By The Associated Press
WASHINGTON – Corn and soybean farmers are pushing for – and Congress is moving to create – a whole new subsidy that could maintain farm incomes at a nearly four-decade high should prices fall or crops be destroyed by weather.
The new subsidy would protect farmers when their revenue drops. Critics say it is an unprecedented program that could pay billions of dollars to farmers now enjoying record-high crop prices.
The subsidy would take the form of free insurance that would cover farmers’ “shallow crop losses” before their paid insurance kicks in. It would replace several other subsidy programs, including direct payments preferred by Southern rice and cotton farmers. Growers get the direct payments regardless of crop yields or prices. They don’t even have to farm.
The “shallow loss” insurance programs could begin paying out once a farmer’s revenue falls by as little as 5 or 10 percent. Federally subsidized crop insurance, for which farmers pay premiums, would kick in with deeper losses.
The income insurance plan has a diverse group of opponents – environmental groups that have long argued against farm subsidies, conservatives who say the plan won’t save the government much and even one of the nation’s largest farm groups. The American Farm Bureau Federation says the beefed-up insurance could encourage farmers to make riskier decisions and drive up the price of land.
The chairs of the House and Senate Agriculture Committees are looking at folding the new subsidy into a farm bill proposal they are quietly crafting as part of their charge by the deficit-cutting congressional supercommittee to cut farm spending. Chairwoman Debbie Stabenow, D-Mich. and House Agriculture Chairman Frank Lucas, R-Okla. have said they will shave $23 billion from farm and food aid programs over the next decade. The new revenue insurance program would be considered part of their effort to achieve that goal.
Federally subsidized crop insurance programs are now costing taxpayers up to $7 billion to $8 billion annually despite the biggest farm profits in nearly four decades. The Agriculture Department predicts net farm income by the end of this year will total $103.6 billion, a rise of 31 percent from 2010. The department says this is the highest value since 1974, adjusted for inflation.