The Bush administration will propose $587 million in cuts in farm program spending as part of its fiscal 2006 budget, a "very modest" 2.9 percent reduction, a senior administration official said on Friday. Two-thirds of the US Agriculture Department reductions would be achieved by paring direct crop and dairy payments by 5 percent, the official told reporters. The administration also will propose to cut the limit on annual crop subsidy payments per farmer to $250,000. It now is $360,000 a year.
The fiscal year begins on Oct. 1. The White House is scheduled to unveil its fiscal 2006 budget proposal for the entire federal government on Monday. Congress will debate the proposal, making changes before it approves a final plan for fiscal 2006 federal spending.
In another proposed change related to subsidy payments, the "triple entity" rule allowing American farmers to collect payments from two affiliated operations would be eliminated, as would be the so-called generic certificates that allow producers to evade the current payment limit.
Fifteen percent of a farm's crop output would be ineligible for non-recourse marketing loans or loan deficiency payments under what the USDA official described as "concepts" being presented by the White House. Recourse loans, which must be repaid, would be available for farm output exceeding 85 percent of normal. Non-recourse loans, the type usually offered by USDA in exchange for the crop as collateral, give producers the option of forfeiting the crop or repaying a loan.
In addition, the White House will propose a 1.2 percent assessment on sugar marketing loan rates, effectively lowering the loan rate by about 0.2 cents per pound.
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