Farm commodity prices are high, expectations for the 2011 crop year optimistic and producers are finalizing their cropping acreage breakdown. At the same time, spending deficits remain unsustainable, the U.S. economy remains in a low gear and a record 44 million Americans – one in eight – were on food stamps late in 2010.

Into this situation, President Obama released his fiscal year 2012 budget (which begins on Oct. 1). Early reviews were mixed, with Republicans accusing the White House of largely side-stepping the deficit.

For agriculture, among the president’s proposals:

• $2.5 billion in direct payment cuts over 10 years (House Republicans have proposed no cuts to commodity programs).

• A drop in farm subsidy eligibility from the current $750,000 in adjusted net income to $500,000.

• Further, those with off-farm income will see eligibility for subsidies drop from an adjusted net income currently of $500,000 to $250,000.

• A proposed per-farm cap for commodity program direct payments from $80,000 a year to $60,000 a year for a married couple.

• Bucking the trend to cut: a $52 million increase in food and nutrition programs (House Republicans have proposed cuts of $780 million to discretionary food programs).

• A $1 billion mandatory spending cut in the Environmental Quality Incentives Program (EQIP), the Conservation Stewardship Program (CSP), and the Wetlands Reserve Program (WRP). On this, the Environmental Working Groups claims Obama would “permanently eliminate” over one million acres from CSP, WRP and the Grassland Reserve Program.

“The administration’s proposed budget makes significant cuts to rural development programs, which were identified as a key component of a vibrant rural America during the presidential elections of 2008,” said  Roger Johnson, National Farmers Union president in response to the White House budget. “Cuts were also announced for agricultural research efforts and the Commodity Credit Corporation. Removing these dollars from the baseline for the next farm bill will make the legislation even more difficult to write. Investments in a stable and secure food, fiber and energy supply ought to be of the utmost importance because these investments create a thriving rural economy and are critically important to our national security.”