The
US Congress is set to start hearings on
Wednesday 15 February concerning the US Farm Bill - the omnibus legislation on
US agricultural policy that is up for renewal this year. The hearings begin just
two days after US President Barack Obama announced a federal budget proposal
for the 2013 fiscal year that would cut farm subsidies by over US$30 billion
over the next decade.
Congressional
budget negotiations in late 2011 had shown Congressional agriculture committees
willing to agree to a US$23 billion cut over 10 years. Those budget
negotiations failed, however, putting the farm bill process temporarily on
hold. Under the proposed 2013 budget, however, the President has made clear
that he would like to see greater cuts over the same ten-year period, in the
order of US$32 billion in spending.
The
budget puts US$5 billion of politically unpalatable direct payments on the
chopping block and trims crop insurance programmes by US$7.6 billion. Farm Bill
activity is traditionally the domain of Congressional agriculture committees,
and similar proposals from the administration were largely ignored in last
year’s ‘Super Committee’ negotiations on federal spending.
Farm
bill discussions in 2011 focused largely on the tradeoffs between “shallow
loss” crop and revenue insurance schemes - which cover 80 to 90 percent of losses
caused by falling prices or other events - and money targeted directly towards
specific commodities.
On
the Administration’s part, US Secretary of Agriculture Tom Vilsack attempted to
cushion the political blow from the cuts, using
language that emphasised the record-breaking farm revenue from exports in
recent years. High farm incomes have made support for subsidies a political
liability, due to the impacts of the ongoing recession.
He
added that the US would seek to “reduce trade barriers” for its farm goods to
ensure that rural incomes continue to grow. Under the proposed budget, the US
Department of Agriculture will see its own discretionary budget trimmed by
three percent and will achieve the savings by streamlining operations, reducing
costs, and closing offices.