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Photo by David Blankenship.

Ag reacts to Obama’s budget proposal with big crop insurance cuts

Last week, President Obama released his spending blueprint for fiscal 2017, a $4 trillion proposal congressional Republicans immediately declared dead on arrival. Agricultural leaders expressed a number of concerns as well.

“A global glut of food production has sent U.S. farm revenues down sharply. With farm income down 56% in the past two years alone, America’s farmers and ranchers face difficult times. Yet, the president’s just-released budget would cut 27 USDA programs, including a 10-year, $18 billion cut to the federal crop insurance programs so important to farmers. And all this happens as farm income is projected to decline another 3% in 2016,” said Zippy Duvall, American Farm Bureau Federation president. “The president’s budget would also harm farm and ranch families through capital gains taxes and special provisions that would force new generations to pay much higher taxes on any land and assets they inherit. Such treatment is a recipe for farm fragmentation and an unnecessary obstacle for agriculture’s next generation.

“There is some positive in his proposal; the president’s budget does include increases for food and agricultural research — a critical need in a world in which hunger remains a problem in many countries — as well as increases for research into antimicrobial resistance in humans and livestock. Each of these needs to be addressed in serious ways, and we appreciate the support for such research.”

In the budget, the U.S. Department of Agriculture would see a 7% decrease in funding, the fourth-largest spending cut among all departments. Despite the cut, certain programs, including the Agriculture and Food Research Initiative (AFRI) and the one for small, beginning and socially disadvantaged farmers, would see budget increases. AFRI has helped to fund valuable agricultural research endeavors.

The savings in the president’s agricultural budget largely would come from the $1.3 billion cut in the crop insurance program in fiscal 2017 and an $18 billion decrease over 10 years. The American Soybean Association (ASA) expressed strong opposition to the proposed cut to crop insurance and a lack of funding for infrastructure improvements. ASA noted the budget contains funding for multiple soybean farmer priorities, including increased resources for oversight at the Commodity Futures Trading Commission (CFTC) and full funding for the Market Access Program and Foreign Market Development program.

“We once again find ourselves fighting attempts to cut crop insurance,” said Richard Wilkins, ASA president and a farmer from Greenwood, Del. “Our policy has always been that we will strongly and absolutely oppose any attempt to target farm bill programs for additional cuts, and it goes without saying that we will continue to fight proposed cuts to the farm safety net. All it takes is a quick glance around the farm economy to see that we need a stronger safety net for our farmers, not a weaker one.”

Wilkins also pointed out the association’s disapproval in the budget’s 22% cut to funding for the Army Corps of Engineers, which oversees the maintenance and construction of locks and dams on the nation’s waterways. Specifically, the budget cuts more than 41% from the Corps’ construction account, $2.7 billion from the operations and maintenance account, and fails to fund the Navigation Ecosystem Sustainability Program (NESP), a priority for ASA.

“We’re disappointed with this budget’s neglect of investments in waterways infrastructure, which is vital to rural economies as it is a means of efficient transportation of soybeans and a key component of our global competitiveness in export markets,” said Wilkins. “Infrastructure investments should not be limited to highways, mass transit, and high speed rail, but should include those aspects important to rural America too. ASA will continue to work with industry partners and Congress to build on the successful increases in investments achieved in FY16 Appropriations for our ports and waterways operations & maintenance and infrastructure improvements.”

While noting the association’s displeasure in the infrastructure and crop insurance provisions in the budget, Wilkins did point out several areas in which the budget addressed and increased funding for farmer priorities.

“Clearly we absolutely oppose any cut to crop insurance, and the proposed hobbling of the Corps funding, but there is plenty in the president’s budget that we support, including $330 million in funding for commodity market oversight at the CFTC,” Wilkins said. “Market integrity is not front-of-mind until something goes wrong, and adequate resources for oversight of futures markets are an important priority for farmers.”

The budget’s continued funding for programs that promote trade with both emerged and developing markets is also something ASA welcomed, and Wilkins said the association will fight for in future budgets.

“The MAP and FMD programs are an essential part of our industry’s work to establish and expand the beachhead for American soybeans in foreign markets,” he said. “That money helps to fund valuable research and market development work by the U.S. Soybean Export Council, which translates directly into increased exports and revenue for American soybean farmers.”

From a legislative standpoint, the president’s budget is a non-starter in an election year and with a Republican-controlled Congress, however Wilkins said the release of the budget can start a productive conversation on the importance of funding many of the programs critical for soybean farmers.

“Every year, we bring the same funding fight down to the wire in November and December. Party leaders hold one another’s feet to the fire, and at the eleventh hour we manage to eke out funding for programs that are essential to farmer success,” Wilkins said. “Regardless of the long-term prospects of this specific proposal, let’s use it to at least start a discussion about how important these programs are to farmers, and how we get them funded for the coming year.”

“That work has to start with farmers. We need to turn up our volume and increase our face-time with lawmakers so that they understand these programs aren’t simply line items on a budget, but real, working tools that help us operate more successfully.”

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