Super Committee's Cuts Will Impact Farm Bill
Current political environment will lead to legislation based more on a safety net and risk management.
Compiled by staff
Published: Oct 14, 2011
The Farm Bill discussions have taken place under the budget axe in the past. For instance, just prior to the 1996 Presidential election the federal budget was a big issue. This time around, it seems corn growers and cotton growers might like a stronger crop insurance program, others like wheat growers out west tend to like disaster assistance programs. University of Illinois's Nick Paulson has been following the Super Committee tasked with making cuts year and the fact that Senator Max Baucus, D-Montana is a member.
"Baucus is really the only member of the Super Committee with agricultural experience or agricultural interests," Paulson said. "And he does come from a region where disaster payments are historically more important and probably a higher priority than crop insurance programs, which are more popular in the Midwest and the southern cotton growing states."
The question then is, where does the political environment in Washington and farm country lead farm policy?
"I really think that we are to the point now where we can safely say direct payments are off the table," Paulson said. "In terms of the crop insurance program, which is so dependent on where commodity prices go in any given year, the only real factor they can play with is subsidy rates. Budget cuts and baselines are ultimately not going to have that big an impact on how well crop insurance program operates from a producer perspective. The budgeting process and baseline does not line up with the money that will be spent in the future, so budgeting is very far from what the actual outlays will be, which is really what matters to the farmers that use the crop insurance program."
The Farm Bill is usually updated every four to five years and there's a lot of wrangling and jostling among the farm groups to help guide the process. USDA generally sits on the sideline, other than to provide financial and historical analysis. Paulson says that doesn't look to be the case this Farm Bill season.
"The thing I keep hearing is that USDA is going to be more directly involved in writing this Farm Bill than other previous Farm Bills," Paulson said. "Beyond that, I think it is just the environment in which the bill is being written where there really isn't a great argument or justification to continue programs that provide income support, so this bill is going to be written I think from a safety net or risk management perspective to be able to come up with any good arguments for agriculture to keep some of the funding levels they have received in previous bills."
Unlike 1996 when farmers were asked to take a cut, and promised everyone else would follow after the election, this year it appears the Super Committee may wield the budget axe more broadly. The other big agricultural backdrop issue is the World Trade Organization. Direct payments don't count in the WTO discussions, but everything else for the most part comes with potential penalties attached. Washington could simply decide to pay that price.
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Tagged: farm, insurance, farm bill, usda, cotton
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