With a tremendous national budget debt, Congress is forced to examine all current and pending legislation to search for ways to reduce and allocate funding to every federally funded program, and agriculture legislation is no exception.
The Senate Agriculture Committee passed legislation April 26 to authorize new farm programs effective until September 2017 while reducing our federal deficit $23 billion as part of its 2012 Farm Bill package. Its recommendations now reside with the full Senate and await a possible vote and amendments.
The Agricultural Adjustment Act of 1933 is considered to be the earliest incarnation of the Farm Bill, passed during the Great Depression to assist farmers during extreme weather-induced losses. Recognizing the role of American farmers as providers of food, feed, fuel and fiber, the federal government has historically provided assistance to farmers to protect against market volatility and other operational challenges.
Though the majority of the public considers the bill as farmer-focused, its policies and programs support food security, nutrition/food programs, the environment, energy initiatives, food aid and the development of rural America.
As with all legislation, there is opposition. The House of Representatives are in the process of drafting their own proposal with reported reductions of at least $33 billion.
Because the current Farm Bill, which has a five-year lifespan, expires September 30, the House and Senate will eventually have to compromise for the implementation of new farm legislation before this date, or Congress will be faced with the proposition of some sort of extension of current law.
Though the bill addresses all programs, the summary below is specific to commodity crops. You may access the summary of the Farm Bill committee print at www.ag.senate.gov/issues/farm-bill.
The most prominent aspect of the Senate ag committee’s proposed bill is the elimination of direct payments (subsidies to farmers based on historical production without regard to current prices or yields).
The other major component is its focus on crop insurance programs. Crop insurance continues to be recognized as one the most accepted forms of public policy support for commodity crop farmers. The bill requires this focus because of its removal of the direct-payment structure as a safety-net feature for farmers. With a shift to a market-driven insurance system from a government-directed system, strengthened crop insurance programs will serve as the primary safety-net mechanism for farmers with this version of the bill.
The bill introduces a new revenue program named the Agriculture Risk Coverage (ARC), to complement crop insurance programs, as its other main feature pertaining to commodity growers. Agriculture.com summarizes this program well.
Major Features (Farm Bill Markup Summary)
• Eliminates direct payments to save $5 billion.
• Savings would be invested in a new revenue insurance program (ARC) designed to complement crop insurance and protect farmers against multi-year losses caused by low prices or poor yields. Crop insurance would continue to be the tool used to protect against larger losses.
• Payments would be capped at $50,000 per person or $100,000 for married couples.
• Enforces stricter requirements that payment recipients be “actively engaged” in farming operations.
A news author reminds us of the significance of this vital bill:
“There are many reasons public support for agriculture is critical to rural economies, to the security and stability of our nation’s food supply and to the American public. The point isn’t to argue that support should be eliminated or even reduced; with 2 percent of the nation’s population producing all of the food, society has a strong interest in providing a safety net for this tiny minority.”
Let’s hope that the House can work with the same diligence as the Senate to achieve legislation that is mindful of the progress made thus far, to continue a speedy path to approval.
Photo obtained from: croplife.com
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