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Agriculture

Cuts proposed for subsidies to large farms

The plan will pit Obama against powerful farm lobby interests and some lawmakers from both parties.

February 27, 2009|Mike Dorning

A proposal to cut government subsidies to large farms puts President Obama at odds with some of the most powerful interests within the farm lobby, which fought off President George W. Bush's similar efforts even when Republicans controlled Congress.

Last year Congress defeated a plan to limit annual farm subsidy payments to $250,000 -- a plan closely resembling Obama's.

Obama also calls for eliminating one type of subsidy to farms with sales of more than $500,000 a year.

That subsidy is in the form of direct payments, which are separate from the price supports that account for the bulk of agriculture assistance.

An Agriculture Department spokesman said the limits would affect about 81,000 farms, or about 4%, in the United States.

The proposals would have the biggest effect on cotton and rice farms, which are typically larger operations clustered in California, Texas and the Southeast, according to Otto Doering, a professor of agricultural economics at Purdue University.

A separate Obama proposal to reduce subsidies for crop insurance would have the greatest effect on the Great Plains states.

"This is a thing that will really split party lines," Doering said.

"The Republicans who represent cotton and rice will go down fighting on this. Populist Democrats in the Plains states will also be opposed," he said.

But the subsidy caps have a populist cast that could appeal to farmers with small and medium-size operations, particularly in the corn and soybean growing regions in the Midwest.

"Today, we have a farm program that provides subsidies to big farms that then turn around and use that to drive family farms out of business," said Chuck Hassebrook, executive director of the Center for Rural Affairs in Lyons, Neb.

-- Mike Dorning

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