USDA will cut direct payments by 8.5 percent

WASHINGTON – The U.S. Department of Agriculture will cut the direct payments for all crop farmers by 8.5 percent this year, not just for farmers who would be required to pay back certain other payments, a representative for the USDA’s Farm Service Agency has confirmed to Agweek.

“Sequestration limits options for the Farm Service Agency significantly, but we are committed to carrying out these required cuts in a way that provides the least disruption to our customers,” the FSA representative said in an email.

FSA will reduce direct payments in order to avoid requiring about 350,000 producers to refund a portion of the payments they have already received through other programs.

“This action will also save American taxpayers significant administrative costs that would be required to recoup these payments,” the FSA said. “While our efforts will minimize disruption to the extent possible, we cannot mitigate the negative effects that cuts of this magnitude will have on our mission. We continue to urge Congress to replace sequestration with balanced deficit reduction.”

Agriculture Secretary Tom Vilsack recently noted that sequestration would require USDA to claw back $151 million in payments made to 350,000 farmers under the Milk Income Loss Contract Program, the Supplemental Revenue Assistance Payments Program known as SURE and the Noninsured Crop Disaster Assistance Program known as NAP.

Vilsack said more than 90 percent of farmers who received payments under those programs also got direct payments, and left the impression that the direct payments would be reduced by the amount the farmer owed.

But the situation is more complicated, an FSA source said.

Using flexibility

All FSA payment programs are subject to the 5.1 percent sequester cut, including direct payments, the source said. In addition to that cut, FSA will also cut the direct payments by 3.4 percent in order to avoid asking producers who have already received the MILC, SURE and NAP payments to repay them.

While cutting the direct payments of producers who did not get the MILC, SURE or NAP payments may seem unfair, FSA is using the limited flexibility it is given under the farm bill to proceed in this fashion because sending bills to each of the farmers who owes a small amount of money and asking them to pay it back would be more expensive, the source said.

The number of farmers who received direct payments in 2012 is three times the number who got MILC, SURE and NAP payments that must be paid back

About 1.06 million producers received about $4.9 billion direct payments in 2012, according to USDA.

The direct payments, which crop farmers have gotten whether prices are high or low, has become unpopular with the general public, and both the Senate-passed farm bill and the House Agriculture Committee-passed farm bill eliminated the direct payments program. The extension of the 2008 farm bill through September 30 extended the direct payments for one more year.

The exact number of farmers who will get direct payments this year is unclear because farmers are still signing up for the program. The payments are expected to be made in the fall.