Ag Secretary Wants Lower Income Limits

During an appearance at the Farm Progress Show in Decatur on Wednesday, Secretary Mike Johanns said the new farm bill passed last month by the House would lower the threshold to $1 million a year from the current $2.5 million. The bill next heads to the Senate.

Johanns and President Bush believe no farmer who makes more than $250,000 a year should receive subsidies intended to protect them against low prices for major crops such a corn, soybeans and cotton. Bush has threatened to veto the bill over the income limit and a tax on some foreign companies with American subsidiaries.

"We've got to do something more robust on payment limits," said Johanns, a former governor of Nebraska. He estimated that about 7,000 farms would be affected by the $1 million threshold -- leaving far too many on the rolls, in his view.

Bob Stallman, president of one of the largest farm lobby groups and an opponent of limits on government payments, watched Johanns from the back of the crowd.

"We believe farm policy should support agricultural production and not some subjective and social goals," Stallman, a Texas rice farmer and president of the American Farm Bureau Federation, said after the appearance.

Limiting subsidies is a nice idea, he said, as long as farmers in Europe and elsewhere also are willing to live without government support.

As it stands, the new farm bill would result in $299 billion in spending from 2008 through 2012, the years the legislation would cover, according to the Congressional Budget Office. The current farm bill, crafted in 2002, expires next month.

About 60 percent of the money is for school lunches, food stamps and other nutrition programs, but farm spending generates the most contentious debate.

The pending farm bill, for the most part, doesn't make big changes in which crops are subsidized and to what extent.

And any limits written into the bill to limit how much farmers are paid by the government or who gets paid will likely be quickly blunted by lawyers in search of loopholes, said Allen Gray, an agricultural economist at Purdue University. He pointed out that income-based limits on subsidies would rely on farmers' tax returns.

"There are all kinds of loopholes in the way in which a farmer can report their farm income," Gray said.

The House bill has been criticized by some lawmakers who don't like a provision requiring that the government buy all food used as aid in poor countries from U.S. farmers.

And environmental groups and international aid groups continue to lobby against subsidies. The environmental groups complain subsidies encourage farmers to work marginal ground that requires more water, fertilizer and other chemicals. Aid groups, meanwhile, complain that farmers in developing countries can't compete with their subsidized American counterparts, particularly cotton farmers.

Subsidies also remain a major issue in the current round of global trade talks. Many countries want the United States and the European Union to cut farm subsidies before the talks can progress.

One farmer at Johanns' appearance Wednesday said he'd like subsidies to be more strictly limited, but doubts that will happen any time soon.

"Once prices are good like this, this is a good time to start weaning people off them," said 52-year-old Clarence Thomas, who farms corn and soybeans near Heyworth, Ill., about 30 miles north of Decatur. "Politically, that doesn't ever happen."