Des Moines Register
10-28-07
Brasher: Farm bill plan pays farmers, yet saves money
WASHINGTON FARM REPORT
Growers have the option to sign up for the provision. It is expected that they will
receive more cash.
By PHILIP BRASHER
REGISTER WASHINGTON BUREAU
Washington, D.C. - Only in the bizarre world of the farm bill and the federal
budget could this happen.
A new subsidy plan included in the Senate version of the farm bill is designed to
pay growers more than they would get under traditional programs.
But the reason many senators like the program - and the reason it has a good
chance of becoming law - is not because it will spend more money but because it
spends less, at least on paper.
Here's how this works:
The program is designed to protect farmers against crop failures as well as a
drop in commodity prices. Payments would be triggered when average crop
revenue for the farmer's state falls below a target level.
Farmers who like the idea think they're more likely to get payments this way in an
era when the ethanol boom is keeping commodity prices relatively high. Under
traditional programs, payments are triggered only when market prices are low.
But congressional budget analysts have calculated that the new program, which
would be optional for farmers, would save the government money. That's
because many farmers who enroll in the plan would get a cut in the fixed annual
payments that they now get from the government.
Analysts at the nonpartisan Congressional Budget Office believe a lot of farmers
will sign up for the program - how many has not been disclosed - and these
growers will give up far more in fixed payments than they will collect in the new
subsidies. The savings to the government could be around $4 billion in three
years.
The chairman of the Senate Agriculture Committee, Iowa Democrat Tom Harkin,
acknowledged the savings "really helped us out a great deal," although he says
he believes the plan is good policy.
Remember, the plan is optional. What happens if farmers don't sign up for the
program in the numbers that budget analysts think will?
It doesn't matter. Because of how the budget process works, it doesn't make any
difference whether one or 100,000 farmers sign up for the program.
As soon as the analysts issued their estimate, lawmakers were free to earmark
that savings for other purposes. The Senate committee raised subsidy rates for
traditional commodity programs and boosted food stamp benefits.
There's a good chance many farmers won't sign up for the program, especially
after the Senate committee dropped a provision to cut crop insurance premiums
for Midwest farmers.
The cut in fixed payments could be stiff.
A corn farmer in Iowa gets a fixed payment each year of $28 an acre for land that
was historically planted to corn and $13 an acre on soybeans. Under the new
program, the payment would be set at $15 an acre for all crops.
Farmers would have to decide that the risk of a bad year was great enough to
accept that cut, said Chad Hart, an economist at Iowa State University.
There's a good chance they'll get to make that decision. The savings, even if they
turn out to exist on paper, are just too enticing.
Welcome to Washington.
Reporter Philip Brasher can be reached at (202) 906-8138 or
pbrasher@dmreg.com