Farm Groups Support Revenue Protection Plans

As Congress mulls major farm spending cuts, representatives of some of the major American staple crops came out in support of subsidy reductions, with the caveat that proposed changes include major crop assistance programs.

The debated cuts, about $23 billion, represent an effort by a Congressional supercommittee to trim nearly $2 trillion from the federal budget. The budget reductions, a part of last summer’s debt ceiling negotiations, need to be agreed up by the end of November, giving Congress only a few weeks to agree to massive and painful budget cuts.

A Congressional plan supported by Democrats Dick Durbin and Sherrod Brown and Republicans Dick Lugar and John Thune, would consolidate several subsidy programs, eliminating direct payment programs, into a single revenue protection program. Farmers would receive federal aid only when prices drop below an agreed upon level, guaranteeing a baseline income for American farmers.

This consolidation would save nearly $20 billion over the next ten years, according to the Congressional Budget Office, forming the bulk of the $23 billion that the House and Senate agricultural committees have pledged to cut by November 1.

Major farm groups have come out in favor of this consolidation. The American Soybean Association, the National Corn Growers Association, and the National Famers Union have all supported revenue based farm subsidy programs, but have urged Congress to preserve the current crop insurance program in addition to launching this new revenue protection program.

However, some organizations have questioned the final saving that this sort of program will generate. Farm policy analysts at the Cato Institute, for example, point out that many of the savings are budgeted based on current farm price estimates and assume that high prices will continue for the next decade. A drop in farm prices, however, could undo many of the estimated savings.

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Written by: Justin Ellison / Farm Plus Staff Writer