While the potential budget cuts being debated in the U.S. House of Representatives have worried many Montana farmers, a Montana State University economics professor believes they may be beneficial to the economy as a whole.
Vince Smith, an MSU economist, has long been an opponent of farm subsidies and direct farm payments. Long a staple of the agricultural sector, direct farm payments have recently come under fire for being wasteful and unnecessary. Given the recent budget hysteria, farmers and policy makers have both agreed to do away with direct payment subsidies.
However, the recent House budget goes much further than the elimination of direct payments. The Ryan Budget submitted by Wisconsin Representative Paul Ryan, calls for $30 billion in farm subsidy cuts, $7 billion more than the budget agreed to by the House and Senate agriculture committees. In addition, the Ryan Budget proposes several major cuts to crop insurance programs, which are increasingly vital given the elimination of direct payments.
According to Smith, however, cutting crop insurance will be beneficial to American taxpayers. Current crop insurance programs cost taxpayers between $7 and $8 billion annually, with the federal government covering two-thirds of premium costs. In addition, Smith says, the federal programs pay what Smith calls exorbitant administrative costs to private insurance companies.
While Smith would like to see significant reductions in federal crop insurance programs, it appears unlikely that the Ryan Budget will pass. Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell appear to have reached an agreement not to put the controversial spending bill before the Senate until after the presidential election.
To learn more about agricultural financing opportunities contact a Farm Plus Financial representative by calling 866-929-5585 or by visiting www.farmloans.com.
Follow us on: Twitter
Written by: Justin Ellison / Farm Plus Staff Writer