The White House made a renewed push in the budget to cut federal agricultural subsidies for the richest farmers, putting down a marker for forthcoming negotiations over the five-year farm bill.
The administration revived a proposal shot down in Congress a year ago to institute restrictions on “direct payments” given to farmers irrespective of what they produce.
Cuts in direct payments may be relatively easy to sell politically as part of a squeeze on public spending, but will make little difference to the impasse over agricultural subsidies and tariffs in world trade talks.
The budget proposed lowering the farm income limit for producers who receive payments to $500,000 from $750,000, and limiting the amount any individual could claim. “The administration proposes that farm policy target payments to only those who really need them,” the White House said in the budget. The reform would reduce payments by a relatively small $2.5bn over 10 years.
Similar proposals in the past have foundered on stiff opposition from the farm lobby. While lawmakers from the rural Midwest have supported cuts in direct payments, the restrictions are strongly opposed by cotton and rice growers from the southern states.
But a former senior administration official said that the proposal might get a better reception in the forthcoming negotiations over the farm bill – the five-year framework for agricultural subsidies – which is due for renewal in 2012.
“With the squeeze on budgets and the very high [commodity] market prices helping farmers’ incomes, this becomes an increasingly difficult programme to defend,” the official said.
However, the reform would make no difference to resolving a deadlock over farm subsidies in the so-called “Doha round” of trade negotiations. US direct payments, since they are regarded as non-distorting of trade, are not restricted under World Trade Organisation rules.
Trade ministers last month announced a fresh effort to revive the Doha talks, which have in effect been suspended since 2009.