With many in Congress eager to take a hatchet to the federal budget it is inevitable that agriculture programs will be cut. But the scope of cuts proposed by the White House early this week – including the end of $5-billion-per-year direct payments and a big drop in crop insurance subsidies – has farmer advocates and commodity groups repeating a complaint heard often in recent years: Agriculture is bearing a disproportionate share of the budget-fixing burden.    

For more, see Obama budget proposal targets direct payments.

Even if agriculture programs emerge more intact than the White House wants, more uncertainty exists for the near future. The next farm bill must be written and agriculture’s major players are jostling over what policies to back.

In mid-September, the National Farmers Union (NFU) showcased a study done by the University of Tennessee Agricultural Policy Analysis Center that looks at how farmer owned reserves (FORs) would work for farmers and taxpayers in the current climate.

See a study report here.

The study “found that, if we had adopted this approach over the last 13 years (1998 through 2010), the value of U.S. exports would have been nearly $5 billion more than it actually was,” said Roger Johnson, NFU President. “Corn prices would have been $0.26 higher than they actually were, wheat prices would have been $0.48 higher, and soybeans would have averaged $1.09 more over the period studied. The farmer-owned reserve acts to moderate highs and lows of grain prices, and during the period studied, farmers would have gained more income from market receipts and relied less on government payments, which would have been reduced by more than half.”

On Tuesday, Farm Press spoke with Harwood Schaffer, Research Assistant Professor at the UT Agricultural Policy Analysis Center. Schaffer, one of the study’s authors, explained why FORs should be considered by Congress, how cotton would fit into the system and how it would stabilize food and animal feed costs. Among his comments:

On Obama’s budget proposals and how they would affect agriculture…

“I’ve been following the proposals in rough detail and am aware of what’s involved. Everyone seems to be figuring out a response.

“Certainly, Obama’s approach will come through the USDA. (Agriculture Secretary) Tom Vilsack was at the (recent) NFU meeting (where the UT study was released). He talked to the NFU but didn’t hear the presentation on the study. But I’m sure he has been apprised of it.

“The NFU, with its legislative fly-in, had visits with a large number of congressional members. They found at least some openness from a number of them.

“Part of that openness comes from the fact that in facing a climate where less money may be available, the study shows over the range of conditions that can happen – and actually did between 1998 and 2010 with relative historic lows and absolute historic highs – the policies outlined would have performed very well and would have saved a significant amount of money. That alone has created some willingness (amongst legislators) to look at this policy that many wrote off since 1996.”