The Joplin Globe, Joplin, MO

Business

October 31, 2011

Crop insurance supplants subsidies in farm-bill proposal

WASHINGTON — The nation’s farm subsidy payments will give way to an expanded crop insurance program under a bi-partisan plan that is expected to be submitted next week to the Congressional deficit committee, Minnesota Rep. Collin Peterson told the Minneapolis Star Tribune.

The proposal is part of an ongoing effort among Senate and House agriculture leaders to rewrite the nation’s farm bill. The group has committed to trim $23 billion in agricultural spending over 10 years.

Roughly $15 billion in cuts will come from the elimination of direct-payment subsidies, said Peterson, a Democrat who serves as the ranking minority member of the House Agriculture Committee. The new payment program would pay farmers only for planted acres when prices plummet below certain thresholds.

“We’re trying to reform this system,” Peterson said. “We don’t want to pay people when they don’t need it, and we don’t want to pay people when they aren’t growing a crop.”

The U.S. Department of Agriculture projects that current farm subsidies would cost $52 billion from 2008 to 2017. The subsidies are paid based on past plantings, not on current acres in production. The subsidies are paid regardless of commodity prices.

The newly proposed protections would apply only to planted acres and current crop prices, Peterson said. The plan would ensure that farmers can collect up to 90 percent of a preset value on their crops.

About $8 billion in other spending cuts would be absorbed by various conservation and nutrition programs, including food stamps.

The rewrite of the farm bill by agriculture committee members has occurred at relatively high speed and behind closed doors, a process which has drawn criticism from several groups. Among the most vocal is the Environmental Working Group, which complained that the agriculture committees did not hold public hearings to listen to groups and individuals affected by the legislation.

“It’s a welcome development that direct payments are finally being eliminated,” said Craig Cox, the Environmental Working Group’s vice president for agriculture and natural resources. Still, he added, the new proposal is “troubling” development because “it looks like they’re turning a safety net into a guaranteed income program.”

Meanwhile, the Minnesota Farm Bureau had not been told about the plan Peterson outlined and referred questions to its parent group, the American Farm Bureau. “Our farmers would have preferred to continue the existing program,” said Mary Kay Thatcher, the American Farm Bureau’s director of congressional relations.

Still, Thatcher conceded that keeping the existing no-strings-attached subsidy program is nearly impossible at this point because of the program’s lack of political support as pressure builds to reduce the deficit. The Farm Bureau has pushed for an insurance program that differed from the one Peterson described.

The details of any farm program that will go to the super committee are not yet final, Thatcher insisted.

The speed of the process has been extraordinary, but that isn’t necessarily a bad thing, said congressional expert Norman Ornstein of the American Enterprise Institute.

“It is not like these are people who haven’t thought about and debated these issues for years,” Ornstein said. “The perversity of paying people not to plant crops makes change long overdue. And if you can get a bipartisan package to do anything at this point, it should be applauded.”

Peterson said the agriculture committees did not establish the timetable.

“What’s usually done in six months, we’re doing in four weeks,” Peterson acknowledged. “When I ran the (House agriculture) committee, we started off in subcommittees. That’s the way it should be done. We did not set up this process. I didn’t think the super committee was a good idea.”

The super committee, composed of six senators and six representatives, was assembled after Congress struggled over deficit reduction and raising the debt ceiling. The group is supposed to come up with $1.2 trillion in federal budget cuts over the next 10 years and present them to the House and Senate by Nov. 23. Congress must act on the plan by year’s end.

If the super committee fails to develop a budget plan or Congress doesn’t pass it, automatic cuts to defense spending and social programs take effect.

Policy committees in the House and Senate are supposed to give detailed budget-cutting proposals to the super committee by Nov. 1. The House and Senate agriculture committees are likely to be the only ones that will come close to that deadline, Peterson said — “We should get credit.”

Cox of the Environmental Working Group has no praise for the process.

“This is no democratic process at all,” Cox said, “They’re making major changes to policy to reach a budget number. They’ve gone way beyond what they should have.”

 

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