transparency Across the Fertilizer Value-Chain