House Proposed FY 2012 Budget Cuts Agriculture $30 Billion

Congressman Paul Ryan (R-WI), chairman of the House of Representative’s Budget Committee, released the House Republican’s proposed fiscal year 2012 budget entitled: “The Path to Prosperity.” The proposed budget would cut $5.8 trillion from projected federal spending over the next 10 years. It would also cut the deficit by $4.4 trillion compared to the Obama Administration’s proposed budget over the next 10 years. The top tax rate for businesses and individuals would be set at 25%. The proposal would cut $30 billion from commodity programs and crop insurance over 10 years. It would reduce fixed payments “that go to farmers irrespective of price levels, to reflect that soaring commodity prices are reducing the need for high levels of farm-income support.” And, the proposal would reform crop insurance “so that agricultural producers assume the same kind of responsibility for managing risk that other businesses do.” The proposed budget assumes that these savings would not take effect until the next farm bill and that it will ultimately be the Agriculture Committee’s decision.

Administration’s Agreement with Columbia Could Move FTA — President Barack Obama and Colombia announced an “Action Plan Related to Labor Rights” that will enhance labor rights in Columbia that could help move the U.S.-Colombia Free Trade Agreement (FTA) forward in Congress. The United States exported $832 million of agricultural products to Colombia in 2010. The top U.S. exports include wheat, corn, cotton, soybeans and corn gluten feed. The FTA provides the following for agriculture:

•Immediately eliminates duties on almost 70% of U.S. farm exports, including wheat, barley, soybeans, soybean meal and flour, high-quality beef, bacon, almost all fruit and vegetable products, peanuts, whey, cotton, and the vast majority of processed products.

•Eliminates virtually all remaining tariffs on U.S farm exports within 15 years.

•Immediately provides duty-free tariff rate quotas on standard beef, chicken leg quarters, dairy products, corn, sorghum, animal feeds, rice, and soybean meal.

•Gives the United States equal or preferential treatment vis-à-vis third-party competitors on key products.

The FTA was signed in 2006, but it has been stalled since that time. While the FTA has been languishing, other countries have signed trade agreements with Colombia and the U.S. market share has dropped for wheat and feedgrains.

New Head of USTR Agriculture Affairs — Sharon Bomer Lauritsen has been named the new Assistant U.S. Trade Representative (USTR) for Agricultural Affairs and Commodity Policy. Prior to joining USTR, Lauritsen served as the executive vice president of the food and agriculture section of the Biotechnology Industry Organization (BIO). Previously, she served as Deputy Assistant USTR for agricultural affairs and was a senior manager in USDA’s Agricultural Marketing Service.

P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.