Despite its trillion dollar price tag, agriculture took a big hit in the federal budget proposed by President Barack Obama’s this week. In it, he asked Congress on Monday to slash crop subsidies to "wealthy farmers" and to pare federal support for crop insurance, moves estimated to save $10 billion over 10 years.

Obama targeted those areas for large cuts last year without success.

In his proposed budget for fiscal 2011, Obama suggested a sharply lower cut-off in income that qualifies for crop supports, implemented over a three-year period. It would save $2.26 billion over 10 years.

The administration plan would end crop subsidies to people with more than $250,000 adjusted gross income from off-farm sources or more than $500,000 on-farm AGI. The caps now are set at $500,000 off-farm AGI and $750,000 on-farm AGI.

Some $8 billion would be saved over 10 years by reforming administration of the federally subsidized crop insurance system to end "huge windfall profits." The Agriculture Department is negotiating a new master agreement with insurers to reduce overhead payments.

The White House also requested a 25 percent cut, to $1.2 billion, in the Environmental Quality Incentives Program. It shares the cost of controlling runoff from fields and feedlots. The green-payment Conservation Security Program would be cut by roughly $1 million and enrollment held to 12 million acres in fiscal 2011 instead of 12.8 million acres.

This has not gone over well with conservation groups.

"At a time when we most need to invest in our strategic natural resources and keep them healthy for the future, the President has proposed cuts to key farmland preservation, conservation, and water quality programs," says Jon Scholl, American Farmland Trust president.

"The fact of the matter is, slashing these programs will do nothing significant to address our nation's budget problems while it will dramatically reduce our ability to protect the resources that supply abundant food and a cleaner environment,” he insists. “So we're concerned that it is penny-wise now, and will be very pound foolish in the future."

Despite the administration's rhetorical desire to support conservation and agriculture, and address such issues as climate change and renewable energy, "reductions of over one-half a billion dollars in mandatory conservation program spending will make it much more difficult for farmers and ranchers to make changes necessary to protect our air, land and water," adds Scholl.

"These cuts represent nearly a 20 percent cut to working-lands conservation programs, yet agriculture is the most cost-effective solution to these very real environmental challenges."

Meanwhile, two new meat and poultry inspection user fees are included in USDA’s proposed Fiscal Year 2011 budget, according to the American Meat Institute. These fees would charge companies for services ordinarily funded by the federal government.

“User fees for meat and poultry inspection have been consistently and properly rejected by the U.S. Congress,” says American Meat Institute President and CEO J. Patrick Boyle. Likening these proposed fees to a food tax, Boyle adds that many meat and poultry companies will be forced to pass on the increased costs to consumers, who are struggling to make ends meet in very tough economy and challenging job market. “Consumers have already been taxed once for the operating budget of USDA and the food safety responsibilities of the federal government,” Boyle added.

Source: Drovers, American Farmland Trust, American Meat Institute