Obama to cut payments to farms making over $500,000

[dbackjon]

President Barack Obama will phase out government payments to crop producers making more than $500,000 a year and eliminate subsidies for cotton storage to help trim the U.S. budget deficit, a senior administration official said.

Obama, who lays out his budget proposals later on Thursday, targets agriculture, tax procedures, and defense procurement in his efforts to cut spending and rein in a deficit the White House projects will reach $1.75 trillion this year.

"Roughly a third of farmers receive direct payments, which they receive regardless of whether they are producing anything or not," the official, speaking on condition of anonymity, said while explaining elements of the budget ahead of its release.

"We would propose that for farms with revenue above $500,000 a year that we phase out those direct payments over time."

Those cuts would save $9.8 billion over 10 years, he said. Stopping payments to cotton producers who get money for storing cotton while it is under a "marketing loan" would save $570 million over the same period, he said. (Reporting by Jeff Mason and Caren Bohan)

http://www.reuters.com/article/governme ... 4220090226

[danefan]

This is a tough call for me......one of my major clients is a major ag company and they get some huge tax breaks. However, if those were to close they would just jack up the price of their goods sold, which would eventually makes its way down to the customer. Cost of corn would definitely go up.

And if Banks have more than $500,000 in revenue a year they still get stimulus.

[dbackjon]

This is a tough call for me......one of my major clients is a major ag company and they get some huge tax breaks. However, if those were to close they would just jack up the price of their goods sold, which would eventually makes its way down to the customer. Cost of corn would definitely go up.

And if Banks have more than $500,000 in revenue a year they still get stimulus.

Corn would not go up because of this - the commodities market sets the price, which is independent of profit/loss for the farms.

Whole point of the subsidies in the first place was to make the small farms profitable.

[danefan]

This is a tough call for me......one of my major clients is a major ag company and they get some huge tax breaks. However, if those were to close they would just jack up the price of their goods sold, which would eventually makes its way down to the customer. Cost of corn would definitely go up.

And if Banks have more than $500,000 in revenue a year they still get stimulus.

Corn would not go up because of this - the commodities market sets the price, which is independent of profit/loss for the farms.

Whole point of the subsidies in the first place was to make the small farms profitable.

If a grower is paying more for a bag of corn seed eventually there will be an adjustment in the market, don't you think?

[dbackjon]

Corn would not go up because of this - the commodities market sets the price, which is independent of profit/loss for the farms.

Whole point of the subsidies in the first place was to make the small farms profitable.

If a grower is paying more for a bag of corn seed eventually there will be an adjustment in the market, don't you think?

You would think, but it doesn't work that way. Suppliers do not set the market price. Having grown up in a farming family (farm has been in family since 1841), I have seen the ups and downs of the corn markets

[danefan]

If a grower is paying more for a bag of corn seed eventually there will be an adjustment in the market, don't you think?

You would think, but it doesn't work that way. Suppliers do not set the market price. Having grown up in a farming family (farm has been in family since 1841), I have seen the ups and downs of the corn markets

So that makes this plan even worse - its the farmer that takes the hit - including the small farmer.

[AZGrizFan]

"We would propose that for farms with revenue above $500,000 a year that we phase out those direct payments over time."

Beancounter alert: Is that 'revenue' or 'NET revenue'....there's a HUGE difference.

[Gil Dobie]

The person hurt the most, indirectly but certain to happen, is the poor or min wage earner buying groceries at the local market.

Same with the new Carbon tax that will increase taxes paid by power companies that will be passed on to the public, and hurting the poor and min wage earner the most.

[dbackjon]

You would think, but it doesn't work that way. Suppliers do not set the market price. Having grown up in a farming family (farm has been in family since 1841), I have seen the ups and downs of the corn markets

So that makes this plan even worse - its the farmer that takes the hit - including the small farmer.

No - it would not affect the corn price one bit.

[dbackjon]

"We would propose that for farms with revenue above $500,000 a year that we phase out those direct payments over time."

Beancounter alert: Is that 'revenue' or 'NET revenue'....there's a HUGE difference.

Net revenue

[bobbythekidd]

If a grower is paying more for a bag of corn seed eventually there will be an adjustment in the market, don't you think?

You would think, but it doesn't work that way. Suppliers do not set the market price. Having grown up in a farming family (farm has been in family since 1841), I have seen the ups and downs of the corn markets

Good call there dback. Good call Obama. I am going to channel MPLS Bison here, "Leave farming up to businesses, small farmers have lived past their time" (My family used to be small farmers so I can say this)

Farming is the only industry where they buy the inputs at a retail price and sell the final goods at a wholesale price. Volume is the only way to be profitable.

[dbackjon]

You would think, but it doesn't work that way. Suppliers do not set the market price. Having grown up in a farming family (farm has been in family since 1841), I have seen the ups and downs of the corn markets

Farming is the only industry where they buy the inputs at a retail price and sell the final goods at a wholesale price. Volume is the only way to be profitable..

Great way to look at it, BTK

[bobbythekidd]

Great way to look at it, BTK

requote me. That was written horribly.

[dbackjon]

Great way to look at it, BTK

requote me. That was written horribly.

Done - and I had already changed your quote once to make it more readable