Farmer subsidies targeted; renewable energy emphasized in President’s Budget

Source: Amanda Peterka • E&E  • Posted: Tuesday, February 14, 2012

President Obama today proposed to eliminate direct farmer payments, cap a popular conservation program and extend disaster assistance to farmers in its $154.5 billion budget for the Department of Agriculture.

The proposed budget for fiscal 2013 would provide almost $23 billion in discretionary funding, a 3 percent decrease from the levels enacted in 2012. The proposal reflects priorities in renewable energy, utilities, research, infrastructure and rural housing and development, the administration said.

“While investments are made in renewable energy, rural development and key innovative areas, the budget makes tough choices to meet tight discretionary caps,” the Obama administration said in releasing the budget today.

To meet the “president’s commitment to fiscal responsibility,” the administration has proposed eliminating direct payments to farmers, an action that would save $3 billion per year.

Cutting the payments, which are made to farmers regardless of prices or crop yields, has gained wide support throughout last year’s conversations about the nation’s deficit. In their final fiscal 2012 budget, lawmakers capped those payments to farmers making an income of more than $1 million.

Obama has also proposed reducing subsidies to crop insurance companies and “better targeting conservation funding.”

The proposed budget would cap the Conservation Reserve Program, a program that pays farmers to idle their land for habitat reasons, at 30 million acres. An estimated 30 million acres are currently enrolled in the program, and USDA recently announced a four-week signup to enroll “as many acres as we possibly can.”

The administration’s move comes after a growing call to reduce the acres in the program as crop prices have gone up and farmers have profited more from planting crops than from taking in the rent payments from the program.

The cut to CRP is one of a number of reductions to conservation programs proposed by the administration.

The administration has requested $1.403 billion for the Environmental Quality Reserve Program, slightly down from the $1.408 billion it requested in fiscal 2012. The program provides funding for farmers to make environmental improvements, such as construct fences and gutters, on their lands and buildings.

The president has also proposed to reduce the program by $800 million over the next decade.

Under Obama’s plan, the Conservation Stewardship Program, which provides incentives to farmers for implementing conservation plans, would also be permanently reduced by almost 760,000 acres. The administration has proposed enrolling about 12 million acres in the program in fiscal 2013.

The budget does not include funding for a wetlands and a grasslands program that is set to expire with the current farm bill on Sept. 30. The future of the program depends on the 2012 farm bill, being written this year in Congress.

Overall, Obama has proposed spending $827 million in discretionary funding toward conservation, a decrease from $898 million in 2011 and an estimated $851 million in 2012, according to the administration’s proposal.

Like many of the department budgets released today, the agriculture proposal reflects Obama’s stated commitment to renewable energy.

The president has proposed investing $200 million in the development of biofuels and $6.1 billion in loans to rural electric cooperatives and utilities to “support the transition to a clean-energy generation.”

“This funding will be targeted to decrease America’s reliance on fossil fuels and promote renewable and clean energy at electric generation, transmission and distribution sites in rural communities,” the administration said.