Plan cuts subsidies to large farms
Twin Cities, Tom Webb
Published February 26, 2009
President Barack Obama fleshed out his plan to "end direct payments to large agribusinesses," proposing Thursday to phase out direct payments to growers with sales of more than $500,000 a year.
But Congress must approve such a plan, and the idea drew a cool response from key lawmakers, including U.S. Rep. Collin Peterson, D-Minn., who chairs the House Agriculture Committee.
Minnesota growers in 2007 collected about $330 million in direct payments, which are subsidies paid regardless of whether the crop is a good one, a bad one or even if no crop is planted at all. In recent years, other types of subsidies have dried up because of strong crop prices, but the direct payment checks kept coming.
Obama's plan would restrict the payments to smaller operations. In Minnesota, about 6,400 of the state's 80,000 farms have sales of more than $500,000 a year, according to the 2007 Census of Agriculture.
Nationwide, about $5.1 billion per year is spent on direct payments, according to data from the Environmental Working Group, a Washington-based consumer group. Southern lawmakers and farmers have been particularly vocal about keeping direct payments, which now are capped at $40,000 per farmer, $80,000 for a farming couple.
In Tuesday's State of the Union address, Obama said his administration is looking to cut wasteful spending, vowing to "end direct payments to large agribusinesses that don't need them."
Also included in Obama's proposed 2010 federal budget was a call to reduce subsidies to crop insurance companies and growers.
