Association Perspectives

Making the Case to Uphold the Farm Program

The fact that United States consumers enjoy abundant, inexpensive, high quality and safe food is no accident – it is a direct result of U.S. farm policy.  For a very small slice of the federal budget, U.S. agriculture delivers substantial benefits to consumers, while conserving the nation’s natural resource base, providing a means to sequester carbon and grow renewable fuels, and securing basic goods for trade and manufacturing jobs throughout the country.

The President’s FY2006 budget proposal would make several cuts to agriculture, and would require Congress to rewrite several components of the 2002 Farm Bill, even though the Farm Bill is not scheduled to expire until 2007.

The proposal includes a small increase in total farm bill conservation program funding over the FY2005 level. Total funding for conservation would go from $3.810 billion in FY2005 to $3.840 billion in FY2006.  CSP funding would increase from $200 to $274 million, EQIP would be trimmed from $1.017 billion to $1 billion and the Wetlands Reserve Program would increase from $275 to $321 million.

However, some of the proposed changes to agriculture in the President’s budget would also include: a reduction in the payment limit to $250,000 and elimination of the three entity rule, basing marketing assistance loans on historical production, a reduction in direct payments by 5%, a decrease in bioenergy incentives to $60 million, and a proposal to make crop insurance programs mandatory for any producer who receives a federal farm payment - beginning in 2007.

A budget summary can be viewed at www.usda.gov/agency/obpa/Budget-Summary/2006/FY06budsum.htm.

According to Sen. Kent Conrad, ranking member of the Senate Budget Committee, an analysis of the White House budget by the non-partisan Congressional Budget Office (CBO) shows a far deeper cut of nearly $18 billion, more than twice what was originally proposed ($7.6 billion).  It also includes a new tax on sugar producers and a requirement that farmers pay more for crop insurance.

Conrad points out that aside from the direct impact affecting the U.S. production sector, the cutbacks would undermine America’s negotiating position at the World Trade Organization, effectively resulting in unilateral disarmament in trade talks with our European competitors. “They support their farmers at a level five times ours. The President’s budget cuts undermine our attempts to level the playing field for our producers,” says Conrad.

The National Association of Wheat Growers, working through its affiliated state organizations and with other national farm groups, are working to educate members of Congress about the impacts these cuts would have on rural America.  Further, that funding for farm bill programs should be sustained in the federal budget because:

· The farm program budget is roughly ½ of 1% of the federal budget-but helps sustain an industry that is responsible for 15% of our nation’s GDP, 25 million jobs, and a supply of food and fiber that is the safest, most abundant and most affordable in all the world. Reducing the baseline for agriculture could have negative impacts on other parts of our economy.

· Negotiations to reduce and equalize worldwide agricultural subsidies and or tariffs are ongoing. Until these negotiations are resolved, changing U.S. policy undermines our negotiating efforts. U.S. farmers currently operate at a severe disadvantage in the world market relative to farmers in the E.U. and other countries where agriculture production is protected by an average worldwide bound tariff of 62% (which compares to an average U.S. tariff rate of less than 12%).

· The federal farm programs act as a multi-year contract upon which hundreds of thousands of farm families across the U.S. make their business and investment plans. The stability provided by these 2002 farm programs (written to last through 2007) has allowed for unprecedented growth in farm income and spending.  To renege on this contract would be unwise and also would be unfair to the many who have made long range farming decisions through 2007.

· The farm bill also authorizes significant levels of environmental and conservation programs. The 2002 bill was hailed as the most important conservation action by both the administration and the Congress. Farmers and ranchers make matching investments to improve water and soil quality; protect open space and wildlife habitat as well as to prevent flooding, drought losses, erosion and other disasters.

· The 2002 farm bill was a fiscally responsible bill when it was written and passed, and it has since contributed significantly to budget savings by spending approximately $17 billion under projections. This proves that the bill is working as designed, but should not justify reducing the baseline; there may be years when the full baseline will be required.

Contact Congress on the Budget
Members of Congress need to know how their constituents feel about the President’s budget proposal. Let them know you are opposed to opening the Farm Bill prior to its scheduled expiration in 2007, and oppose any cuts to agriculture programs. You can send a letter to members of Congress through NAWG’s website. Click on the “Action Alert” located at http://capwiz.com/wheatworld/home .

The Action Alert includes a draft letter which be used to personalize your own. Members of Congress can also be reached through their congressional websites at www.house.gov and www.senate.gov .

Summary of Proposed Cuts in the President’s USDA Budget Proposal

• Payment limits lowered from $360,000 to $250,000.   
• “Overall” cuts in the 3-5% range are masked by $1 billion to continue the Milk Income Loss Contract (MILC) program for another year - a Bush campaign pledge. Real cuts in program crops are likely to exceed 6%.
• Cuts in crop insurance of $140 million, and up to $3.6 billion starting in 2007.
• In addition to a payment limit of $250,000, under the proposal the three entity rule would be eliminated
• Marketing assistance loans would be based on historical production  
• Direct payments would be cut 5%
• Total CCC outlays would decrease to $19.6 billion in FY2006 from $24.064 in FY2005
• Most conservation programs will see small increases – total farm bill conservation programs would increase from $3.810 billion in FY2005 to $3.840 billion in FY2006 - some specifics CSP would go from $200 to $274 million, EQIP is trimmed from $1.017 billion to $1 billion, Wetlands Reserve Program from $275 to $321 million 
• Bioenergy incentives would be decreased to $60 million
• Crop insurance programs would be required for any producer who receives a federal payment for a crop (beginning in 2007).