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2/2/2007 Capital Press |
More on the specific proposals
in the Bush administration's
2007 Farm Bill programs is
online at
www.usda.gov/farmbill
Farm Bill fact sheet
Here are highlights of
President's Bush's 2007 Farm
Bill proposal. The proposals
spend about $10 billion less
than the cost of the 2002 farm
bill over the past five years
- excluding disaster aid - and
uphold Bush's plan to
eliminate the deficit in five
years. These proposals
authorize about $5 billion
more than the projected
spending if the 2002 Farm Bill
were extended.
Commodity Programs
• Convert current price-based
countercyclical program to a
revenue-based program. Under a
price-based program, farmers
who experience crop loss are
often under-compensated while
those with high production
tend to be over-compensated.
This new revenue program will
factor in U.S. crop yield when
determining crop payments to
better target support.
• Reform and modernize the
marketing assistance loan
program. Current law provides
loan rates, or price floors,
for corn, wheat, cotton, rice,
soybeans and other major
crops. These are set in law at
high levels, which have
encouraged production and
resulted in lower market
prices. The proposals set loan
rates for each commodity at 85
percent of the five-year
Olympic average (average of
last five years excluding the
high and low year). This
change minimizes market
distortions and encourages
farmers to plant crops based
on market prices instead of
the level of subsidy payment.
• Tighten payment limits and
work to close loopholes. Under
current law, farmers use the
three-entity rule to establish
corporations and other
entities, which allow the
amount of payments received to
exceed statutory limits. These
proposals eliminate the
three-entity rule and tie
payments to an individual.
This plan also sets the
subsidy payment limit for
individuals at a total of
$360,000.
To receive commodity payments,
producers must also meet a
limit on adjusted gross
income, which includes wages
and other income minus farm
expenses and depreciation.
This plan reduces the current
AGI limit of $2.5 million to a
new limit of $200,000. If a
producer has an annual
adjusted gross income of
$200,000 or more, that
individual would no longer be
eligible for commodity
payments.
Conservation Programs
The administration's proposals
include an additional $7.8
billion over 10 years for
conservation programs.
• Increase the acreage limit
on the wetlands reserve
program from 2.3 million to
3.5 million acres. With this
increase to the acreage cap, a
total of 250,000 acres will be
made available for enrollment
annually.
• Consolidate cost-share
programs into the
environmental quality
incentives program and create
a regional water enhancement
program with an additional
$4.2 billion. This newly
designed EQIP program will
increase the simplicity and
accessibility of conservation
programs and provide program
flexibility that increases
environmental benefits. The
new water program will focus
on cooperative approaches to
enhancing water quality on a
regional scale. This program
will fill a void in the
federal government's
conservation delivery system
by facilitating a cost-share
program to coordinate
large-scale water conservation
projects.
• Continue the conservation
reserve program at the current
acreage limit and focus
program benefits on lands that
provide the greatest
environmental benefit. This
plan also gives priority to
whole-field enrollment for
land utilized for biomass
production for energy.
Renewable energy
More than $1.6 billion in new
renewable energy funding is
proposed.
• Provides $500 million for a
bioenergy and biobased product
research initiative. Advances
in technology play an
important role in the future
of renewable energy. Our
scientists, farmers and
entrepreneurs must coordinate
efforts to continue
improvements in crop yields
and work to reduce the cost of
producing alternative fuels.
• Provides $500 million for a
renewable energy systems and
efficiency improvements grants
program. This program supports
small alternative energy and
energy efficiency projects
that directly help farmers,
ranchers and rural small
businesses.
• Provides $210 million to
support an estimated $2.1
billion in loan guarantees for
cellulosic ethanol projects in
rural areas. This program will
advance the development of
cellulosic ethanol production.
Rural development
The administration's farm bill
proposals continue this
administration's commitment to
rural America by building upon
U.S..Department of Agriculture
rural development programs.
• Includes $1.6 billion in
guaranteed loans to complete
the rehabilitation of more
than 1,200 current Rural
Critical Access Hospitals.
• Includes $500 million to
reduce the backlog of rural
infrastructure projects such
as water and waste disposal
loans and grants.
Specialty crops
The proposals target nearly $5
billion over 10 years to
significantly increase support
of fruit and vegetable
producers through targeted
programs:
• Provide $1 billion for
research programs targeted to
specialty crops. This
initiative will include
fundamental work in plant
breeding, genetics and
genomics to improve crop
characteristics such as
product appearance,
environmental responses and
tolerances, nutrient
management and pest
management.
