Cotton and rice farmers and, by extension, U.S. agriculture are batting .500 in the ongoing battle over new payment limits in the FY 2005 budget resolution. On March 5, the Senate passed a budget plan that recommended new rules be implemented to reduce spending on commodity programs by $1.24 billion over five years.
But a few days later, the House Budget Committee tossed out an amendment offered by Rep. Ron Kind, D-Wis., suggesting new payment rules similar to those in the Senate-passed budget resolution. Those rules, similar to ones written by Iowa Sen. Charles Grassley, would limit farmers to $275,000 in payments per year.
Kind introduced his payment limit amendment during the mark-up session for last year’s budget resolution, claiming it and strengthening federal regulations on dairy imports would reduce the federal deficit by $733 million.
“The current system is putting our family farmers out to pasture," said Kind. "These are fair solutions to some of the challenges facing our family farmers. We have commodity farmers who are watching millions of dollars flow to the nation's largest farm operators at their expense.”
Like Grassley and other Midwest congressmen who seem to have tunnel vision when it comes to farm program payments, Kind claims that “only a handful” of farms in each state would be subject to the cap. This despite numerous studies showing the new limits would hammer cotton and rice farms with only a few hundred acres in times of low crop prices.
For now, most cotton and rice farmers are receiving more income from the marketplace, a change from the last three or four years when the only thing that stood between many of them and bankruptcy was a loan deficiency payment. The latest projections from the Congressional Budget Office put farm program payments for FY 2004 at $13.7 billion or $8 billion less than predicted two years ago.
Farmers also know that it would take one or two years of good growing weather in the Midwest for prices to fall and for counter-cyclical payments and LDPs for corn, which make up the lion’s share of farm program outlays, to rebound. In fact, CBO has reduced its baseline spending projections for FY 2005 by only $3 billion.
At the same time, many congressmen are worried about projections of increasing budget deficits that could lead to other cuts in federal spending, including commodity programs. The deficit for FY 2004, which ends Sept. 30, is now forecast to exceed $500 billion.
Despite those predictions, the House Budget Committee FY 2005 budget resolution would authorize an additional $158 billion in tax cuts over five years. The Senate budget resolution would require a 60-vote margin to make any of the president’s tax cuts permanent.
House Budget Committee Republicans say their tax cuts are simply giving people their money back. But, as farmers have learned in recent years, tax cuts don’t help when you don’t have any income to report.