On Tuesday, May 23rd, President Trump and the Office of Management and Budget released their proposed budget for the next fiscal year. Although not necessarily covered by major media outlets, the budget proposal was not particularly friendly to agriculture. There were proposed cuts to rural development, conservation programs, and USDA staffing but below are some of the major cuts proposed to Farm Bill programs. The budget proposal from the Administration is expected to be used as blueprint for the House as they begin to appropriate funds.
Title 1: Commodities—The commodity title outlines all commodity programs for the Farm Bill. For example, ARC and PLC fall under Title 1. President Trump proposed reducing the AGI limit for eligibility from $900,000 to $500,000.
Title 4: Nutrition—The nutrition title makes up the largest spending title of the Farm Bill with Supplemental Nutrition Assistance Program (SNAP) making up nearly 80% of Farm Bill spending. The budget proposes more than $190 billion in cuts over 10 years. These Federal cuts come by requiring states to match 20% of SNAP benefits.
Title 7: Crop Insurance—Crop Insurance seemed to take the brunt of the agriculture cuts. Here are the three proposed cuts:
- Cap the amount of subsidy received at $40,000 to save an estimated $16.2 billion over 10 years.
- Eliminate the Harvest Price Option (HPO) to save an estimated $11.9 billion over 10 years.
- Implement a $500,000 AGI cut off for crop insurance participation.
It’s important to understand that the spending mentioned above is mandatory spending and cannot be changed based on a budget proposal. These proposals will be discussed during the Farm Bill debate. In most political circles, these proposed cuts are expected to be a “non-starter” on the Hill as prior Administrations have proposed similar cuts. However, its also viewed that the Trump Administration won’t stand with lead Farm Bill negotiators who have fended off these proposals in the past. In addition, it’s viewed as being not supportive of the rural electorate, who stepped up to help elect President Trump. Means testing has been proposed in the past and not had the support to gain a passing vote. The main supporters of means testing are Rep. Ron Kind (D-WI), Sen. Jeff Flake (R-AZ), Sen. Jeanne Shaheen (D-NH), The Heritage Foundation and the Environmental Working Group (EWG). For Farm Credit Illinois, these proposals could make it difficult for our members to effectively utilize these risk management tools. Farming operations could become more complex as well. Some of these proposals could prompt families to create more farming entities in order to qualify for certain programs.