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Published March 01, 2009, 11:51 AM

North Dakota, Minnesota leaders react to farm subsidy payments

President Obama’s new federal budget proposal is likely to touch off the second round of political battles over farm subsidy payments in less than a year and has received mixed reactions from North Dakota and Minnesota congressional leaders.

By: Matt Bewley, Grand Forks Herald, INFORUM

President Obama’s new federal budget proposal is likely to touch off the second round of political battles over farm subsidy payments in less than a year and has received mixed reactions from North Dakota and Minnesota congressional leaders.

“We just passed a fiscally responsible farm bill that made cuts to farm programs, so now is not the time to reopen it,” said Rep. Collin Peterson, D-Minn., chairman of the House Committee on Agriculture. Peterson was one of the chief architects of the 2008 farm bill.

He is opposed to any effort to cut support for farmers, he said, pointing out that farmers did not contribute to the budget shortfall.

“In these challenging times, no part of the budget can be immune from consideration for reductions,” he said. “But the farm bill that just passed was completely paid for.”

The bill passed in May, despite President Bush’s veto, and was just the latest battleground on which farm subsidy limitations were challenged and defeated. Bush had tried to pass subsidy limitations in multiple budget proposals.

The Obama budget calls for a $250,000 cap on subsidy payments to producers and eliminates direct payments to farmers with more than $500,000 annual revenue.

In Minnesota, the cuts would affect about 6,700 farms, according to U.S. Agriculture Department information. Though the farms represent less than one-tenth of all Minnesota farms, they account for almost $8 billion, or two-thirds of the state’s agricultural sales.

Sen. Amy Klobuchar, D-Minn., has supported payment reform in the past. She co-sponsored a farm bill amendment that would have stopped payments to full-time farmers with income greater than $750,000 and to part-time famers with income greater than $250,000. The senator’s spokesman, Linden Zakula, said “she is open to looking at it as long as it does not hurt Minnesota’s family farmers.”

Challenges

Lawmakers from California and southern rice and cotton-producing states are expected again to object to the proposed limitations, claiming their crops are more costly to raise.

Sen. Byron Dorgan, D-N.D., who in 2008 cosponsored an amendment with Sen. Chuck Grassley, R-Iowa, to set a payment cap of $250,000, disagrees.

“I think there is a reasonable case for payment limitations when a big corporate farm down south gets $30 million in five years,” Dorgan said. “That’s not what the farm program is supposed to be about.”

Rep. Earl Pomeroy, D-N.D, also hesitates to give taxpayer dollars to larger farming operations, which some say are big enough to fend for themselves.

“I think you go in the South from tiny farms, like 10, 20 or 100 acres, to massive farms,” he said. “Quite frankly, subsidizing a lot of those enterprises, I don’t have a lot of sympathy for them, and my city friends in the House have no sympathy at all for them.”

Dorgan said there should be “reasonable payment limitations,” but stopped short of agreeing with the president’s proposals before learning the specifics.

The real challenge to the agricultural portion of the new budget may lie in the proposed elimination of direct payments to farmers earning more than $500,000 a year.

“First of all, the $500,000 is gross income,” Dorgan said. “In those circumstances, it may very well be gross income for a unit that, in a bad year, did not make a profit.”

Dorgan said both he and Congress would have a “difficult time” supporting such a proposal.

“I also believe the fundamentals of the proposal are wrong,” Peterson said. “This plan would phase out direct payments based on gross sales, which would mean a farmer could see a drop in farm income and still see a cut in their safety net support. That makes no sense.”

Pomeroy agreed.

“I don’t want to fight proposals relative to corporate-scale agriculture and ultimately place at risk programs critical to family farming up here in the Upper Midwest,” he said.

Split along lines

Farmers also are split on the issue.

Kirsten Weeks Duncanson, who raises corn and soybeans in Mapleton, Minn., would be one of the 6,700 farmers in her state to lose her subsidy payment. She sees the payments more as a source of reassurance than a necessity to her operations.

“Direct payments come in handy when you have these wild circumstances (in the markets),” she said. “That is what the government is for, providing a safety net.”

Tom Nuessmeier farms organic crops in Le Sueur, Minn., but is not at risk of losing his subsidy payments. He sees the subsidy issue differently.

“Any farm with a gross income of more than $500,000 or more is going to be good enough that they can retool and steer toward a potentially different market,” he said. “I want to be able to farm and not rely on government subsidies to make or break my business.”

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