Bringing the Economy Home

Proposed Ag Subsidy Cuts Won’t Touch Most Idaho Farmers


After harvest, a corn field lies covered in snow.

President Obama’s budget proposal, released earlier this month, outlines cuts to ag subsidies.  That’s a potential hot button issue for rural and agricultural states, including Idaho. The Los Angeles Times summarized those cuts this way:

The White House wants to cap direct payments to farmers — which flow mainly to producers of corn, soybeans, cotton and other core commodities, regardless of market prices — at $30,000 per farm. It also wants to limit who is eligible to receive those subsidies.

Currently, a farmer can earn as much as $500,000 in non-farm adjusted gross income and still qualify. The administration is proposing reducing that ceiling to $250,000, phased in over a three-year period.

According to Agriculture Secretary Tom Vilsack, the change would affect about 30,000 of the 1.2 million people who currently receive direct-payment farm subsidies. — The Los Angeles Times

At the same time, the piece points out, the Obama proposal would increase “USDA spending on the Supplemental Nutrition Assistance Program, or so-called food stamps, to grow 15% from 2010 levels.”  The basic tension, the story finds, is that between funding for programs intended to ensure U.S. food security and programs that provide food to the poor.

That’s a tradeoff that touches a nerve in Idaho, according to Idaho Farm Bureau Federation spokesman John Thompson.  “Our organization supported removing the direct payments as a budget-cutting measure,” he said.  “I think farmers’ main concern is that if that money is not going to be spent on agriculture, that it be used for deficit reduction and not channeled into some sort of social program.”

As The Financial Times points out, resisting cuts in direct payments to farmers may not be a winning strategy for the farm lobby.

Public sympathy for farmers is fading. The average US farm household’s net worth was $901,700 in 2007, according to the latest US Department of Agriculture census data.

Most of this is tied up in land, making it illiquid, though rapidly escalating prices suggest balance sheets may be even stronger today. Farmland values in the Midwest corn belt rose 22 per cent last year. — The Financial Times

Here in Idaho, there’s an additional reason why resistance may not make a lot of sense.  “It won’t be a big effect,” Thompson said of the proposed cuts.  “It’s not going to be a tremendous impact on any one farm.” The numbers bear that out.  According to the Environmental Working Group, which compiles information from the U.S. Department of Agriculture for its farm subsidy database, well over half of Idaho farmers did not collect farm subsidy payments.  Of those who did, the top 10 percent received just over $31,000 per year, on average, between 1995 and 2010.

President Obama’s proposal would cap direct payments at $30,000, as outlined above.  There’s also the reduction in the income ceiling to consider, but nevertheless, it’s clear the majority of Idaho farmers would not be affected.

It’s also true that much remains to be determined about the next farm bill, and the 2013 budget.  As a New York Times article put it, “Congress is not likely to accept much of Mr. Obama’s budget, given Republicans’ opposition. Its value is more as a political document as he fights for re-election, contrasting his approach to the other party’s.”


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