Farmers Brace for Crop Insurance Cuts

U.S. farm groups are looking for a formula to lower crop subsidy spending dramatically ahead of new congressional demands for cuts in a farm bill now costing $10 billion more than planned. The cuts could be larger than the $30 billion from farm subsidies and crop insurance that Chairman Paul Ryan of the House Budget Committee proposed last year, lobbyists said.

A star element of 2012 work on the farm bill – an insurance-like plan to shield farmer revenue from poor yields, as well as low prices – might be a prominent victim of fiscal belt-tightening. The direct-payment subsidy, paid regardless of need, also could go.

Farm-bill writers will start at a disadvantage this year, despite trying to carve as much as $36 billion from farm bill costs last year. The Congressional Budget Office took a new look at the legislation and said on March 1 the bills passed by the Senate and approved by the House Agriculture Committee save $8 billion-$10 billion less than originally estimated.

“It gets a lot tougher,” said agricultural economist Pat Westhoff of the University of Missouri, to write a bill when large savings are demanded from crop subsidies.

An aide to House Agriculture Chairman Frank Lucas said the committee’s target for savings remained at $36 billion over 10 years, including cuts in food stamps for the poor. The panel’s 2012 bill got half of its savings from food stamps.

A core question for the farm bill, Lucas said, is the split in spending between food stamps and money for farmers. Food stamps account for the lion’s share of Agriculture Department spending.

Farm bills are panoramic legislation written every few years that set the terms for crop subsidies, food stamps, agricultural research, farm exports, food aid, soil and water conservation, crop insurance, dairy subsidies and rural economic development.