Trump budget proposes steep subsidy cuts to U.S. farmers

Crop insurance programs are hardest hit

president trump in alabama
U.S. President Donald Trump and First Lady Melania Trump survey damage and are briefed by a FEMA official on March 8, 2019 in Beauregard, Alabama, where 23 people in Lee County were killed by tornadoes earlier in the week. (Photo: Reuters/Mike Theiler)

Washington | Reuters — U.S. President Donald Trump’s 2020 budget on Monday proposed a 15 per cent cut for the U.S. Department of Agriculture, calling its subsidies to farmers “overly generous” at a time when they are going through the worst crisis in decades because of depressed commodity prices and Trump’s trade tariffs.

The Republican president’s budget requested $20.8 billion for the USDA, a cut of $3.6 billion, or 15 per cent, from the 2019 estimate, according to the proposed budget text (all figures US$). It proposes reducing premium subsidies for crop insurance, limiting the number of producers who would be eligible and tightening commodity payment limits.

“The budget also proposes that USDA responsibly and efficiently use taxpayer resources by making targeted reforms to duplicative programs and overly generous subsidy programs,” the document said.

Democrats slammed the move as “short-sighted,” while the crop insurance industry, which will see the deepest cut, said it would undermine a key financial safety net for farmers at a time when they need it the most.

Trump’s budget is expected to be rejected by Congress, where Democrats control the House of Representatives.

The U.S. rural heartland helped carry Trump to victory in 2016 and remains largely supportive of his hard line on trade, but is urgently calling for a deal with China to end the trade dispute with that country.

“The President’s budget request is a road map for how to make things worse for farmers, ranchers and those who live in rural communities,” Collin Peterson, Democratic chairman of the House agriculture committee, said in a statement. He added that the cuts to crop insurance totaled $26 billion.

Democratic Senator Debbie Stabenow said the budget cut would jeopardize the USDA’s ability to implement the farm bill at a time when farmers are struggling with economic instability and trade uncertainty.

Weakening policies

The farm bill, crop insurance and commodity programs serve as a safety net for farmers, shielding them from the financial damage of unforeseen natural disasters and helping them manage their risk. A new farm bill was passed at the end of 2018.

The budget proposes to reduce the average premium subsidy for crop insurance to 48 per cent from 62 per cent and limit subsidies to producers that posted an adjusted gross income of half a million dollars or less.

“In the midst of a prolonged rural recession and crop damage from devastating weather events, we should be having a conversation about how to strengthen and improve crop insurance, not weaken the policies that so many of America’s farmers rely on,” a coalition of seven crop insurance groups said.

The proposal also requests tightening commodity payment limits, including eliminating an “unnecessary and separate” payment limit for peanut producers and limiting eligibility for commodity subsidies to one manager per farm.

The budget also proposes tightening around the Supplemental Nutrition Assistance Program (SNAP), which feeds roughly 40 million Americans and is administered by the Agriculture Department. The budget text said it included proposals to help able-bodied adults enter the job market.

Food stamps were at the heart of a bitter partisan debate last year. The administration unveiled plans to curb them through a proposed rule after Republican efforts to do so failed in the Congress.

— Humeyra Pamuk is a Reuters correspondent covering U.S. agriculture and energy policy from Washington, D.C.; additional reporting by Mark Weinraub.

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