US President Barack Obama has renewed speculation on just how far he will go in slashing farm subsidies.
Obama administration officials have repeatedly signaled a desire to restrict the subsidies and the president's speech before Congress this week revived the issue."In this Budget, we will ... end direct payments to large agribusinesses that don't need them," Mr Obama said.
Mr Obama's concern about wealthy farms collecting government subsidies comes on top of similar comments from US Department of Agriculture Secretary Tom Vilsack.
"I am particularly interested in suggestions that would help the [USDA] target the payments to farmers that really need the payments and to ensure the payments are not being provided to ineligible parties," Mr Vilsack said in a recent teleconference.
On more than one occasion he has suggested that the USDA needs to rethink who can consider themselves a farm and thus be eligible for farm subsidies.
Wealthy landowners, who do not do much more than make telephone calls to inquire about production decisions, should not be eligible for government payments, Mr Vilsack has suggested.
He has already said it is too late this year to restrict subsidies that farmers are counting on now as they sow this year's crops, but Mr Obama signaled substantial cuts in his fiscal year 2010 Budget proposal.
Mr Obama said "a trillion dollar deficit, a financial crisis, and a costly recession" has his administration going "line by line through the federal Budget in order to eliminate wasteful and ineffective programs".
The White House is set to release its 2010 Budget proposal, but USDA officials said they expected to see only broad outlines of initiatives and not many details.
Credit Suisse analyst Robert Moskow said there was little doubt Mr Obama would follow his threat to cut subsidies to wealthy farmers who did not need the government handouts but he wondered whether other payments might also be slashed.
The director of the National Economic Council, Larry Summers, is scheduled to speak at the USDA's annual Agricultural Outlook Forum, and Mr Moskow said he expected to hear more about the administration's plans for farm subsidies.
"He is quite obviously there to 'sell' the Budget plans to the agriculture community," Mr Moskow said. "It will be interesting to see if he provides more details on the depth of the cuts."
One lawmaker, Representative Frank Lucas, Republica-Oklahoma, reacted sharply against Mr Obama's criticism of farm subsidies.
"At a time when the USDA recently reported that US net farm income is down 20 per cent from last year, it is irresponsible to even think of eliminating the one stable form of support for our producers," Mr Lucas said in a letter he sent to Mr Vilsack.
Mr Lucas is the ranking Republican on the House Agriculture Committee.
Bill Tomson of Dow Jones