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2/2/2007 Capital Press
More on the specific proposals in the Bush administration's 2007 Farm Bill programs is online at www.usda.gov/farmbill

Farm Bill fact sheet

Here are highlights of President's Bush's 2007 Farm Bill proposal. The proposals spend about $10 billion less than the cost of the 2002 farm bill over the past five years - excluding disaster aid - and uphold Bush's plan to eliminate the deficit in five years. These proposals authorize about $5 billion more than the projected spending if the 2002 Farm Bill were extended.

Commodity Programs

Convert current price-based countercyclical program to a revenue-based program. Under a price-based program, farmers who experience crop loss are often under-compensated while those with high production tend to be over-compensated. This new revenue program will factor in U.S. crop yield when determining crop payments to better target support.

Reform and modernize the marketing assistance loan program. Current law provides loan rates, or price floors, for corn, wheat, cotton, rice, soybeans and other major crops. These are set in law at high levels, which have encouraged production and resulted in lower market prices. The proposals set loan rates for each commodity at 85 percent of the five-year Olympic average (average of last five years excluding the high and low year). This change minimizes market distortions and encourages farmers to plant crops based on market prices instead of the level of subsidy payment.

Tighten payment limits and work to close loopholes. Under current law, farmers use the three-entity rule to establish corporations and other entities, which allow the amount of payments received to exceed statutory limits. These proposals eliminate the three-entity rule and tie payments to an individual. This plan also sets the subsidy payment limit for individuals at a total of $360,000.

To receive commodity payments, producers must also meet a limit on adjusted gross income, which includes wages and other income minus farm expenses and depreciation. This plan reduces the current AGI limit of $2.5 million to a new limit of $200,000. If a producer has an annual adjusted gross income of $200,000 or more, that individual would no longer be eligible for commodity payments.

Conservation Programs

The administration's proposals include an additional $7.8 billion over 10 years for conservation programs.

Increase the acreage limit on the wetlands reserve program from 2.3 million to 3.5 million acres. With this increase to the acreage cap, a total of 250,000 acres will be made available for enrollment annually.

Consolidate cost-share programs into the environmental quality incentives program and create a regional water enhancement program with an additional $4.2 billion. This newly designed EQIP program will increase the simplicity and accessibility of conservation programs and provide program flexibility that increases environmental benefits. The new water program will focus on cooperative approaches to enhancing water quality on a regional scale. This program will fill a void in the federal government's conservation delivery system by facilitating a cost-share program to coordinate large-scale water conservation projects.

Continue the conservation reserve program at the current acreage limit and focus program benefits on lands that provide the greatest environmental benefit. This plan also gives priority to whole-field enrollment for land utilized for biomass production for energy.

Renewable energy

More than $1.6 billion in new renewable energy funding is proposed.

Provides $500 million for a bioenergy and biobased product research initiative. Advances in technology play an important role in the future of renewable energy. Our scientists, farmers and entrepreneurs must coordinate efforts to continue improvements in crop yields and work to reduce the cost of producing alternative fuels.

Provides $500 million for a renewable energy systems and efficiency improvements grants program. This program supports small alternative energy and energy efficiency projects that directly help farmers, ranchers and rural small businesses.

Provides $210 million to support an estimated $2.1 billion in loan guarantees for cellulosic ethanol projects in rural areas. This program will advance the development of cellulosic ethanol production.

Rural development

The administration's farm bill proposals continue this administration's commitment to rural America by building upon U.S..Department of Agriculture rural development programs.

Includes $1.6 billion in guaranteed loans to complete the rehabilitation of more than 1,200 current Rural Critical Access Hospitals.

Includes $500 million to reduce the backlog of rural infrastructure projects such as water and waste disposal loans and grants.

Specialty crops

The proposals target nearly $5 billion over 10 years to significantly increase support of fruit and vegetable producers through targeted programs:

Provide $1 billion for research programs targeted to specialty crops. This initiative will include fundamental work in plant breeding, genetics and genomics to improve crop characteristics such as product appearance, environmental responses and tolerances, nutrient management and pest management.

