* Identical plan was rejected by Congress last year
* Obama says payments not needed, distort production
By Charles Abbott
WASHINGTON, Feb 14 President Barack Obama
called in his 2012 budget plan for the elimination of farm
subsidies to the wealthiest U.S. growers on Monday, arguing
that the payments distort the farm sector and some farmers can
be paid even if no crops are grown.
Lawmakers rejected an identical proposal a year ago, ahead
of the 2010 mid-term elections. They said any change in farm
supports should be delayed until a scheduled overhaul in 2012.
Obama said his plan would save $2.6 billon over 10 years, a
comparatively small amount of overall farm spending, while
preserving a farm safety net against low prices or crop
failures. The changes would affect roughly 30,000 people, the
Agriculture Department has estimated, out of 1.2 million farm
In his proposed budget for fiscal 2012, beginning Oct. 1,
Obama proposed that farm subsidies go only to people with less
than $500,000 in adjusted gross income from agriculture or less
than $250,000 off-farm AGI. The current cut-off is $750,000
on-farm AGI and $500,000 off-farm AGI. The new caps would be
phased in over three years under the administration proposal.
In addition, Obama said the maximum amount available in the
so-called direct payment guaranteed annually to farmers should
be $60,000 per farm, down from the current $80,000. Some $5
billion a year goes to cotton, grain and soybean farmers
through the payments, regardless of need.
"They distort production and drive up the value of farm
land," said the administration. "Direct payments are payments
made to farmers based on historical productions, regardless of
whether they currently produce crops."
A small-farm advocacy group, the National Sustainable
Agriculture Coalition said, with farm income at record highs,
Congress ought to set the limits even lower than Obama
suggested. A lobbyist for a large farm group said Obama's
budget had little chance on Capitol Hill.
Obama also called for a revision in the crop insurance
program to save $1.8 billion over 10 years. It would reduce the
amount paid to insurers for policies against catastrophic crop
losses. The administration renegotiated its master agreement
with insurance companies last year to save $6 billion.
The administration proposed higher spending on programs to
protect wetlands and reduce runoff from fields and feedlots.
Republicans in the U.S. House of Representatives have
tagged those programs for large cuts in spending this year.
(Reporting by Charles Abbott; Editing by Tim Dobbyn)