The Ag Secretary (Iowa’s own former governor Vilsack) lashed out at a budget proposal that is backed by the majority of the house republicans as a radical attack on USDA safety net programs.
The floated 2025 budget would gore ox in many a sector of the government, and the USDA would be no exception. First, farmers that have adjusted gross income of $ 500,000 of would see payment limitations, which is currently at $900,000. It also calls for a hard cap total on subsidies at $40,000.00. Next, it calls for increasing the cost of crop insurance by decreasing the amount of that premium that the government picks up by about 14%. The budget dream also halts CRP, CSP, technical assistance by the NRCS, and trade promotion programs. What is doesn’t address is complex business structures developed to work around those payment limitations that essentially allow large operations with the funds to spend on the legal work the ability to avoid those limitations.
Interesting enough, data suggests that 12 percent of farms make over $250,000 in market revenue but receive over 60 percent of all farm payments. This does lend to efficiency, as the big get bigger (equipment and farm income both). I am curious of that 12 percent is after section 179 and bonus depreciation is factor back out to show actual income.
The reason for all the programs on the cutting room floor, elimination of the estate tax. Interestingly enough, of the 31,000 farmers who died in 2020, only 189 paid any estate tax and of those 50 paid 130 million in estate tax, which transferred $56 billion to the next generation. By the way, the depth of the estate tax is at a historic low. Only 8 out of 10,000 deaths (not just farmer deaths) pay any estate tax. That’s .08%.
So, to sum it up, the proposal makes farming more risky, stops preserving fragile lands from being used for short term production ag at the expense of long term soil health and stops engaging with new trade partners for farm products so the ultra-few, who are likely not farmers can transfer wealth without tax.
The fun part of this posturing is that those same budget hawks are likely to be the first to line up with bills to help their states out on an ad hoc basis when disasters strike.
To be clear, I had heard the jokes about farmer’s caps are curved because they look in the mailbox for checks so much. I have also long believed that stable, cheap food commodities are a wonderful policy for domestic and international uses. The use of farm program safety nets to shift risk to the taxpayer instead of the farm producer is intentional. No private company is going to write crop disaster insurance let alone enough companies do so to create a capital backed marketplace of reasonable costs. All businesses have government risk shifting from oil companies having favorable exploration tax treatment, to low-cost SBA loans in many market sectors and research incentives and credits. To attempt to single out the ag industry as a government cheese eater is not accurate, all businesses dine at the trough of the government’s largess.
The question is, which mice are getting fat and which ones are being left for carving knife.
