MEAKMatt 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 agendao “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 231-191 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?