Ag Policy Blog

Parsing Farm Bill's Costs

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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I'm in DC today to deal with the prospective planting report. This is from today's Washington Insider column ...

Washington Insider: Parsing Farm Bill Costs

Earlier this month, the Environmental Working Group's farm program skeptics tried their hand at a familiar game — deconstructing the many variables of the new programs, including some that are not yet implemented, and estimating their likely cost. The EWG came up with some big numbers, and were hooted at by Politico reporter David Rogers, who said they were unreasonably high.

Now EWG is back in print with their side and some new criticism. We probably will see more of this fight over time since it seems to be drawing a crowd, of sorts.

EWG says its earlier estimates were "based it on newly published projections by the University of Missouri's Food and Agricultural Policy Research Institute and the University of Illinois' Farmdoc Daily." And, it says history is on its side, that "estimates are estimates" but farm bills have a long history of costing more than projected. Then the group takes an interesting tack in revisiting the argument.

EWG group says it did not create the numbers, but merely used those already in wide use. So, it says it is standing aside and that Politico's fight is really with U of Illinois' Farmdoc Daily. That blog published a map — an estimate — that pegged the per-acre payments that corn growers could receive under the newly minted Agriculture Risk Coverage subsidy program at "shockingly high levels, ranging from $60 to $200 per acre on their base acres, EWG says. "We pointed out that those payments would be far, far larger than the so-called direct payments that ARC replaced,"

The Politico article chastised EWG for citing the $200-per-acre estimate, arguing that no farmer would ever get that much. For example, Farmdoc writer, Gary Schnitkey, said he thought $80 per acre would be closer to the truth. But that's what a range means, EWG responded. The most common payment rate would likely fall somewhere in between. "The author didn't mention what payment level he considered most probable within this range," EWG complained.

EWG says there are lots of complications involved in estimating farm program costs and that they expected the U of Illinois to have considered all of them — and still highlighted the high level of per acre payments. The group also says that the argument that "payment limits" in the recent bill would effectively cap payments is not valid since the caps affect only farms with perhaps 1,200 acres and that many, many farms are much smaller than that.

Then, EWG uses this dispute to express their hopes that Politico "is right that ARC payments will not reach $200 per acre" and then it goes on to agonize, "Are we supposed to be happy with the $80-per-base acre payment? That's still more than three times the old $24-per-acre average direct payment for corn. So even at $80 per base acre, growers will get the equivalent of three years' of direct payments in the first year of the new farm bill alone –– with more to come."

EWG says it agrees that growers should have a safety net supported by taxpayers when farmers suffer potentially crippling losses — but that the current programs are excessive.

Nobody can be much surprised that EWG is critical of the new programs, since the group made similar criticisms throughout the recent debate, and long before. They have attracted particular attention from budget hawks and others over the years, especially for their highly detailed reports of individual producer payments — reports that are regarded as credible in spite of strong criticism from certain quarters.

Right now, it seems that the congressional leadership is not much interested in following EWG's advice since it seems likely to make only token cuts on farm programs — at the same time it focuses on restructuring and reducing the nutrition programs.

Whether the ongoing budget wars significantly involve the farm programs as they intensify, the EWG criticisms should be noted carefully by producers since they almost certainly will play a role in the coming debates over the role of government in the sector, Washington Insider believes.

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