President supports forward-looking farm legislation that facilitates
the long-term prosperity of our Nation's farmers and ranchers, promotes
effective conservation efforts, and strengthens the nutrition safety
net. The President has urged Congress to adopt farm policy that embraces
the Administration's principles. Because new legislation will shape
the future of U.S. agriculture in an unusually critical time, the
Administration believes that the Senate should resist retreating to
policies, such as those contained in S. 1731, that will ultimately
harm our farmers and ranchers. Consequently, the Administration strongly
opposes S.1731, urges the Senate to defeat it, and supports the Cochran-Roberts
Amendment as the more responsible, effective approach in helping America's
farmers. The Administration will continue to work with the Congress
to craft policy that better responds to rapid changes in the sector
and the opportunities facing agriculture in the years ahead.
Farm Policy Principles
President's farm policy principles, described in USDA's report entitled
Food and Agricultural Policy -- Taking Stock for a New Century,
emphasize the following points:
Safety Net. The Administration believes in providing a solid
safety net for all farmers and ranchers -- including a savings account
for farmers that grows each year. The Administration recognizes
that agriculture is a unique industry, buffeted not only by natural
forces but also by the forces of economic policies and markets all
around the world. The safety net should protect producers from events
and circumstances that are beyond their control, and enable them
to better manage individual financial situations.
Expansion. The Administration recognizes the enormous importance
of foreign trade to the agriculture industry, with exports accounting
for twenty-five percent of farm income. We support programs that
facilitate trade and enhance the competitiveness of our farmers
and food industry in the global marketplace. Producers must be able
to aggressively compete for new markets, therefore, our domestic
farm programs must be compatible with, and reinforce our trading
Conservation. The Administration supports increasing resource
conservation in ways that will enhance our environment. American
farmers are uniquely situated to play a large and vital role in
meeting these objectives. The Administration favors greater incentives
that enable more farmers to undertake effective conservation activities
on their working lands.
The Administration believes that farm legislation in the best long-term
interests of our producers is market-oriented and minimally distorting
of planting and investment decisions. Agriculture functions best
when it is responsive to the market and to the needs of users and
consumers, not to artificial government signals.
Responsible. The President has called for a farm bill that is
generous but affordable. The President supports farm legislation
that provides authorization over five years and honors the limits
of the Congressional Budget Resolution.
about S. 1731
would expand the government's role in agriculture in a way that
threatens the financial health of the farm sector, compromises our
efforts to expand markets abroad for American farm products, and
harms American consumers, especially those with lower incomes. The
Administration supports a generous safety net for producers who
encounter unavoidable financial stress while the farm economy improves.
However, S.1731 attempts to address the vital needs of America's
producers with policies that exacerbate current problems of overproduction
and low commodity prices. Specific problems include:
S.1731 would increase government payments to farmers on a per bushel
basis when prices are low. This will further encourage overproduction
and depress prices, deepening the problem of recent years. The Administration
supports policies that help producers work with markets, rather
than policies that create harmful distortion of markets and further
dependency on Federal programs.
Milk Prices. The Administration is strongly opposed to the dairy
program proposed in this bill as it is regressive and counterproductive.
This dairy program will raise the cost of milk by 10-15 percent.
In effect, this provision imposes a tax of at least $0.20 on each
gallon of milk consumed, a tax that will be disproportionately borne
by low and moderate income American families. Consumers will pay
billions in additional costs. Moreover, S.1731 works against all
dairy farmers. States operating outside the federal marketing orders,
representing about 35 percent of production, will lose income. By
raising prices, S.1731 will also further exacerbate dairy overproduction.
The Federal government currently owns more than 600 million pounds
of non-fat dry milk -- nearly a year's supply. The bill's effect
of increased supply and reduced demand will create an even more
enormous surplus that would adversely impact dairy farmers for many
years to come.
to Markets Abroad. The greatest sustainable boost to farm income
will come from exports -- if we embrace competition rather than
retreat from it. After the recent successful launch of new World
Trade Organization (WTO) negotiations at Doha, U.S. farm policy
should continue to send a strong signal of U.S. leadership, not
encourage others to undermine the rules, and jeopardize the opportunities
for expanded sales abroad. S.1731 would increase the likelihood
of subsidies exceeding limits under WTO rules, risking our ability
to meet our existing trade obligations and undermining our ability
to convince trading partners to phase out export subsidies, and
open their markets to American farm products. The "circuit breaker"
provision, providing the Secretary of Agriculture discretion to
reduce domestic support programs (to ensure compliance with "amber
box" provisions) causes concern because it is likely to prove unworkable.
This approach is disingenuous because it actually creates uncertainty
about the amount of support producers will receive.
provisions included in S. 1731 requiring mandatory country of origin
labeling on meat and perishable commodities are highly objectionable.
