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Senators Grassley and Johnson Advocate for Limits to Farm Payments to Reduce Deficit

October 18, 2011

On October 14th, Senators Charles Grassley and Tim Johnson submitted a letter to the chairs of the Joint Select Committee on Deficit Reduction (Super Committee), recommending the inclusion of their legislation that would generate upwards of $1.5 billion in savings through setting strict payment limits on all commodity farm programs, as well as closing the loopholes in current payment limitation law.

The legislation, the Rural America Preservation Act of 2011 (S.1161), initially introduced on June 9, 2011, places a hard cap of $250,000 per married couple ($125,000 per individual) on farm payments.  Specifically, the bill will set limits of direct payments at $40,000; counter-cyclical payments at $60,000; and marketing loan gains (including forfeitures), loan deficiency payments, and commodity certificates at $150,000.

The bill also improves the standard which the Department of Agriculture uses to determine if farmers are actively engaged in their operations, closing the loopholes that make the current payment caps ineffective.  Without closing the loopholes, any future payment caps would likewise be ineffective.

The letter notes that the actual level of the proposed caps will need to be refashioned once the Agriculture Committees and Super Committee decide on a revised commodity title and set of subsidy programs.  The letter nonetheless stresses that “our main point is that setting a meaningful payment limitation and closing current loopholes in the law will provide savings and add integrity to the farm programs.  No matter what decision the Joint Select Committee makes regarding commodity programs, we urge you to ensure payment limitations and closing of loopholes plays a meaningful part.”

In their joint press release, Senator Johnson said, “Particularly given the budget environment we’re in, it’s important that our farm programs are effectively targeted to those who need the assistance the most: the small and medium-sized family farmers.  I hope that our bill can be incorporated into any recommendations made by the deficit reduction committee.”

Grassley added: “Our bill maintains the much needed safety net for farmers so we are assured that the American people will have a safe, abundant and inexpensive food supply….This is an easy way to save some additional funds in what’s a very difficult task.”

Categories: Budget and Appropriations, Farm Bill

One response to “Senators Grassley and Johnson Advocate for Limits to Farm Payments to Reduce Deficit”

  1. Brad Wilson says:

    Ok, but why, again, do we have any farm commodity subsidies in the first place? Why do some people think that it’s appropriate to write checks for $250,000 to farm couples? Oh, I know, it’s because Congress and the Presidents lowered price floors drastically 1953-1995, then eliminated them, along with supply management, price ceilings, (with reserve supplies) to protect consumers. Ok, so in the real world, the prices farmers have received (x acres x yields) for wheat, corn and soybeans, for small farmers and for big farmers, have been about reduced by net amounts adding up to about $2.2 trillion below previous (1942-1952), real world price standards (ie. parity price x acres with 10% more acreage reduction x yields, in 2010 dollars). So the subsidy cap crowd, such as Grassley and Johnson, are fighting big farmers who got only 1/7th of the reductions back in subsidies, and ignoring the 7/7 of hidden, off books below cost gains to unsustainable CAFOs, exporters, food and feed mills and other processors (the infamous “merchants of grain,” the mega “rats in the grain” who fixed prices on lysine). Wasn’t Scrooge such a grain merchant? For decades it’s been a lump of coal for farmers, to help pay for fuel costs for their aging tractors, as they continually filled everybody else’s (domestic and foreign buyers, domestic and foreign consumers) stockings with gold. So why do we have subsidies anyway? To blame farmers and hid enormous mega benefits. Cargill probably has gotten bigger below fair trade gains over 16 years than everyone in EWG’s farm compensatory subsidy database combined.