U.S. farmers receive most of their income from the markets, and Congress should eliminate farm subsidies by establishing a low baseline in the Budget Resolution for the Commodity Credit Corp.

The only problem with this claim – by the president of Taxpayers for Common Sense Action, a Washington-based “non-partisan, budget watchdog” – is that someone forgot to tell the markets.

Cotton and rice are currently selling at below the cost of production. Corn, soybean and wheat prices are relatively high, but anyone who has had to make their living from the “markets” knows those could turn around the first time crude oil prices drop below $40 a barrel.

The Taxpayers for Common Sense Action fail to mention those inconvenient truths in the letter they sent members of the Senate Committee on the Budget before it voted to create a “Deficit-Neutral Reserve Fund for the Farm Bill” of up to $15 billion in additional baseline funding for the 2007 farm bill.

The fly in the ointment Senate Budget Committee Kent Conrad attempted to apply to the wounds to the farm bill baseline is the funding increase must be offset by cuts in other programs or increased taxes, a feat Senate Agriculture Committee chairman Tom Harkin says could be difficult in the current deficit environment.

Just how difficult is illustrated by the rhetoric of groups like Taxpayers for Common Sense Action or the Cato Institute’s Center for Trade Policy Studies, both of which argue against any increase in the baseline.

Prior to the Budget Committee vote, Harkin, an Iowa Democrat, and ranking member Saxby Chambliss, R-Ga., asked for increased funding for mandatory spending programs such as farm income support, agricultural trade, conservation, nutrition and renewable energy.

Sources said Harkin and Chambliss requested a $20 billion increase, but Conrad, a North Dakota Democrat, was barely able to add $15 billion to the $2.9 trillion Budget Resolution, which passed on a 12-11 party-line vote. The Senate was scheduled to vote on the plan March 20.

Taxpayers for Common Sense Action told Budget Committee members that they could “take an important first step toward meaningful reform of the current wasteful federal farm support program” by voting against any increases in the farm bill baseline.

“The farm bill includes a taxpayer-funded support program that rewards wealthy agribusinesses with out-dated Depression-era supports,” its letter said. “We urge you to heed Agriculture Secretary Mike Johanns’ appreciation that markets can and do work for farmers, and we call on you to reduce agriculture subsidies and make the tough decisions necessary to put our budget back on track.”

Subsidies cost taxpayers billions of dollars annually, are inequitably distributed, and undermine international trade relationships, it said. “Since 1995, more than $165 billion has been funneled to this country’s largest landowners and biggest agriculture producers, with annual costs to taxpayers exceeding $20 billion in many years.”

Those numbers have just enough truth in them to make farmers cringe and give taxpayers pause.

email: flaws@farmpress.com