In a piece headlined “At the trough,” The Economist magazine targets the American Farm Bill currently in the works before Congress, adding in its secondary headline that “an awful farm bill faces opposition.”
In the piece, they also cite a Montana State University professor.
Here’s an excerpt:
Proponents of the new bill (of which there are two draft versions) boast that it ends “direct payments” to farmers. These are the subsidies paid to producers of wheat, corn, cotton, rice, peanuts, etc, regardless of whether they actually grow these crops—or even plant them. Other plums, such as “counter-cyclical payments” (extra handouts when prices are low) are also to be eliminated.
That may sound like a ray of sunshine for taxpayers, but there are clouds looming. Vincent Smith, a professor of farm economics at Montana State University, says the new bill offers a “bait and switch”. Direct payments are the bait, he explains, but they have been replaced by an expanded programme of subsidised crop insurance. The CBO calculates that more than two-thirds of the $50 billion saved by cutting direct payments would be used to boost other farm programmes, such as crop insurance and disaster relief. If crop prices fall, insurance payouts will explode. And crop prices are near historic highs right now.
Federal crop insurance is not new; it began in the 1930s. But its cost has already risen from $2 billion in 2001 to $7 billion last year (see chart). It is expensive because taxpayers pay two-thirds of each farmer’s premiums, and most of the claims. During last year’s drought, crop-insurance payouts were a bountiful $17 billion. Uncle Sam shouldered three-quarters of that.
I wonder- conventional wisdom has typically been that combining the Farm Bill with the food stamp program allows for broader support to get a Farm Bill passed. But now, with 80% of the “Farm Bill” actually going to the food stamp program, is the bill growing into such a large size, garnering increased negative attention, that it actually threatens the smaller portion of the bill which actually deals with farming?