Ag Policy Blog

A pair of analyses done by the conservative Washington think tank the Heritage Foundation and the University of Illinois at Urbana-Champaign on behalf of the Environmental Working Group, pointed out expected higher costs for various programs proposed in the farm bill proposals in the House and Senate.

The Heritage Foundation report released Friday is critical of Congressional proposals on a new farm bill, saying although there is bipartisan support to cut crop insurance costs both bills in the House and Senate would increase those costs.

"Congress is playing a shell game: the new farm subsidy programs in the House and Senate bills could likely cost far more than the programs being eliminated," the Heritage analysis said.

"Congress should not ignore the interests of taxpayers. It should protect their interests by cutting costs instead of gambling with taxpayer dollars."

In its analysis on Friday Heritage said the "costliest farm program" is not the direct payment program, but the crop insurance program.

"The price tag for taxpayers is skyrocketing and needs to be reined in," the analysis said.

"The average annual cost of the program from 2000 to 2006 was $3.1 billion. This amount more than doubled to $7.6 billion from 2007 to 2012, and is expected to grow to $8.9 billion from 2013 to 2022.

"There are bipartisan efforts to reduce these costs, including from President Barack Obama. Yet, both bills would take the irresponsible step of actually increasing the costs of crop insurance. The Senate bill would increase crop insurance costs by $5 billion and the House bill would go even further by increasing the costs by $8.9 billion."

Heritage said both bills attempt to reduce "almost all risk for farmers through 'shallow loss' programs, covering even minor losses in revenue.

"The bills also create reference price programs allegedly designed to cover 'deep losses.' When a commodity price falls lower than a reference price, farmers receive payments," Heritage said.

"However, the reference prices are set so high that they would cover minor losses and effectively guarantee payments to peanut farmers."

When Speaker of the House Rep. John Boehner, R-Ohio, announced Wednesday he would vote for the farm bill, American Farm Bureau Federation President Bob Stallman called out Heritage and other groups for their criticism of the proposals.

The House version of the bill could come to the floor sometime next week.

"Congress is advancing bipartisan farm legislation -- the House bill that cleared committee on a bipartisan 36-10 vote will soon be on the House floor," Stallman said in a statement.

"It is unfortunate that outside political groups with no interest in the agricultural economy or the farm and ranch families who underpin our rural economies have reacted by promoting inaction, effectively supporting no reform, no progress.

"Heritage Foundation-Heritage Action, for example, opposes the legislation, but they are misstating the facts in characterizing reforms advanced in the legislation as a referendum on the president. It certainly is not the view of a single leader in the political debate.

"The American Farm Bureau calls on Congress to work its will through a fair process and an open debate, to finish the House bill, leading to a conference committee, which can then produce legislation that reflects the will of the American people. It is time to put aside partisan bickering and get to work."

Also on Friday, an Environmental Working Group-funded study conducted by the University of Illinois at Urbana-Champaign concluded that a new price guarantee program in the House farm bill could cost nearly $20 billion more than the programs it is designed to replace.

The analysis said a new price loss coverage program could exceed the cost of current programs if prices fall.

The study found that the new program would fix crop prices at levels high enough to trigger larger payments than the current counter-cyclical program and direct payment programs it would replace.

While driving up government spending by $2 billion a year or more, the analysis found the price supports could also distort growers' planting decisions and threaten trade agreements that have helped U.S. agriculture expand exports.

View the Heritage report here, http://tinyurl.com/….

View the Environmental Working Group analysis here, http://tinyurl.com/….

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