Ag's Budget is Targeted
Farm programs and crop insurance may be fair game for cuts.
John Otte
Published: Feb 25, 2011
Washington is intent on cutting spending. No program or budget item is immune from cuts.
"U.S. farmers need a strong safety net," U.S. Senator Debbie Stabenow, D-Mich., told more than 2,000 attendees at USDA's annual Agricultural Outlook forum Thursday in Washington, D.C. She serves as Chairwoman of the Senate Agriculture, Nutrition and Forestry Committee.
She helped draft the 2002 Farm Bill that improved the farm safety net. Plus she created an historic new focus on specialty crops, agricultural research and conservation in the 2008 Farm Bill.
Stabenow will have a significant hand in molding the next farm bill.
Predicting just what that safety net will look like this early in the debate is difficult. Agriculture will be called upon to contribute toward balancing the budget.
Ag more than farm programs
Supports for production agriculture are relatively small slices of the USDA budget. Food stamps and other food aid programs are larger slices.
Rising commodity prices have significantly reduced the countercyclical portion of the direct and countercyclical farm program payments.
"Direct payments under the DCP and crop insurance are two sizable chunks of production agriculture's share of the USDA budget," says Chad Hart, Iowa State University economist. They may become budget cut targets.
Income transfers to farmers through crop insurance come in two forms:
* Payments to insurance companies to administer federal crop insurance products
* Premium subsidies to farmers.
Lawmakers have already significantly scaled back administrative payments to insurance companies. Premium subsidies may be targets.
Regional differences
Northern farmers generally see crop insurance as more beneficial than the direct payments under the farm program. Southern growers generally perceive more value in direct payments than crop insurance.
One thing is clear. Generating enthusiasm to cut spending that directly impacts "the other guy" is a lot easier than putting programs that are dear to us on the butcher's block.
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Tagged: farm, insurance, usda, farm bill, Iowa State University
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