Former Iowa Governor Tom Vilsack knows that Farm Belt protocol requires paying respect to the Butter Cow. During a visit to the Iowa State Fair on August 17, he made the pilgrimage to the 600-pound bovine sculpture carved from pure creamery butter. Now that he is US Agriculture secretary, Vilsack wants to take a chunk out of another sacred cow: $15.4 billion in farm subsidies.
Record federal deficits and changing priorities are spurring President Barack Obama’s administration to redirect who gets rural aid. The government is shifting payments to broadband providers, land-conservation efforts and nutrition programs, Bloomberg Businessweek reports in its August 30 issue.
To many farmers, the changes seem designed to satisfy organic-food devotees, first lady Michelle Obama’s anti- obesity cause, weekend duck hunters, and small-town internet users — everyone, that is, except traditional farmers. Kris Luoma, 55, a cattle rancher and crop-insurance salesman visiting the Iowa fair from Arcadia, Nebraska, blames the ignorance of Washington policy makers.
“A lot of them,” he said, “don’t know where their food comes from.”
Vilsack’s US Department of Agriculture (USDA) in July trimmed $6 billion in payments to crop insurers such as San Francisco-based Wells Fargo & Co for the next decade. Now he’s looking at cuts of as much as $5 billion a year from an automatic payments program that compensates farmers even if they grow nothing. Vilsack is the chief messenger of this makeover, a turnabout for farmers who have known him as one of their staunchest advocates.
Fragile recovery
The timing makes growers especially uneasy. Agriculture, like the rest of the economy, is experiencing a fragile recovery. Corn, soybean and wheat prices are at least 39 per cent below 2008 records. Farm profits fell 35 per cent last year to their lowest level since 2002, according to the USDA; the agency predicted in February that they will increase 12 per cent in 2010.
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Agriculture payments have withstood challenges before. The last real attempt to cut subsidies, in 1996, led to a backlash — and bailout checks for farmers after export declines and heat waves persuaded lawmakers to abandon cost-cutting. This time, the $1.3 trillion annual federal deficit will make changes stick, said House Agriculture Committee Chairman Collin Peterson, the Minnesota Democrat whose district’s $243 million in 2009 subsidy payments ranked it number six out of 435.
Vilsack calls the deficit an incentive to revamp farm support and allocate funds to alternative energy and broadband projects, benefiting telecommunications companies such as New York-based Verizon Communications Inc and ethanol producers, including Poet LLC of Sioux Falls, South Dakota.