The first skirmish in the 2009 version of the battle over payment limits has been held, and farmers appear to have won.

The Senate Budget Committee defeated, by a vote of 13-10, an amendment offered by Iowa Sen. Charles Grassley that would have capped farm payments at $250,000 per individual farmer and used the savings for child nutrition programs.

The Budget Committee, instead, adopted an amendment offered by its chairman, North Dakota Sen. Kent Conrad, that would call for reductions in funding for crop insurance programs and increased spending on child nutrition.

Grassley, who has become the leader of Senate efforts to clamp down on farm payments, issued a statement on his Web site that expressed disappointment at the amendment’s failure. The amendment would have provided savings of $235 million over five years assuming the legislation he authored with North Dakota Sen. Byron Dorgan wins passage.

“We face enormous budget pressures, and this amendment would have saved a good deal of money and helped pay for important legislation that the Senate will work on later this year,” Grassley said.

“The only way we’re going to keep urban support for a farm program is to have policy that both protects family farmers and makes sure that big farms aren’t being subsidized to get bigger,” the senator added. “The policy changes in the farm bill didn’t go far enough in that direction.”

The Grassley amendment would have placed a $20,000 cap on direct payments, a $30,000 cap on counter-cyclical payments and a $75,000 cap on marketing loan gains, commodity certificates and loan deficiency payments.

Half of the estimated savings of $235 million would have been redirected for child nutrition programs and the other half for deficit reduction, according to the statement on Grassley’s Web site.

Proponents of payment limit reform accused three senators — Robert Byrd, D-W.V.; Patty Murray, D-Wash.; and Ron Wyden, D-Ore. — of flip-flopping on the issue and causing the amendment to fail. All three had voted for such an amendment during last year’s Budget Committee deliberations.

“The farm families we represent strongly support payment reform,” said Ferd Hoefner, policy director for the Sustainable Agriculture Coalition. “We are saddened to see the three senators reverse their previous position in support of family farmers, but today’s vote is not the end of the line. Budget assumptions are just that — assumptions. Everyone may well have a second chance to vote on commodity payment reform later this year.”

Hoefner and other payment limit reform proponents claim the Grassley-Dorgan legislation was supported by a majority of senators during the voting on the 2008 farm bill and was endorsed last month in President Obama’s budget proposal to Congress.

But the Grassley-Dorgan bill was not agreed to by the 60 percent of the senators required to prevent a filibuster during the farm bill debate and thus was not included in the Food, Conservation and Energy Act of 2008.

“Our farmers are ready to stand with the White House to press the case for reform with Congress,” said Hoefner. “In the meantime, however, we expect the White House to stand with us and issue a final rule to put an end to the loopholes that allow the nation’s largest farms to collect unlimited annual production subsidies. These schemes to rip off the taxpayer and put family farmers out of business are an outrage, and it is time to put a stop to it.”

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