President's Deficit Reduction Package Released

Farm safety net would be cut by $33 billion.

Published on: Sep 20, 2011

President Obama has formally unveiled his $3 trillion deficit reduction recommendations to Congresses' bipartisan Super Committee. The recommendation includes $350 billion in savings from certain mandatory programs; including $33 billion in cuts from the farm safety net. The proposal would save $3 billion by making cuts in direct support payments.  Other savings would be found in modernizing crop insurance and better targeted agriculture conservation assistance, among other programs.

The President points out taxpayers continue to foot the bill for direct payments to farmers who are experiencing record yields and prices; more than 50% of direct payments go to farmers with more than $100,000 in income. As for better targeted agricultural conservation assistance, the President says it is time to correct difficulties in program administration and redundancies among our agricultural conservation programs.

Crop insurance continues to be highly subsidized and costs the taxpayers approximately $8 billion a year to run. Reforms would include: lowering crop insurance companies' rate of return to meet the 12% target; cap administrative expenses; and better pricing of the premium for catastrophic coverage policies. The proposal also would extend mandatory disaster assistance to strengthen the safety net for farmers and target Medicare support for rural providers.

National Corn Growers Association President Bart Schott, a corn grower from North Dakota, says NCGA supports the effort to get the federal budget under control and recognizes the need for shared sacrifice to achieve an equitable, balanced approach. While he says the group appreciates the President's recognition of how important reliable, effective risk management tools are to farmers and rural communities, he says they are concerned by proposals that would undermine a farmer's ability to purchase adequate insurance coverage at a time of heightened volatility in commodity markets.

Schott notes that NCGA recently unveiled the Agriculture Disaster Assistance Program. That plan would transfer a significant portion of direct payments for deficit reduction, with the remaining funds put toward an improved risk management program that better complements federal crop insurance.

House Agriculture Committee Chairman Frank Lucas, R-Okla., and Senate Agriculture Ranking Member Pat Roberts, R-Kan., issued a joint statement following the unveiling questioning several parts of the President's recommendations.

"The President’s policy priorities reveal a lack of knowledge of production agriculture and fail to recognize how wholesale changes to farm policy would impact the people who feed us.  For example, cutting $8 billion from the crop insurance program puts the entire program at risk. We have heard again and again from producers that crop insurance is the best risk management tool available. In jeopardizing this program, the President turns a deaf ear to America’s farmers.  Meanwhile, SURE has not worked as intended for most crops, but the President proposes extending it.  The President only proposes a $2 billion cut, roughly three percent, to conservation despite his claim that conservation spending has increased 500% through the years.  And, the President does nothing to address waste, fraud, abuse, and other integrity issues within nutrition programs, which account for 80% of USDA spending."