MEAK Matt Kaufman, Eric Koziel, Anca Istoc, Kevin Lawson

 Farm subsidies in danger of cuts ◦ Farm incomes high ◦ Grain prices up ◦ Federal budget deficit  Major proposed cut shot down ◦ Would have decreased subsidies by $10 bil over 5 years

 High global demand for grain ◦ Spurred prices by $2.20 since 2006  Farm income up ◦ Biofuel demands, rising middle classes around globe ◦ Projected income of $92.3 bil  Subsidy would grant an additional $13 bil

 Why Subsidies? ◦ Helps to stabilize grain prices ◦ Makes products more competitive ◦ Provide abundant food supply  Why Change? ◦ Too much going to farmers  Could be spent on other ventures  Farms doing fine without the aid ◦ Create a more balanced federal budget

 Main piece of legislation governing subsidies  The Farm Bill is a success ◦ $80 mil was spent for lobbying the bill in 2007 ◦ Renewed every five years

 The Bill in the past ◦ Introduced in 1930’s ◦ Was intended for only farmers  Present day ◦ It has unnecessary programs ◦ Farmers are less than 1%

 Agriculture and related industries contribute nearly 5% of America’s annual gross domestic product ◦ Costs for seed, land rent and fertilizer have been rising swiftly  In 1996 the Freedom to Farm Act was passed

 Emergency relief bills were passed and by 2002 thought of big changes in farm relief were off the agenda o “The success of America’s farmers and ranchers is essential to the success of the American economy” o In 2007 as democrats took power on Capitol Hill, there were proposed big cutbacks in farm subsidies

 The goal was to give more benefits to farmers who really needed it not the well to do farmers  Bush proposed to end payments to producers with incomes greater than $200,000. The law at the time was $2.5 million.

 The income limit on payments is now $1 million down from $2.5 million  The limit is $500,000 for beneficiaries who don’t earn at least two thirds of their income from farming.  Support for subsidy programs still remains

 Chairman Peterson ◦ Made sure more money was added to nutrition and conservation  Unstoppable Farm Lobby ◦ When groups saw the farm lobby wasn’t going to be stopped, they changed from pushing for change to wanting a peace of the pie.  United Fresh Produce Association ◦ Likely to win specialty-crop producers up to $2.2 billion in aid  Black Farmers Association ◦ Support the overall bill in return for language helping members receive settlement money from Agriculture Department in a discrimination lawsuit

 House Bill passed by vote of  Senate Bill ◦ Passed in December ◦ Eventually ratchet income cap to $750,000 ◦ Bar farmers from collecting multiple payments  Key members of House & Senate to negotiate compromise package by Mid-April

 Threatens to veto both bills  Dangling prospect of $10 billion in new spending ◦ If he gets congressional support for more aggressive changes  White House suggested raising proposed income cap to $500,000 from $200,000

 Original Article: “Farm Lobby Beats Back Assault on Subsidies,” by Lauren Etter and Greg Hitt, March 27 Wall Street Journal.  Questions?