Bruce Blythe, Business Editor   |   Updated: April 8, 2011

Facing billions of dollars in potential cuts to government agriculture programs, U.S. farm groups say they’re willing to cut their “fair share,” but not more than that, to help reduce the country’s spiraling budget deficit.

The House Budget Committee, in its fiscal 2012 spending plan released April 5, called for a 23-percent reduction in agriculture spending next year as part of a longer-term farm program downsizing the committee said would save U.S. taxpayers $30 billion over the next decade.

Given the U.S.’ budget woes, cuts to agriculture programs appear inevitable, farm group representatives said.

“Something has to be done about the budget deficit, and agriculture is willing to do its fair share,” said Mary Kay Thatcher, director of agricultural policy with the Washington, D.C.-based American Farm Bureau Federation. “We just don’t want to be asked to do more than our fair share.”

Agriculture is among at least eight federal programs slated for smaller budgets in 2012 as Congress and the White House try to rein in a budget deficit that’s expected to reach nearly $1.4 trillion this year.

The Republican-controlled House Budget Committee said its plan, which it deemed the “Path to Prosperity”, will reduce government spending by $6.2 trillion over the next decade, partly by cutting Medicaid health care benefits and eliminating redundant programs.

Other areas targeted for cuts include environmental programs, health care, science and technology and transportation. Meanwhile, the committee proposed spending increases in areas including Social Security and the global war on terror.

Time to re-examine farm programs

With farmers reaping near-record income amid soaring crop and livestock prices, the committee said it’s time for a “re-examination” of U.S. Department of Agriculture programs to “ensure that taxpayers aren’t funding support for a sector that is more than capable of thriving on its own.”

“Against the backdrop of an overall economy that is recovering slowly, the American agricultural sector is racing ahead,” the committee, led by Paul Ryan (R-Wisconsin), said in the report: “With crop prices – and deficits – hitting new highs, it is time to adjust support to this industry to reflect economic realities.”

Under the budget proposal, agriculture spending in fiscal 2012, which begins Oct. 1, would fall to $20 billion from $26 billion in 2011. Through the rest of the decade, annual agriculture spending would fall roughly another 14 percent, on average, from 2012 levels.

The committee suggested curbing fixed payments crop growers receive irrespective of price levels and reducing the government’s support for crop insurance so producers “assume the same kind of responsibility for managing risk that other businesses do.”

Also, the committee recommended reforming the Supplemental Nutrition Assistance Program, the food stamp benefits administered by the USDA.

Based on an initial reading of the proposed budget, “we don’t believe that they have indeed asked for more than our fair share,” the Farm Bureau’s Thatcher said.

Nutrition program cuts may affect livestock producers

It isn’t yet clear what specific agriculture programs may actually be cut or what the impact will be on USDA operations, industry representatives said. A USDA spokesman declined to comment.

The committee’s plan is “light on details,” but implies lower direct payments to crop producers, said Rich Pottorff, an analyst with Doane Advisory Services. Generally speaking, the proposed agriculture cuts probably wouldn’t have a major impact on livestock and dairy producers, he said.

“The bigger impact might come from the cuts in nutrition and other social safety net programs,” Pottorff said in an April 6 e-mail. “To the extent that we reduce people’s ability to buy food or get it at reduced or no cost, we reduce demand for livestock products.”

“Cutting funding for other social programs would probably also tend to reduce demand for livestock products,” he added.

U.S. beef and pork producers don’t receive direct government report, industry groups said. But the pork industry, and the public, does benefit from some government-funded programs, including those dealing with conservation, animal disease surveillance and food safety, said Dave Warner, spokesman for the National Pork Producers Council.

“Over the past few years, pork producers have had to tighten their belts,” Warner said in an e-mail. “And now it’s time for the federal government to do the same.”

Digging out of a deep hole

Frank Lucas (R-Oklahoma), chairman of the House Agriculture Committee, said the budget proposal merely offered suggestions on where to reduce spending. Ultimately, the agriculture committee will make the spending decisions that will be part of the 2012 Farm Bill.

“The House Budget Committee has outlined a plan that may shock some, but this only illustrates the deep hole we are in,” Lucas said in an April 5 statement. “While I might not agree with every proposed cut, we are well past the point where trillion-dollar deficits can be ignored.”

While farm subsidies have drawn criticism for years, agriculture represents just a fraction of overall government expenditures, or outlays.

At a projected $20 billion for fiscal 2012, agriculture spending would account for 0.6 percent of total federal outlays, which the House Budget Committee pegged at $3.53 trillion.

Defense outlays, estimated at $594 billion in 2012, account for 17 percent, while Social Security, at $766 billion, accounts for 22 percent, according to the report.

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  |  April, 08, 2011 at 10:39 AM

We've been operating at a loss for the past three years in dairy & now because the prices have gone up where do you think all the debt went that was accumulated in those years. We are all trying to catch up with the years we've had to eat our losses & try to stay afloat.

WI  |  April, 08, 2011 at 01:27 PM

Lets go one step further and eleiminate all government programs and susidies! The government can not give any subsidy without taking it from someone in the first place.

Philadelphia  |  April, 08, 2011 at 04:16 PM

Could someone please help and old man and identify where in the US Constitution ANY of the above mentioned governmental programs receive their charter??

Mississippi  |  April, 08, 2011 at 07:11 PM

Dairy Farmers suffering, Row crop farmers reaping the benefits of high grain prices at taxpayer's expense.

Ahmedabad-India  |  April, 09, 2011 at 04:06 AM

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