• Provide $3.2 billion to
improve nutrition assistance
programs by purchasing more
fruits and vegetables. This
funding will support efforts
by schools and other
participants to offer meals
based on the most recent
Dietary Guidelines for
Americans by increasing the
availability of fruits and
vegetables to students
participating in the National
School Lunch and Breakfast
Programs and to participants
in other nutrition assistance
programs.
Trade programs
The administration's farm bill
proposals increase trade
programs by nearly $400
million to continue the
creation, expansion and
maintenance of agricultural
exports.
• Increase the market access
program by $250 million. This
initiative allows partnerships
between the USDA and nonprofit
domestic agricultural trade
associations to share the
costs of overseas marketing
and promotional activities.
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Farm bill proposal caps subsidies
Bush plan would cut off farmers
earning more than $200,000
Jerry Hagstrom, Washington,
D.C., Correspondent,
WASHINGTON, D.C. - Agriculture
Secretary Mike Johanns announced a
Bush administration farm bill proposal
Jan. 31 that would reduce farm
subsidies by banning payments to any
farmer earning $200,000 in adjusted
gross income, but overall it proposes
fewer changes in the structure of farm
programs than anticipated.
The bill would also eliminate the
prohibition against planting fruits
and vegetables on land that receives
subsidies, but it would provide an
additional $5 billion over 10 years
for specialty crops such as fruits,
vegetables and nuts.
Johanns said at a news conference that
the majority of farmers told him they
liked the structure of the 2002 Farm
Bill but wanted certain problems
solved - such as the lack of
assistance when they did not get a
crop.
"These proposals represent a
reform-minded and fiscally responsible
approach to making farm policy more
equitable, predictable and protected
from challenge in trade cases,"
Johanns said.
The proposal, presented in a 181-page
book and posted on the Internet, would
cost $17 billion less over the next
five years than the 2002 Farm Bill has
cost in its life, including disaster
payments. But it would cost $5 billion
more than the current projected
spending over the next 10 years,
officials said.
The current farm bill has cost $98
billion in farm programs, and Congress
added $7 billion in disaster payments,
but the government's projection for
future spending has gone down because
commodity prices are high and
price-related farm payments are
projected to be low.
A USDA official said the elimination
of all commodity subsidies to farmers
with $200,000 from all income sources
is expected to affect 80,000 farmers
and save $1.5 billion.
Since farm production is highly
concentrated on the biggest farms,
that restriction could reduce incomes
and buying power for some of the
nation's most productive farmers, but
USDA officials could not immediately
predict the impact eliminating those
subsidies would have on production.
Johanns said anyone earning $200,000
is among the 2.3 percent richest
Americans and that he would have a
hard time justifying to urban
taxpayers subsidies to such high
earners.
The proposal would also end farm
payments on land acquired through the
Internal Revenue Service's "1031" land
exchange rule.
Such swaps exempt from federal capital
gains taxes properties used for
businesses and farming.
The proposal does not eliminate
marketing loans on crops, as some
reformers have advocated, but would
reduce marketing loan rates to the
levels passed in the House version of
the 2002 Farm Bill. Those loan levels
were raised in the 2002 Senate bill
and became law.
Under the Bush proposal, the loan rate
for corn would be $1.89 per bushel,
for soybeans $4.92 per bushel, for
wheat $2.58 per bushel and for cotton
.5192 cents per pound.
The bill would increase by 7 percent
farmers' direct payments, which are
not affected by production. Direct
payments are preferable to those who
say higher marketing loan payments
when prices are low discourage farmers
from following markets.
The proposal would also change the
countercyclical payment program so it
would be based on farmers' revenue
from a crop rather than on price.
Johanns said the change would allow
farmers to receive payments when a
crop fails rather than only when
prices go down.
The administration also proposes to
eliminate the prohibition on planting
fruits and vegetables on land that
gets crop subsidies and increases by
$5 billion over 10 years various
programs for fruit and vegetable
producers, who have expressed fears
that increased acreage will lower
their prices.
The proposal also continues the dairy
support program and the milk income
loss contract program, but with
reduced payment levels. It continues
the sugar program, but would eliminate
a provision that gives the agriculture
secretary power to reduce sugar
production to avoid forfeitures.
The proposal also increases funding
for various conservation programs by
$7.8 billion over 10 years and
continues the land-idling Conservation
Reserve Program at its current level.
It also includes $1.6 billion in new
funding for renewable energy research,
development and production, targeted
for cellulosic ethanol. The USDA would
also make available $2.1 billion in
guaranteed loans for cellulosic
projects.
Johanns left immediately after his
announcement for a national tour that
included a stop in Modesto, Calif., to
talk about the benefits of the
proposal for specialty crops.
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