These requirements would raise costs for industry and consumers,
resulting in higher food costs to low-income Americans. The enforcement
costs would be burdensome on taxpayers, diverting many millions
of dollars from vital food safety activities. Additionally, these
are the type of arbitrary requirements that we resist other countries
imposing on U.S. products. As agricultural production becomes more
globalized, compliance with these provisions would become increasingly
Conservation Programs. While the Administration applauds the
intention of S.1731 to increase funding for the conservation of
natural resources, S. 1731 commits significant funds to a new working-lands
program that does not necessarily deliver measurable, effective
environmental benefits. The Administration would support a program
designed to reward producers for sound stewardship practices if
the program is crafted to generate genuine increased environmental
benefits and is directed to our Nation's highest priority conservation
Directs Assistance. After years of concern about disproportionate
levels of Federal assistance going to producers least in need, S.1731
relaxes the rules and actually increases payments to the largest
producers of traditional program crops. This will result in more
wealthier producers bidding up land prices, buying out neighbors,
and creating fewer, larger farms. The largest 8 percent of U.S.
farms receive nearly half of all subsidies, while most farmers share
in only 13 percent of payments. S. 1731 also continues to only support
producers of program crops, leaving many farmers without any form
of income support. While it is true that some larger program crop
producers may be in need of assistance, the approach of S.1731 would
increase payments regardless of need.
Accountability of Nutrition Program. The Administration supports
changes to the Food Stamp program designed to reduce its complexity
and ensure that eligible individuals are able to access the program,
but strongly opposes the bill's changes to the food stamps quality
control program. Changes are needed to target more effectively the
poorest performing States, but the provisions of S. 1731 would go
too far in relieving States of their responsibility to manage Federal
resources prudently. States would be granted three years of poor
performance before they face the consequence of sanction, seriously
undermining program accountability. This is contrary to the President's
management initiative to improve financial performance and reduce
erroneous payments in Federal programs. While doing harm in the
area of program accountability, the Administration believes S. 1731
does not go far enough to streamline program rules.
Budget Costs. S.1731 would provide funding that surpasses even
recent record levels. While CBO estimates the cost of S.1731 would
fall within the Congressional Budget Resolution, the final cost
of this bill is likely to exceed the official estimate. Since the
bill increases the level and role of Federal subsidies, it will
cause planting decisions and prices to change, as well as increase
dependency and expectations. The Administration believes it is unwise,
in this time of uncertain and changing Federal resources and priorities,
to enact policies that create unknown and potentially huge future
demands on taxpayers.
of Prohibition of Financing Agricultural Sales to Cuba. Because
of Cuba's continued denial of basic civil rights to its citizens
as well as its egregious rejection of the global coalition's efforts
against terrorism, the Administration strongly opposes section 335
which would repeal the prohibition on private financing by U.S.
persons of sales of agricultural commodities to Cuba.
Administration supports the proposed amendment by Senators Cochran
and Roberts, which is consistent with the President's principles
for sound farm policy. It provides for a strong safety net for farmers
in times of low prices by continuing the current marketing loan
program for traditional program crops, while better balancing loan
rates. The Cochran-Roberts proposal for marketing loan rates would
be less distorting than proposals contained in S. 1731, and it is
worth noting that H.R. 2646 (Farm Security Act) follows the Cochran-Roberts
approach. The Administration would like to reiterate that higher
loan rates are a stimulus for overproduction, which lowers prices.
also substantially increases AMTA fixed de-coupled payments as a
trade-friendly alternative to providing a safety net for producers.
The proposal also establishes innovative new farm savings accounts
that provide another risk management tool for all producers -- not
just traditional commodity program farmers. This program will enable
producers to set aside money during good years to draw on in the
event of an economic downturn.
would enhance conservation in a balanced way by improving existing
programs and providing incentives for greater environmental benefits
on working lands.
Cochran-Roberts authorizes program funding for a five-year bill
at a generous level, within the limits of the Congressional Budget
Resolution. Its relatively predictable spending enables more responsible
management of farm and Federal budgets.
Administration continues to be willing to engage in a deliberative
and collaborative process that allows Congress and the Administration
to develop forward-looking farm policy that better serves the interests
of production agriculture, rural life, and the environment. However,
the Administration believes that S. 1731 as drafted puts U.S. agriculture
at risk, and consequently the Administration strongly opposes the
law that would reduce receipts or increase direct spending is subject
to the pay-as-you-go requirements of the Balanced Budget and Emergency
Deficit Control Act. Accordingly, S.1731 or any substitute amendment
in lieu thereof that would reduce revenues or increase direct spending,
will be subject to the pay-as-you-go requirement. OMB's scoring
estimates are under development. The Administration will work with
Congress to ensure that any unintended sequester of spending does
not occur under current law or the enactment of any other proposals
that meet the President's objectives.