US crop subsidy costs are skyrocketing in the wake of this fall's mammoth harvest, possibly making the farm program a larger target in the struggle to rein in federal spending in 2005.
Both President George W. Bush and Democratic nominee John Kerry have promised to halve the federal deficit. In the tussle for funding, agriculture must compete with high-priority issues like the war in Iraq, health care and disaster relief.
"My impression is agriculture spending was going to be a target regardless," said Bob Stallman, president of the American Farm Bureau Federation. He pointed to recent calls to bring federal spending under control and to trim farm outlays.
Farm subsidies cost an estimated $12.3 billion in just-ended fiscal 2004 and may leap by several billion dollars this year due to wilting market prices and huge output. Growers are reaping their largest corn, soybeans, rice and cotton crops ever.
"It doesn't make sense to us to cut now," said Tom Buis of the National Farmers Union. "Times of low prices are exactly what the farm bill was designed for."
The 2002 farm law automatically sends more money to growers whenever returns on cotton, grains and oilseeds from sales and other subsidies fall short of targets set by Congress. The Agriculture Department soon will begin the first round of target price payments to offset low prices for this year's crops.
Since harvest began, cotton, grain and oilseed farmers have pocketed nearly $400 million in price supports, a different subsidy program.
Under the pressure of record output, farm-gate prices for corn and soybeans, two major US crops, will drop to levels seen at the start of this decade, a stressful period of surpluses and low prices. Agricultural economists said a bumper crop this year did not mean low prices for years to come.
"This is due to incredibly good yields. You wouldn't expect to have incredibly good yields year after year," said Pat Westoff of the Food and Agricultural Policy Research Institute at the University of Missouri.
In addition, Westoff said, domestic and world demand for US crops was strong. Bob Young, an economist for the American Farm Bureau, said there was "a long-term build-up in demand" for feed grains.
"It's not going to take much of a crop problem anyplace," Young said, for prices to rebound quickly.
In the short run, economists said, farmer income should remain high for the second year in a row. The downturn in prices was roughly equal to the rise in crop size, so revenue from crop sales would be about the same as from the 2003 crop. Livestock prices were at healthy levels.
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