Aggie Bill Cuts = $24 Billion Windfall for Farmers
Policy + Politics

Aggie Bill Cuts = $24 Billion Windfall for Farmers

Last year there were a lot of self-congratulations by both Republicans and Democrats when Congress finally passed a bipartisan five-year farm and nutrition bill to reduce long-term spending by about $23 billion.

“This is not your father’s farm bill,” Senator Debbie Stabenow (D-MI), then-chair of the Senate Agriculture Committee, boasted at the time. “Instead of getting a government check even in good times, farmers will pay an insurance bill every year and will only receive support from that insurance in years when they take a loss.”

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The legislation forged by Stabenow and Frank Lucas (R-OK), former chair of the House Agriculture Committee, consolidated a myriad of duplicative programs, cut spending on food stamps and conservation programs, and eliminated direct payments to farmers.

That last provision was deemed the most important. It cut roughly $5 billion a year in overly generous payments to farmers and land owners regardless of whether they grew crops or not. The payment program had flourished since the late 1990s, drawing sharp condemnation from the Obama administration and lawmakers of both parties for its wasteful ways.

But experts warned that Congress was playing a shell game with the subsidies – in effect, scrapping one unpopular program while greatly hiking spending on another and adding a couple of more programs for good measure. Their predictions have proven painfully accurate.

A new report on the agricultural and biofuels market published last week by the University of Missouri’s Food and Agriculture Policy Research Institute confirmed the worst suspicions about the farm legislation. The 2014 farm bill will prove to be the most expensive ever, largely due to the two new subsidies and the expanded crop insurance coverage.

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Agricultural producers, including farmers and ranchers, buy crop insurance to protect themselves against loss from natural disasters or from declines in agricultural commodities prices. Congress added two new crop subsidy programs – called Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC).

ARC and PLC provide revenue and price loss payments to eligible producers for the years 2014 through 2018, according to the Dept. of Agriculture. ARC payments are made when the actual county crop revenue of a covered commodity is less than the ARC county guarantee for that commodity.

The Univ. of Missouri Policy Research Institute estimates the two new types of coverage will generate more than $24 billion in payments over the 2014-2018 life of the farm bill, according to an analysis done by the Environmental Working Group (EWG), an advocacy group. Remarkably, that works out to $2.4 billion more than the direct payment subsidies the new plans replaced. Direct payments cost taxpayers $21.6 billion from 2009 through 2013.

“Under the Risk Coverage program, most counties in Ohio, Iowa, Minnesota and Kansas are projected to receive payouts of between $60 and $200 an acre for corn alone,” writes Anne Weir, a senior analyst with EWG. “This is a huge increase from the average $24 per acre formerly paid for corn under the direct payment program. Corn growers in other states are also predicted to receive ARC payments, but in lesser amounts.”

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The Institute also projects that crop insurance payouts will total almost $85 billion for fiscal years 2015-2024 – a 27 percent increase over the $67 billion paid out for crop insurance over the previous decade, Weir writes. “Even under the previous farm bill, per-acre premium subsidies were larger than direct payments for most crops, and the new projections show that these subsidies will remain high in the coming years.”

She adds, “Meanwhile, budget cuts to conservation and other important programs that helped underwrite the cost of the new farm subsidies have been very real. The Institute’s projections make it painfully clear that last year’s farm bill ‘reform’ was really more of the same.”

Stabenow, the ranking member of the Senate Agriculture Committee since the Republican takeover of Congress in January, could not be immediately reached for comment.

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