Plan cuts from direct payments, crop insurance

WASHINGTON -- Farm and nutrition leaders expressed caution about a proposal by House Budget Committee Chairman Paul Ryan, R-Wis., to cut $30 billion from the direct payments and crop insurance program over 10 years and to turn the food stamp program into a capped block grant to the states.

Ryan proposed the farm and nutrition cuts as part of a much larger fiscal year 2012 budget resolution that would cut $6.2 trillion from the budget over 10 years. Most of the savings would come from Medicare and Medicaid. Ryan proposed reducing the $5 billion in fixed payments that crop farmers get irrespective of price levels and reforming "the open-ended nature of the government's support for crop insurance so that agricultural producers assume the same kind of responsibility for managing risk that other businesses do."

'First serious step'

House Agriculture Committee Chairman Frank Lucas, R-Okla., commended Ryan "for taking the first serious step in reining in our deficit."

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

He also noted that Ryan and President Obama have both made policy "suggestions."

House Agriculture Committee ranking member Collin Peterson, D-Minn., said in an interview in the Capitol that he would favor the cuts "only if they cut everything else the same percentage."

Peterson also said that agriculture already has contributed $12 billion to deficit reduction through cuts to the crop insurance program in the 2008 farm bill and the Obama administration's renegotiation of the standard reinsurance agreement with the companies.

Told that Ryan has said the cuts are appropriate because agriculture is so prosperous, Peterson said he has warned Lucas that, "I don't buy into that foolishness." High prices, he said, lead to higher production and lower prices. Of the proposal to turn the food stamp or supplemental nutrition assistance program known as SNAP into a state block grant, Peterson only rolled his eyes.

Food stamp program

Although Ryan did not appear to announce the expected budget savings from food stamps, the potential is much more there than from farm programs. SNAP is projected to cost $700 billion over 10 years.

The Food Research and Action Center said in a statement that the food stamp program "has succeeded for 40 years as the nation's most fundamental public program, safeguarding against hunger, working both in good times and in bad times."

"Chairman Ryan's proposal to destroy the structure of the program is an old idea that has always been misconceived, but which the effective SNAP response to the recession has underscored as a really bad idea," the FRAC statement said. "If enacted, it would have the effect in the long term of harming tens of millions of children, seniors, and working-age adults, damaging our education and health systems, creating havoc with state and federal budgets and weakening the economy."

Peterson said his more immediate concern is that appropriators in the Senate will try to cut mandatory programs to complete a bill to fund the government for the remainder of the fiscal year 2011. Those cuts, Peterson said, "are undermining the agriculture committee."

An idea on the table

National Corn Growers Association President Bart Schott was the most positive of farm leaders reacting to the proposal.

"These cuts are significant, but so is our nation's out-of-control budget deficit," Schott said in a news release. "What is important is that farmers are not singled out -- the cuts proposed for agriculture are proportional to those proposed for other areas of the federal budget."

National Sustainable Agriculture Coalition Washington lobbyist Ferd Hoefner noted that Ryan addressed only the direct payments and crop insurance subsidies and did not mention price-triggered subsidies, which would not provide much budget savings in this time of high prices, or programs for conservation, renewable energy, specialty crops or any of the other farm bill mandatory spending.

"In our view, Ryan has done a service by at least putting the idea on the table that cuts to farm bill mandatory spending might include commodity and crop insurance subsidies," Hoefner said.

"With nothing except farm bill conservation program cuts on the table currently in the debates over budget cuts in the continuing resolution for (fiscal year 2011) and the upcoming (fiscal year 2012) appropriations bill, we welcome the suggestion that if there are to be cuts, then everything needs to be on the table," he said. "Of course, the Budget Committee can only make suggestions. If a budget resolution ultimately is approved by both houses (a big if) and includes farm bill cuts, the Agriculture Committee is free to make the cuts from any and all mandatory programs in their jurisdiction."

National Farmers Union President Roger Johnson said that Ryan's proposals are shortsighted even though his group has proposed using the $5 billion in annual direct payments for other purposes.

"Our members have called for a reallocation of funds from direct payment programs to other components of the safety net that provide assistance only in times of need," Johnson said. "Crop insurance, which has already absorbed steep cuts, should be at the center of the next farm bill, along with permanent disaster programs, countercyclical programs and supply management."

National Cotton Council President Charles Parker said his group is "deeply concerned by the extent of the cuts to commodity, conservation and nutrition programs" Ryan proposed.

The cuts represent 20 percent of the funding baseline for agricultural programs over the next 10 years and come on top of $6 billion in cuts resulting from the renegotiation of the standard reinsurance agreement in 2010, Parker said.