Criticism Rains on Obama’s Farm Subsidy Cut Idea

By Charles Abbott | Reuters

WASHINGTON (Reuters) – Wally Darneille has two words for President Barack Obama’s proposal to end the so-called direct payment subsidy to large U.S. farmers: “That’s insanity.”

“I think we’re really going down the wrong path here,” said Darneille, the head of a farmer-owned cotton marketing cooperative in Lubbock, Texas.

An array of lawmakers and farm groups agree, suggesting poor odds for the idea to become law.

Foes say the idea is poorly timed and aimed at growers who account for three-fourths of farm production. Two longtime Senate backers of farm subsidy reform oppose Obama’s proposal.

As part of his 2010 budget, Obama proposed phasing-out direct payments to farmers with sales of more than $500,000 a year, to save $9.8 billion over 10 years.

Direct payments, which total $5.2 billion a year, are paid regardless of crop prices.

“Large farmers are well-positioned to replace those payments with alternate sources of income from emerging markets for environmental services, such as carbon sequestration, renewable energy production and providing clean air, clean water and wildlife habitat,” the White House budget documents said.

Criticism of the direct-payment plan eclipsed a companion White House proposal for a $250,000 a year cap on farm subsidy payments, the usual battleground for controlling subsidies.

“Most full-time farmers, commercial farmers … it looks to me like they’re going to get hit,” said Daryll Ray, a University of Tennessee agricultural economist.

“It will include any livestock operations you have. You might even go over (the sales limit) on livestock alone.”

A farmer could reach $500,000 in sales with 885 acres of corn or 2,250 acres of lower-yielding wheat.

Roughly 126,000 U.S. farms have sales over $500,000 a year, according to the Agriculture Department.

“We did some figuring, and it would not take much to get to that cap, said Tim Bartram, who farms 400 acres of wheat in Guthrie, Oklahoma. “They are showing a real lack of understanding of agriculture.” …

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