Ag Policy Blog

FAPRI Compares Farm Bill Programs

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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SEE CORRECTION BELOW:

In the midst of the shutdown battle, Senate Majority Leader Harry Reid, D-Nev., returned to the Senate floor Tuesday afternoon to reappoint conferees for the farm bill and effectively ask the House to do the same.

The Senate conferees are the same as those appointed Aug. 1.

Democrats: Senate Agriculture Chairwoman Debbie Stabenow, D-Mich., as well as Sens Patrick Leahy, D-Vt., Tom Harkin, D-Iowa, Max Baucus, D-Mont., Sherrod Brown, D-Ohio, Amy Klobuchar, D-Minn. and Michael Bennet, D-Colo.

Republicans: Committee Ranking Member Thad Cochran, R-Miss., and Sens Pat Roberts, R-Kan., Saxby Chambliss, R-Ga., John Boozman, R-Ark., and John Hoeven, R-N.D.

The Food and Agricultural Policy Research Institute at the University of Missouri released a report Tuesday looking at some of the various differences between the House and Senate farm bills in the safety net for crop farmers.

The FAPRI update offers a primer on how some programs are supposed to work, the acreage and loss calculations and how different crops are affected.

The report examines overall benefits adding both commodity programs and changes in crop insurance programs. The report also shows how the House farm bill is weighted to support crops such as rice, peanuts and barley while the Senate bill is weighted to more heavily support corn and soybeans.

Under the Senate bill, a farmer with one base acre for each planted acre could expect the following average program benefits: $25 for corn, $12 for soybeans, $10 for wheat or barley, $27 for upland cotton, $40 for rice and $70 for peanuts.

Under the House bill, the various program benefits would be $22 per acre for corn, $10 per acre for soybeans, $12 for wheat, $27 for upland cotton, $49 for barley, $82 for rice and $119 per acre for peanuts.

CORRECTION: Due to a typing mistake, I had the wrong number for peanuts in the paragraph above. It is $119. I'm sorry for the error.

It's important to note these are not actual benefit numbers. The calculations represent average of 500 different market outcomes and five marketing years. FAPRI states that any given farmer may not receive any benefits in some years, but the benefits could be high when prices or yields decline.

"For most crops, prices are lower under the House Committee bill than under the Senate bill, so the market value of production per acre is also lower."

The report breaks out how the calculations play out for specific commodities. For instance, the Price Loss Coverage in the House bill would be a boon for barley. Under the bill, Price Loss Coverage (PLC) would add over $44 per acre to the revenues for barley farmers.

For peanuts, farmers would make $74 less per acre from the market under the House bill than the Senate bill. Payments under PLC would more than offset that with nearly $111 in federal payments.

Those price and market distortions were highlighted last month in a report by the U.S. Chamber of Commerce, which raised issues about program changes such as shifting from base acres to planted acres.

As the Chamber report states, "Economists widely view coupled payments, such as those under the proposed PLC program, to be highly trade distorting because farmers are incented to plant additional acres of a crop simply to receive the subsidy, rather than in response to market demand for the crop. As a result, crop sizes are artificially inflated, which reduces market prices and injures non-subsidized producers."

The FAPRI report can be found at http://www.fapri.missouri.edu/…

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Bonnie Dukowitz
10/2/2013 | 6:19 AM CDT
Rice and peanuts. The article is a perfect example of the distorted description of Food and Job Security Act. The end $ on these commodities is for JOBS, not farmers.