Provide $3.2 billion to improve nutrition assistance programs by purchasing more fruits and vegetables. This funding will support efforts by schools and other participants to offer meals based on the most recent Dietary Guidelines for Americans by increasing the availability of fruits and vegetables to students participating in the National School Lunch and Breakfast Programs and to participants in other nutrition assistance programs.

Trade programs

The administration's farm bill proposals increase trade programs by nearly $400 million to continue the creation, expansion and maintenance of agricultural exports.

Increase the market access program by $250 million. This initiative allows partnerships between the USDA and nonprofit domestic agricultural trade associations to share the costs of overseas marketing and promotional activities.

Farm bill proposal caps subsidies
Bush plan would cut off farmers earning more than $200,000

Jerry Hagstrom, Washington, D.C., Correspondent,

WASHINGTON, D.C. - Agriculture Secretary Mike Johanns announced a Bush administration farm bill proposal Jan. 31 that would reduce farm subsidies by banning payments to any farmer earning $200,000 in adjusted gross income, but overall it proposes fewer changes in the structure of farm programs than anticipated.

The bill would also eliminate the prohibition against planting fruits and vegetables on land that receives subsidies, but it would provide an additional $5 billion over 10 years for specialty crops such as fruits, vegetables and nuts.

Johanns said at a news conference that the majority of farmers told him they liked the structure of the 2002 Farm Bill but wanted certain problems solved - such as the lack of assistance when they did not get a crop.

"These proposals represent a reform-minded and fiscally responsible approach to making farm policy more equitable, predictable and protected from challenge in trade cases," Johanns said.

The proposal, presented in a 181-page book and posted on the Internet, would cost $17 billion less over the next five years than the 2002 Farm Bill has cost in its life, including disaster payments. But it would cost $5 billion more than the current projected spending over the next 10 years, officials said.

The current farm bill has cost $98 billion in farm programs, and Congress added $7 billion in disaster payments, but the government's projection for future spending has gone down because commodity prices are high and price-related farm payments are projected to be low.

A USDA official said the elimination of all commodity subsidies to farmers with $200,000 from all income sources is expected to affect 80,000 farmers and save $1.5 billion.

Since farm production is highly concentrated on the biggest farms, that restriction could reduce incomes and buying power for some of the nation's most productive farmers, but USDA officials could not immediately predict the impact eliminating those subsidies would have on production.

Johanns said anyone earning $200,000 is among the 2.3 percent richest Americans and that he would have a hard time justifying to urban taxpayers subsidies to such high earners.

The proposal would also end farm payments on land acquired through the Internal Revenue Service's "1031" land exchange rule.

Such swaps exempt from federal capital gains taxes properties used for businesses and farming.

The proposal does not eliminate marketing loans on crops, as some reformers have advocated, but would reduce marketing loan rates to the levels passed in the House version of the 2002 Farm Bill. Those loan levels were raised in the 2002 Senate bill and became law.

Under the Bush proposal, the loan rate for corn would be $1.89 per bushel, for soybeans $4.92 per bushel, for wheat $2.58 per bushel and for cotton .5192 cents per pound.

The bill would increase by 7 percent farmers' direct payments, which are not affected by production. Direct payments are preferable to those who say higher marketing loan payments when prices are low discourage farmers from following markets.

The proposal would also change the countercyclical payment program so it would be based on farmers' revenue from a crop rather than on price. Johanns said the change would allow farmers to receive payments when a crop fails rather than only when prices go down.

The administration also proposes to eliminate the prohibition on planting fruits and vegetables on land that gets crop subsidies and increases by $5 billion over 10 years various programs for fruit and vegetable producers, who have expressed fears that increased acreage will lower their prices.

The proposal also continues the dairy support program and the milk income loss contract program, but with reduced payment levels. It continues the sugar program, but would eliminate a provision that gives the agriculture secretary power to reduce sugar production to avoid forfeitures.

The proposal also increases funding for various conservation programs by $7.8 billion over 10 years and continues the land-idling Conservation Reserve Program at its current level. It also includes $1.6 billion in new funding for renewable energy research, development and production, targeted for cellulosic ethanol. The USDA would also make available $2.1 billion in guaranteed loans for cellulosic projects.

Johanns left immediately after his announcement for a national tour that included a stop in Modesto, Calif., to talk about the benefits of the proposal for specialty crops.


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