Wisconsin Ag Connection - WFBF: Obama Plan Still Calling for Cuts in Direct Payments

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WFBF: Obama Plan Still Calling for Cuts in Direct Payments
Wisconsin Ag Connection - 05/11/2009

Despite opposition from the agricultural community earlier this year, President Obama's budget proposal still calls for a phase out of direct payments to farmers with gross sales revenue of more than $500,000 annually. According to the Wisconsin Farm Bureau Federation, the proposed spending package also calls for a $250,000 cap on farm subsidies.

Office of Management and Budget Director Peter Orsag said the direct payment proposal was still included, 'as a matter of principle.'

Obama's more detailed FY2010 budget proposal unveiled Thursday calls for $17 billion in budget cuts from 121 government programs. Farm subsidy spending, estimated at $9.25 billion this year, would be cut by $1 billion a year under Obama's proposals, which include a reduction in crop insurance subsidies.

Meanwhile, the farm group also say the budget calls for a $2 billion cut in baseline funding over five years and seeks reducing premium subsidies and underwriting gains.

Specifically, the budget document's 'Terminations, Reductions and Savings' section says the proposal would reduce the federal crop insurance subsidy to both farmers and the insurance companies in three ways: reduce premium subsidies by five percentage points on all coverage levels; increase the government's share on underwriting gains to 20 percent from five percent; and reduce the premium on Catastrophic Crop Insurance by 25 percent and charge a sliding scale fee for CAT coverage from $300 up to $5,000 depending on the crop value.

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