President Bush’s budget proposal recommending another 5 percent cut in agricultural program spending has attracted bi-partisan interest.
Members on each side of the aisle oppose reductions that many say levies too big a cost on agriculture.
Texas Republican congressman Randy Neugebauer said President’s Bush’s budget request indicates a continued commitment to national security and fiscal responsibility. But he disagrees with the cuts in agriculture.
“Once again the president has proposed changing payment limits for agricultural producers, and I disagree with this request. The time for debating payment limits and other changes in agriculture policy is during upcoming work in Congress to write the 2007 farm bill, not in the annual budget process,” Neugebauer said.
“The president’s proposal is just that, a proposal. Congress has much work to do throughout the year to pass funding bills that focus on national priorities like achieving energy independence, ensuring that our military and law enforcement personnel have the tools they need to defend our nation, and keeping America’s workers competitive in the 21st century economy.”
The U.S. House of Representatives’ Committee on Agriculture also opposes the recommended cuts and adopted a budget views and estimates letter outlining the Committee’s budget recommendations for the agencies and programs under its jurisdiction. The Committee recommends that any substantive budget changes be considered only when the farm bill is up for reauthorization in 2007.
“Rest assured that this Committee will have a full, fair, open and comprehensive farm bill debate in 2007 with participation by all stakeholders,” Chairman Bob Goodlatte and Ranking Minority Member Collin Peterson said in the letter.
“We want to ensure that our programs deliver appropriate benefits and do so as effectively and efficiently as possible. We understand current budget concerns and are prepared to do our part-in concert with other committees to address these concerns. We are not afraid of consolidation and change if such actions are needed. If we are to meet these challenges, however, we must have the time do it right without rushing to make premature changes just before a new farm bill.”
The Democrats take even stronger exception to the proposed cuts in farm program funding.
House Democrats, led by Democratic leader Nancy Pelosi, Financial Services Ranking Member Barney Frank and Agriculture Committee Ranking Member Collin Peterson criticized Bush’s proposed cuts to, among other items, rural housing programs that provide affordable housing to lower-income people in rural areas. Democrats promised to fight against these cuts to rural housing programs.
“These proposed cuts to America’s rural housing initiatives are simply immoral,” Pelosi said. “To shelter the elderly and disabled is part of the essential safety net and social fabric of our country.”
“By proposing cuts to rural housing on top of cuts to agriculture and rural development programs, the president’s budget shows a lack of concern for the basic needs of rural America,” said congressman Peterson.
“The president’s budget is full of gimmicks and runs low on common sense,” Peterson said. “The plan does nothing to address escalating federal spending or this Administration’s unending record of deficits.
“For agriculture, at best, this budget is a rehash of the president’s strategy of sacrificing farm support for a sell at any cost international trade policy. At worst, this budget shows no commitment on the part of the president to the needs of our nation’s farmers. “America’s farmers and ranchers cannot afford the uncertainty that these proposals would create, and Congress should quickly reject them,” Peterson said.
National Farmers Union Vice President of Government Relations Tom Buis agrees with Peterson’s claim.
“This budget proposal is lacking in common sense,” Buis said.
The NFU is asking Congress to reject the proposed budget.
The cuts come at a particularly bad time for America’s farmers, said to NFU President Dave Frederickson.
The U.S. Department of Agriculture’s Economic Research Service recently released a report indicating that net farm income is projected to decrease by nearly $20 billion in 2006. Frederickson said this decrease is further reason why the White House’s budget proposal is ill-conceived and ill-timed.
He said President Bush is seeking several cuts to the farm safety net, including a 5 percent cut in commodity programs and new user fees on sugar and dairy farmers. These proposals will result in cuts of $1.1 billion in fiscal 2007 and $5 billion over the next five years.
“The president’s budget proposal justified huge cuts in agriculture programs by pointing to high farm income the past two years. Yet four days later the U.S. Department of Agriculture projected net farm income to decrease 20 percent in 2006,” Frederickson said. “This is further reason that now is not the time to cut programs that help keep America’s producers of food and fiber afloat.”
He said farm income would be lower next year for several reasons:
• Commodity prices have been declining
• Production in many areas has been down as a result of weather-related disasters
• Input costs have skyrocketed as a result of energy costs and rising interest rates
Buis said the dairy industry would be hit particularly hard: “America’s dairy farmers should not be expected to pay new taxes and diminish their safety net so multi-millionaires get another tax cut.”
Under the Bush Administration’s budget proposal, dairy farmers would be taxed $0.03 for every hundredweight of milk produced. For an average size farm, this amounts to more than $700 per year in new taxes.
Dairy farmers also would take a hit on their safety net. Congress recently approved a scaled-down extension of the Milk Income Loss Contract (MILC) program, which provides producers an economic safety net when prices fall below a specific level. The Bush budget calls for further reductions in the MILC program with a 5 percent cut of all payments.
Dairy producers are facing increased costs in production, a dilapidated safety net, predicted market lows for milk in 2006, increased imports and ongoing efforts to change the definition of milk for the benefit of processors, Buis said.
“With 25 percent of the 2007 budget cuts coming out of agriculture spending, farmers and ranchers are saying enough is enough,” he said. “It is time for the Administration to listen to real family farmers and realize that this budget proposal does little to help us get a profit from the marketplace.”
Talk of budget slashing occurs as the first rumblings of farm bill discussions begin in Washington. A number of farm state legislators prefer staying the course with the 2002 farm legislation, at least until the Doha round of World Trade Organization negotiations conclude.
Congressman Mac Thornberry, a Texas Republican, says it would be unfair to the nation’s agriculture producers to write a new farm bill in the midst of ongoing international trade negotiations. He filed legislation to extend the current farm bill until the Doha round is complete.
“Our nation’s farmers and their lenders should not be asked to operate under rules that keep changing. We should get fairer global trading rules in place before we write the next farm bill,” Thornberry said.
The current legislation was approved in 2002, and many of its provisions are scheduled to expire in 2007. Congress has begun preliminary work on the next farm bill. But, unless the Doha process can be completed before the current farm bill expires, Congress will be attempting to write a new farm bill without a clear understanding of the trade conditions that the new WTO agreement will create. Thornberry wants to prevent the possibility that a new farm bill could wind up putting American farmers at a competitive disadvantage when new international trade rules are later established.
The 2002 law will remain in effect while Doha negotiations continue. The bill will keep current legislation in place for at least one crop year after Congress has approved legislation to implement any eventual Doha agreement.
“I believe extending the current farm bill will help our trade negotiators by making the point that we are insisting on a more level playing field with regard to market access, domestic support, and export assistance,” Thornberry said.