The first attempt by the Senate Committee on Agriculture, Nutrition and Forestry to meet its budget reconciliation target of $3 billion in spending cuts over five years had to be sent back to the drawing board.
The plan, which involved a 2.5-percent reduction in farm program payments and cuts in spending for conservation, food stamps and agricultural research, was severely criticized by numerous conservation, charity, environmental and taxpayer watchdog groups in Washington.
But the opposition that counted came from Agriculture Committee members who reportedly felt the 2.5-percent ($1.15 billion) reduction in farm program payments was more than their farmers could bear.
The 2.5-percent figure was made larger — some had expected a 1-percent cut — because of pressure from dairy-state senators to extend the Milk Income Loss Contract program, which expired Sept. 30. The budget reconciliation proposal included $998 million in new funding for MILC.
Senate Agriculture Committee Chairman Saxby Chambliss said the opposition to the deeper cuts was one of the reasons for postponing a mark-up session on the budget reconciliation proposal that had been scheduled for Oct. 6.
“We did achieve the difficult balance for conservation and food stamp spending and among program crops; however, some committee senators said they were concerned at the cost of extending the MILC program at the expense of other commodity programs,” Chambliss said in a statement.
“There is strong support for this counter-cyclical dairy program among both parties within this committee, but it does not appear there is the support that is necessary.”
While the committee's work would be simplified by omitting the MILC program, senators are aware that President Bush promised dairy farmers he would fight to extend the program when he was campaigning for re-election in Minnesota last year.
Dairy state senators from both parties, meanwhile, have vowed to provide funding for the program, including Rick Santorum, a Republican from Pennsylvania, who reportedly faces a stiff re-election challenge next year.
The committee has not re-scheduled the mark-up session, which was canceled shortly before midnight on Oct. 5.
More than 150 food and nutrition groups, including the Memphis, Tenn., Food Bank sent a letter to Chambliss criticizing the plan that would reportedly have reduced spending for conservation programs by $1.05 billion, food stamps by $574 million and ag research by $227 million.
Groups such as the Environmental Working Group, a long-time nemesis for farm programs, also weighed in with its president, Ken Cook, saying the proposal would hamper the efforts of U.S. negotiators in the Doha Round of WTO talks.
“It's a slap in the face to the poorest countries in the world,” said Cook. “The only thing U.S. Trade Representative Rob Portman will get out of this round of negotiations is frequent flyer miles.”
A minister from Hazard, Ky., wrote an op-ed article for the Christian Science Monitor, claiming that the plan would harm families “living on the edge” in rural areas while continuing to provide $11 billion a year in government payments to large-scale commercial farms nationwide.
The National Cotton Council, on the other hand, called the proposal “painful, but equitable,” in a statement attributed to its chairman, Woods Eastland, a producer and cooperative official from Greenwood, Miss.
“This proposal calls on the U.S. cotton industry to make significant contributions to deficit reduction through cuts aimed at all commodities generally and cuts aimed at cotton specifically,” said Eastland. “Cotton is clearly doing its part to contribute to deficit reduction in this package. These proposed cuts will be painful to the U.S. cotton industry.”
The proposal apparently included a 2.5-percent reduction for direct, counter-cyclical and marketing loan payments for cotton, rice, corn, soybeans, peanuts and other program crops, including dairy payments. It would have also ended the Step 2 export subsidy program for cotton on Aug. 1 or after the end of the current marketing year for cotton.
Although the cotton industry had hoped to keep Step 2 through the end of the current farm bill, Eastland sounded supportive of the move to terminate it a year earlier than the 2007 expiration of the 2002 farm bill.
Agriculture Secretary Mike Johanns had asked Congress to end the program immediately to comply with a ruling by a WTO dispute panel in a case brought by Brazil against the U.S. cotton program.
“Even though the U.S. cotton industry remains convinced that the WTO dispute panel's findings were flawed, the decision to terminate the Step 2 program prior to the conclusion of the current farm bill is an acknowledgement of U.S international obligations,” he said.
“A decision to completely terminate a U.S. farm program in the middle of a farm bill is virtually unprecedented. The loss of the Step 2 program will reduce offtake of U.S. cotton and put additional pressure on prices received by farmers. The elimination of Step 2 and the administrative changes to the export credit programs constitute significant progress in response to the WTO decision on prohibited subsidies.”
He said the reduction in benefits from the marketing loan and counter-cyclical payments combined in the Chambliss plan along with the elimination of Step 2 “address the price suppression and serious prejudice ruling in the Brazil WTO cotton case.”
Eastland also expressed disappointment at the decision to delay mark-up in the Senate Agriculture Committee.
“The Senate Agriculture Committee has a difficult task before it. Cutting farm programs is never easy. The committee has managed to craft a balanced package of cuts that is relatively equitable across all commodities and all programs overseen by the committee.”
The 2.5 percent reduction in payments, particularly in the face of rising fuel and fertilizer costs, “will be keenly felt,” he said. “The Senate did what it could to minimize overall negative impacts from this budget-cutting exercise.”
Although finding common ground is obviously proving difficult, Chambliss said the committee must still choose where the $3 billion in cuts will come from. “As a committee, we must participate with other committees that are cutting the budget, or we lose the right to choose our cuts when the Congress votes on budget reconciliation.”
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