(Updates with farm profits in sixth paragraph, crop subsidies in eighth.)
Oct. 17 (Bloomberg) -- Spending on agriculture, rural development and nutrition should be cut by no more than $23 billion over 10 years, leaders of the U.S. House and Senate farm panels told the supercommittee charged with reducing the federal deficit.
Specific recommendations on what to cut, including possible reductions in farm subsidies, will be provided by Nov. 1, according to a letter today from the House and Senate agriculture committees to the congressional deficit panel.
The savings “should absolve the programs in our jurisdiction from any further reductions,” the top Democrats and Republicans on the panels wrote, citing previous cuts to crop insurance and the Supplemental Nutrition Assistance Program as well as the expiration of other initiatives as reasons the total shouldn’t exceed $23 billion.
The 12-member bipartisan supercommittee has until Nov. 23 to come up with a plan to cut the federal budget deficit by at least $1.2 trillion. The law that created the panel requires automatic, across-the board spending cuts if Congress doesn’t approve its recommendations.
Signing the letter were House Agriculture Committee Chairman Frank Lucas, an Oklahoma Republican; Representative Collin Peterson of Minnesota, the panel’s top Democrat; Senate Agriculture Committee Chairwoman Debbie Stabenow, a Michigan Democrat; and Senator Pat Roberts of Kansas, ranking Republican of that committee.
The U.S. Department of Agriculture forecasts record farm profits of $103.6 billion this year as livestock sales expand and exports set records. Farmers’ relative prosperity while unemployment remains stuck at 9.1 percent has made government programs inviting prospects for cuts, Mark McMinimy, an analyst for MF Global Inc. in Washington, said in an interview last month.
Opposition to current levels of agricultural spending has been bipartisan. President Barack Obama last month proposed a $33 billion, 10-year cut in farm programs that included shrinking funds for direct payments to farmers, made regardless of crop prices, and to crop insurance, where the government subsidizes overhead costs for companies including Wells Fargo & Co. to encourage them to underwrite policies.
Representative Paul Ryan of Wisconsin, the Republican chairman of the House Budget Committee, proposed about $30 billion in farm-subsidy cuts over 10 years in April, and reductions also have been urged by Senator John McCain, an Arizona Republican, and Representative Ron Kind, a Wisconsin Democrat.
Crop-price increases, which result in lower subsidies under the formulas for some programs, will drive down payments to an estimated $10.2 billion this year, less than half the record $24.4 billion in 2005.
Federal subsidies encourage greater production and reduce raw-materials costs for grain traders such as Cargill Inc., Bunge Ltd. and Archer Daniels Midland Co. Meatpackers that rely on corn-fed livestock, including Tyson Foods Inc., and food processors such as Kraft Foods Inc. also benefit.
--Editors: Daniel Enoch, Steve Geimann
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