Senators offer alternatives to Obama plan to end direct payments to farms with sales over $500,000

Arguments against President Obama’s plan to limit direct payments to farms with more than $500,000 in annual sales mounted yesterday.

Keith Good of Farmpolicy.com and Charles Abbott of Reuters reported that two senators offers alternatives. Senate Agriculture Committee chairman Tom Harkin said the better approach would be shut off direct payments to grain, cotton and soybean growers on the basis of adjusted gross income, perhaps $200,000 or $250,000 a year. North Dakota Sen. Byron Dorgan argued that limit on payments to growers is the first step in curbing farm spending since there is effectively no limit now. Dorgan is a supporter of a $250,000 a year cap. Abbott notes, “Obama proposed a $250,000 payment limit too but it has gotten little attention.”

"The 2008 farm law set a $40,000 a year limit on direct payments and $65,000 a year for counter-cyclical payments but no limit on price supports," Reuters noted. "The limits on direct payments and counter-cyclicals can be doubled by a farm family because spouses are eligible for payments too."

FarmPolicy.com noted that Jerry Hagstrom and Chris Clayton reported for the subscription-only site DTN, “Under the WTO, direct payments and conservation payments are not classified as trade distorting, and for that reason, they garner more support by trading partners to be maintained. Loan-deficiency payments and counter-cyclical payments are considered trade distorting because of the way they move with price levels. Because of that, Grassley said, future farm programs are going to be more prone to look like direct payments than other programs being used right now and a cut in direct payments now would diminish any position in the trade talks.”