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Congress Mulls Cap on Government Payments to Farmers

posted on November 4, 2005

Hello, I'm Mark Pearson.

Congress began swinging a heavy budget axe this week, which is going to have an impact in farm country.

The Senate approved some $36 billion in budget cuts as lawmakers took up the White House call to trim federal spending. Medicare, Medicaid and farm subsidies were among the programs being trimmed. The spending battle now heads to the House, where Republicans are divided over whether to cut programs more deeply.

For farmers, the cuts were inevitable. The budget masters in Washington had mandated a reduction of at least $3 billion in farm program spending. But just how those cuts were allocated was left to lawmakers on the agriculture committees, who this week took their fight over one contentious proposal to the floor of the Senate.


Congress Mulls Cap on Government Payments to Farmers

Currently, individual farms can receive up to $360,000 in government farm payments annually, but loopholes in the rules allow some operations to receive millions of dollars.

Senator Charles Grassley of Iowa is in favor of cutting those payments by more than $100,000. And this week the Iowa Republican introduced legislation that would do just that.

Sen. Charles Grassley R - Iowa: "My amendment will put a hard cap on farm payments at $250,000. That's the same as what's in the president's budget."

Grassley offered the amendment as part of the $100 billion food and farm spending bill the Senate passed on Thursday. The measure delayed mandatory meat labeling laws until 2008, and loosened regulations on what can be included in "organic" products. It also extended current farm subsidy programs, set to expire in 2007, until 2011.

Arguably the most controversial aspect of the bill, though, dealt with government farm payments.

Sen. Charles Grassley R - Iowa: "Ten percent of the largest farmers in America get 72 percent of the benefits to help farmers with their safety nets."

Sen. Saxby Chambliss R - Georgia: "Ten percent of the farmers in this country produce more than 72 percent of the products that come off the farm."

Despite strong bipartisan support, Grassley's amendment was not without its critics -- Especially from the South.

Sen. Saxby Chambliss R - Georgia: "Last year there were $12.5 billion in farm payments made. Guess where 10 percent, 1.3 billion dollars went? They went to the state of Iowa. Do I think that's unfair? Absolutely not."

Other Southern lawmakers also opposed the amendment. Senators Thad Cochran of Mississippi and Blanche Lincoln of Arkansas argued that capping government payments at $250,000 hurt their constituents more due to the cost of production of their crops.

Sen. Blanche Lincoln D - Arkansas: "We grow what we're suited to grow ...cotton and rice, which are highly capital intensive crops. Finally, on the issue of size, farmers of commodities are not getting larger to receive more payments. They get larger in an attempt to create an economy of scale, to remain competitive internationally."

Sen. Byron Dorgan D - North Dakota: "You want to farm the whole county? God bless you. You have every right in this country to do so and we sure hope you're successful. But I don't see that the taxpayer has to bankroll the financial operation if you want to farm the entire county."

When the dust settled though, the South prevailed and Grassley's amendment to cap government payments failed 46 to 53.

Tags: agriculture Congress farms government money news