By Doug Rich

The message from Secretary of Agriculture Mike Johanns to those attending the 2005 Commodity Classic in Austin, Texas was that he supports President Bush's proposed budget cuts. Sec. Johanns said he admired President Bush's courage for stepping up and taking on the growing federal deficit.

"The 2006 budget funds key priorities while producing savings and deficit reductions that in my judgment are absolutely essential to the economic health of our nation," Sec. Johanns said. "Your farms depend upon a strong and growing e economy. Nothing good comes for agriculture if the economy isn't growing. Reducing the federal deficit is vital to supporting that economic growth and prosperity for future years." He said that a smaller federal deficit would keep interest rates low which is good for agriculture. "We believe it means higher incomes. High incomes create new markets and d demand for the products you raise. It is like a tax cut, creating jobs and raising incomes."

The message from the National Corn Growers Association (NCGA) and the American Soybean Association was not to open the Farm Bill. Most growers see the 2002 Farm Bill as a contract, one that does not expire until 2007.

"The President's budget has targeted cuts in some of the key farm safety net programs," said Sam Willett, Director of Public Policy for NCGA. "One of great concern to corn growers is the cap on production that is eligible for the Marketing Assistance Loan Program. That is the program where producers can either secure marketing loan gains or market gain through Loan Deficiency Payments (LDP)." if the cuts proposed by the Bush administration has been in place in 2004, 40 percent of last year 11.8 million bushel crop would not have qualified for LDPs or Marketing Loan gains. "If this proposal is actually passed by congress it would have a severe impact on grower income next year."

If the budget is passed as proposed by Pres. Bush it would cost row crop producers $432 million just on the Marketing Assistance Loan Program and that does not include the overall 5% cuts on all program across the board. "You can see why NCGA is very much opposed to opening up the farm bill," said Willett. "Be careful what you wish for because this has been a fiscally responsible alternative to what was there before. "Willett added that livestock producers should be very concerned about the dollars being taken out of the Environmental Quality Incentives Program (EQIP) and the Conservation Security Program (CSP). Under the proposed budget $200 million be taken out of EQIP and $40 million out of CSP. "There are a variety of proposals there that impact all of production agriculture."

"The last two years the appropriation bills have actually resulted in losses in agricultural spending," said Sam Willett. "When you look at the 13 appropriation bills, agriculture is the only one that has sustained those kinds of cuts the last couple of years. Keeping the Farm Bill intact as it is today makes good budget policy."

Dennis Gengenback, past president of the Nebraska Corn Growers Association, said we need to remember that the current farm bill has come in $15 billion under the estimated cost. "The USDA budget represents only 4% of the total federal budget and yet we are being asked to contribute 9% of the cuts," he said. If they do open the Farm bill it will be hard to say which program should be cut and that might put a strain on the coalition of farm groups that came together to get the current Farm Bill passed. This farm bill was built on a coalition and if you cut any part of that Farm bill, you risk breaking the coalition. "Payment limits would break the coalition between cotton and rice and corn and soybeans," said Gengenback.

Although several programs were be cut under the proposed budget, Sec. Johanns noted that several key programs would see increased funding. Funds for BSE research, and the Food and Agriculture Defense Initiative would not be reduced.

Sec. Johanns justified the cuts Pres. Bush has proposed by pointing to what the administration has already done for farmers during the last four years. He cited three major tax cuts signed into law by Pres. Bush. "So what did that mean to farmers," asked Johanns. "It meant that farmers kept 44 billion more of their own money in 2003 and again in 2004. Quadrupled expensing from $25,000 to $100,000 and he led the fight to end the death tax." Sec. Johanns added that net cash farm income in 2005 is projected to be $78.1 billion. Farm equity in 2005 is estimated to be $1.25 trillion.

Before concluding his remarks, Sec. Johanns let the soybean growers know that USDA is taking the necessary steps to help producers understand and deal with Asian Soybean Rust. These steps emphasize protection, detection, response, and recovery. "Developing a coordinated support network for 2005 growing season includes: Predictive modeling of aerial transport of rust spores, decision-criteria for fungicide application, monitoring and surveillance system, web-based information that is disseminated so you have complete and up-to-the-minute access to all of the information and expert advice that we can offer and outreach for training and education and further distribution of information," said Sec. Johanns.

Date: 3/24/05