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U.S. farm bill would create new subsidies

May 14, 2013 - Washington, DC - The Senate Agriculture Committee on Tuesday approved a massive five-year farm bill that would cut spending while also creating new subsidies for farmers.

The legislation approved 15-5 includes concessions to Southern rice and peanut farmers, thanks to a new top Republican on the committee, Mississippi Sen. Thad Cochran. The bill eliminates $5 billion in annual subsidies, called direct payments, that are important to those Southern farmers but makes it easier for them to receive alternate subsidies if prices dip.

The Senate bill calls for a total of roughly $2.4 billion a year in cuts, while a House version to be considered Wednesday would save $4 billion out of almost $100 billion annually. Those cuts include more than $600 million in yearly savings from across-the-board cuts that took effect earlier this year.

Much of the savings in the House and Senate bills comes from eliminating the direct payments, which are frequently criticized because they aren't tied to production or crop prices. Part of that savings would go toward deficit reduction, but the rest of the money would create new programs and raise subsidies for some crops while business is booming in the agricultural sector.

Republican Sen. Pat Roberts of Kansas, the top Republican on the committee in the last session of Congress, criticized the higher subsidies for Southern farmers, which are essentially a lower threshold for rice and peanut subsidies to kick in. Roberts said the new policy could guarantee that those farmers profits are average or above average.

''I simply don't know how to justify a program that pays producers more than the cost of production and essentially becomes nothing more than another income transfer program, not a risk management tool,'' Roberts said.

Under the House bill, authored by Rep. Frank Lucas, R-Okla., those subsidies for rice and peanut farmers could kick in even sooner. These ''target price'' programs allow farmers to receive subsidies if prices fall below a certain threshold. It hasn't been used much in recent years because of record crop prices, but is intended to be a safety net if prices collapse.

The bill includes generous protections for other crops as well. Both bills would boost federally subsidized crop insurance and create a new program that covers smaller losses on planted crops before crop insurance kicks in, favouring Midwestern corn and soybean farmers who use crop insurance most often.

Nebraska Sen. Mike Johanns, a Republican on the panel who served as Agriculture Secretary in the George W. Bush administration, was critical of the entire bill, arguing that the bill was more generous than Nebraska farmers had asked for and that the added help for the Southern farmers could endanger the bill on the Senate floor. The Senate easily passed a farm bill last year that did not include those higher subsidies.

Johanns also said the bill has fewer cuts than advertised because the across the board cuts have already taken effect. He called many of the cuts an ''illusion.''

''It's no way to deal with budget problems,'' he said.

Sen. Debbie Stabenow, D-Mich., chairwoman of the Senate Agriculture Committee, said all of the changes are meant to make farm programs more efficient.

''Instead of subsidies that pay out every year even in good times, the bill creates risk management tools that support farmers when they are negatively impacted by weather disaster or market events beyond their control,'' she said.

In order to boost savings, the Senate bill would cut $400 million out of almost $80 billion spent annually on food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP. The legislation would save dollars by targeting states that give people who don't have heating bills very small amounts of heating assistance so they can automatically qualify for higher food stamp benefits.

The committee rejected amendments by Johanns and Sen. John Thune, R-S.D., to expand the cut, while New York Sen. Kristen Gillibrand, a Democrat, said she will offer amendments on the Senate floor to restore the food stamp dollars. She said the cuts are immoral.

All three of those senators voted against the final bill, along with Roberts and Senate Minority Leader Mitch McConnell, R-Ky., who sits on the agriculture panel but did not attend the meeting.

The House bill up Wednesday would cut five times as much domestic food aid as the Senate bill in that chamber in an effort to appease conservatives in that chamber. That bill would cut $2 billion annually from the program and rewrite policy that allows some people who already receive benefits to automatically receive food stamps.

Balancing the cutbacks important to conservatives with maintaining the generous safety net that farmers have relied on for decades will be key to getting the bill passed before current farm programs expire Sept. 30.

This is the third year in a row that farm-state lawmakers have tried to push the bill through. Though it passed the Senate, the House declined to take up the bill last year after conservatives in that chamber objected to the bill's cost and insisted on higher cuts to food stamps.

In 2011, Stabenow and Lucas attempted to include the bill as part of the congressional supercommittee's effort to come up with a long-term deficit reduction plan. When that effort failed, farm bill action stalled until the next year.

House leaders have given supporters more optimism this year as they have said they plan to put the measure on the floor this summer.

Longtime critics of farm policy say that even with the belt-tightening, the legislation is still a giveaway to the largest farms which tend to receive the largest shares of the subsidies.

''It's very disappointing in a time of runaway deficits and record farm income,'' says Scott Faber of the Environmental Working Group.

Farm groups defend the policy by using last year's drought as an example. Despite widespread losses, federally subsidized crop insurance helped farmers recover.

The bill would also limit payments to the wealthiest farmers and require farmers who receive crop insurance to comply with certain soil and water conservation requirements.

May 28, 2013  By The Canadian Press