On Monday President Bush released his Fiscal Year 2007 budget proposal for USDA. And while he does call for increased spending for biosecurity projects and for the fight against Avian Bird Flu, most farm programs take a hit.

In addition dairy producers and sugar processors are being asked to pay an assessment or tax. For dairy it amounts to a 3-cent per hundredweight tax on all milk produced. For an average size dairy of 120 cows that translates into a cost of about $720 per year, for an estimated savings of $578 million over ten years. The proposal also calls for a 5 percent reduction in spending on all farm payment programs including dairy and requires the dairy-price support program to minimize expenditures. 

Listed out below are details of some of the budget highlights. New spending priorities include:

  • $322 million for protecting America's agriculture and food supply by improving USDA’s ability to detect, respond to and recover from incidents of diseases, pests or poisonous agents.
  • $82 million to continue activities related to avian influenza preparations and prevention, including surveillance of wild and domesticated birds.      
  • Provides full funding for the Northwest Forest Plan allowing for 800 million board feet of lumber to be harvested from Forest Service land.
  • Provides funding to enroll 250,000 acres in the Wetlands Reserve Program to meet the President's commitment to create, improve and protect at least three million
    wetland acres by 2009.
  • Continues Forest Service reforms that will result in a savings of more than $115 million over three years.
  • Targets Conservation Reserve Program funding to activities that will have the highest chance of improving conservation.
  • Proposes to exclude all retirement savings when determining if a household is eligible for food stamps to make it easier for low-income people to save for retirement and get food stamps if they need them.

Now for the spending cuts.

The list below details the cuts proposed by President Bush to help restrain spending in USDA's FY 2007 budget:

  • Reduce all crop payments to producers by 5 percent. Payments to producers from all commodity programs (marketing loans, direct and counter-cyclical payments, and the Milk Income Loss Contract program) would be calculated, and payments would be reduced, by five percent. (Savings = $4.9 billion over 10 years.)
  • Initiate a dairy assessment to be paid by dairy producers. An assessment of 3 cents per hundredweight of milk produced would be paid by all producers on all of their production. (Savings = $578 million over 10 years.)
  • Require USDA to achieve effective dairy price supports at the least possible cost to the taxpayer. Change the law to require dairy product prices set by USDA to minimize cost, and allow purchases only when reported prices are below the support rate. This would change milk product price ratios to reduce Government purchases and save on storage costs. (Savings = $618 million over 10 years.)
  • Initiate a sugar marketing assessment to be paid by sugar processors on all processed sugar. An assessment of 1.2 percent of the raw sugar loan rate would be paid by processors for sugar from both cane and beets. (Savings = $364 million over 10 years.)
  • Reduce the payment limit cap for individuals to $250,000 for all commodity payments, including all types of marketing loan gains while removing the three-entity-rule and making marketing loans recourse above the payment limit. (Savings = $1.2 billion over 10 years.)
  • Reduce crop insurance premium subsidies for farmers and lower the amount paid to reimburse insurance companies for administrative costs. Require all producers receiving direct crop payments to purchase crop insurance. This is expected to eliminate the need for ad hoc disaster assistance. (Savings = $1.26 billion over 10 years.)

USDA, IllinoisFarm Bureau, Channel3000.com

Editor’s note: You also can find additional information regarding the FY 2007 budget proposal on the USDA Web site at: http://www.usda.gov/wps/portal/usdahome?navid=BUDGET.