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USDA Pushes 2007 Farm Bill Proposals

posted on February 2, 2007

Hello, I'm Mark Pearson. Halfway through winter it seems everyone from policy makers to the weatherman is optimistic about the future.

Despite sub-zero temperatures in some regions, the famed Punxsutawney Phil failed to see his shadow this week, a phenomenon thought by some to foretell an early spring...

Federal Reserve Chairman Ben Bernanke apparently didn't see any shadows in the U.S. economy this week either, and the Fed left interest rates unchanged at 5.25 percent.

That news was welcomed on Wall Street, and pushed the Dow to a record high on Wednesday. The rally was supported by a Commerce Department report indicating the U.S. economy, as measured by gross domestic product, grew at an annual rate of 3.5 percent in the fourth quarter of 2006.

And the Consumer Confidence Index climbed to its highest January level in five years suggesting consumers will continue to fuel economic growth in the coming months.

In farm country, the highest commodity prices in recent memory are bolstering optimism for the rural economy. The outlook, coupled with a river of federal red ink, prompted the Bush administration this week to call for spending cuts in the next Farm Bill.

USDA Pushes 2007 Farm Bill Proposals

The Bush Administration unveiled an extensive list of farm bill proposals this week, raising eyebrows in certain agricultural sectors. The plan, announced in Washington by USDA Secretary Mike Johanns, addressed a wide range of subjects including the structure of farm payments.

Sec. Mike Johanns, USDA: "…if you have an Adjusted Gross Income of $200,000 or more, your participation in the commodity programs under Title I of the Farm Bill would cease. That is, in the top 2.3 percent of Americans if you look at the statistics of the Internal Revenue Service."

The $200,000 adjusted gross income level is a drastic drop from the current restriction of $2.5 million dollars. Johanns claims the revision in farm payments will be welcomed by a majority of farmers but criticism likely will come from Southern producers.

Johanns: "We're proposing a counter-cyclical program that will be based on revenue. It will be triggered by a drop in revenue rather than a drop in price." Speaking in Iowa this week, Johanns and USDA chief economist Keith Collins hoped to clarify the Bush Administration's proposal.

Keith Collins, USDA Economist: "If the actual revenue is below the target revenue then you have a revenue shortfall. Then we would distribute that revenue shortfall across all producers based upon their historical yield."

Sec. Mike Johanns, USDA: "This will work much better as a safety net, it just simply will. The testimony from farmers that said we're over compensated when we have big production and we're under compensated when we don't was absolutely accurate." Johanns explained that the USDA plan addresses everything from commodity payments to conservation and biofuels. But there may be conflict on Capitol Hill with various segments of the USDA proposal.

Senate Agriculture Chairman Tom Harkin criticized the plan this week claiming it falls short of President Bush's call for increased biofuel production. Harkin's House counterpart, Rep. Collin Peterson, recently stated that Johanns was "on a different planet when it comes to the next farm bill."

Iowa Farmer: "Do you think you're going to run into a lot of the political bickering that frankly we're all tired of back here and we'd like to see this continue on without that bickering." Johanns "You're not going to see politics enter into it. It's just not where any of us are at. We want to get a farm bill done. I think we're interested in the same goals. We may have some different opinions on how to get there but I'm pretty confident that this is going to move right along."


Tags: agriculture Congress government news policy USDA