Republicans want to cut farmers' direct payments

The direct payment subsidy that gives U.S. farmers $5 billion a year has become the primary focus of Republicans looking to cut agriculture spending. "Created in 1996, the subsidy is a point of dispute in farm country. Some farm groups want Congress to eliminate direct payments as part of an overhaul of farm policy due next year while others would keep it," Charles Abbott of Reuters reports. "The new Republican majority says it will unveil in coming weeks how it will cut spending by $60 billion this year. House Budget Committee chairman Paul Ryan says cuts of more than $100 billion would be made in 2012."

Farm lobbyist Mark McMinimy of the consultants MF Global told Abbott spending cuts in agriculture are likely to be on the agenda for cost-conscious Republicans. Since it will be difficult to cut food-stamp funding, other areas of the Farm Bill are likely to be targeted. The Obama administration already has made revisions in crop insurance that it says will save $4 billion over 10 years. "I would suggest that is a fairly significant cut," Bob Stallman, president of the American Farm Bureau Federation, told Abbott. "We're getting down to the point where there's not much left to cut" in farm spending.

"Farm subsidies, including land stewardship, are forecast for $10 billion this year -- half of 2005's total -- out of a federal budget of $1.34 trillion," Abbott writes. "Public nutrition programs, chiefly food stamps and school meals, were projected for $94 billion last year, roughly two-thirds of all USDA spending." Food stamp enrollment is at a record high, making spending cuts difficult, Abbot reports. Defenders of direct payments say they stabilize farm income, while critics say that money would be better spent helping growers deal with low prices or crop failures. (Read more)