Congress Considering Deductable Subsidies

With the Senate version of the 2012 Farm Bill removing direct subsidy farm payments, farmers are pinning their hopes on strengthened crop insurance programs to protect their livelihood. Now that the farm bill debate has shifted to harmonizing the Senate bill and the anticipated House bill, farmers are focusing their energy on protecting crop insurance policies that are a major part of the Senate measure.

The crop insurance policies in question are major subsidies that help defer the cost of insurance deductibles. The Senate farm bill currently contains a $3 billion a year subsidy program that would help farmers cover the deductibles they are required to pay before crop insurance kicks in. These costs can typically run tens of thousands of dollars for a mid-sized farm and are a major impediment to many farmers nationwide.

While budget hawks may be up in arms about the annual $3 billion price tag, farmers and agricultural politicians say that the program will help lower costs overall. The expansion of crop insurance, they say, was necessary to eliminate the $5 billion a year direct payment program, creating an overall drop in spending.

Critics, however, are skeptical of these claims and argue that the bill serves to reduce funding for vital programs like Food Stamps (which feeds about 1/7 Americans a month). According to a senior vice president at the Environmental Working Group, “It’s obvious why a farmer would like this, but it’s not at all obvious why the taxpayer should pay for this.”

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Written by: Justin Ellison / Farm Plus Staff Writer