It’s looking more and more like conferees meeting to hash out competing versions of a farm bill will lose their race against time and fail to complete their work this year. Nevertheless, they might agree to a bipartisan blueprint for a deal that could be put to a vote in January.

The chambers took different approaches to the commodity title. The Senate plan is geared toward revenues while the House approach is more about production costs. Both would pay farmers based on what they actually plant, not the “base acre” formula used for direct payments. This has created fear that all government aid will be decoupled from planted acres to avoid World Trade Organization complaints. The Senate bill continues current price-support policy by making payments based on 85% of historical plantings. The House bill takes a new approach, paying on 85% of planted acres, ostensibly to better-align payments with producer risk.

With direct payments gone, both bills increase spending levels for the $9 billion crop insurance program. The Senate-passed version, however, provides means testing. It reduces crop insurance premium subsidies by 15% for producers with average adjusted gross income greater than $750,000. Both farm bills combine dairy subsidies with a new program that pays participating dairy producers when margins fall below $4 per hundredweight. The Senate bill also subjects participating producers to a separate program that reduces incentives to produce milk when margins are low.

Because the new program has no eligibility constraints, its costs are expected to be up to three times higher than continuing 2008 farm bill dairy laws. The Senate program, according to the Food Policy Research Center, would reduce the cost of 2013 farm bill dairy programs by 5% to 30%, compared to standalone margin insurance.


Story courtesy of Boyce Thompson, AgWeb Editorial Director