“You’re going to have a fundamental change with this farm bill.” Period.
Adam Sharp, Ohio Farm Bureau Federation vice president for public policy, told the farm group members Dec. 1 to get ready for change in the next year’s farm bill, and to kiss direct payments goodbye.
Direct payments no longer have public support and, some would argue, public justification.
(Some would argue further to ditch all farm programs — but 75 percent of the programs funded by the U.S. farm bill are nutrition programs, like school lunch and school breakfast programs, food stamps, or Women, Infants and Children, or WIC, so that move would have unintended consequences outside the farm world.)
Of course, we’ve heard it before. “… the Federal Agriculture Improvement and Reform Act of 1996 became law on April 4, 1996, significantly changing U.S. agricultural policy.” But this time around, the change may be real, as Sharp explained, because of the deficit spending/federal budget world we live in.
Of the items funded in the current farm bill, 37 baseline programs’ funding won’t be extended at the end of fiscal year 2012. So if you (and lawmakers) want to keep a program like the National Organic Certification Cost Share, SURE (Supplemental Agriculture Disaster Program), or the Wetlands Reserve Program, you’ll have to find new money for them.
If there’s only so much money for the farm bill programs, and the nutrition title gets the biggest, non-negotiable share of the pie, the rest of the pie may get divided differently in this bill — funding shifted from one program to another, depending on priorities (or the loudest, or most connected, voice).
The biggest fundamental change will be from direct payments to risk management — a safety net. Yes, we had it in the 2007 farm bill with the ACRE program (Average Crop Revenue Election), but you could argue that it duplicates crop insurance program coverage. Expect more attention to the crop insurance program, and “add-ons” available to farmers as supplemental, or perhaps subsidized, crop insurance.
Ohio State ag economist Carl Zulauf compared 10 farm bill proposals this fall and found this: “All but one of the proposals had a shallow loss component, addressed multiple-year risk, were oriented to revenue, discussed the need for coordination of the program with crop insurance, had an individual crop orientation, and required a loss for a farm to receive payments.”
Get ready to hear more about a “shallow loss” program, which basically means the government would compensate farmers for relatively small losses. For example, if a farmer shoulders 5 percent of income loss, a free shallow loss program could cover the next 20-25 percent, and then crop insurance kicks in to cover losses below 30 percent.
Not really sure if I like the sound of that. Yes, it limits risk, but does it prop up poor managers, too? Would that encourage more risky farm practices? In October, the American Farm Bureau recommended that a shallow loss coverage should not exceed 85 percent. That I can live with.
Perhaps the wisest comment I’ve read, related to the new farm bill, came from Purdue University ag economist Otto Doering, who was actually rephrasing colleague Lyle Schertz observations from the 1996 farm bill process. “We have a tendency in the U.S. to socialize losses and privatize gains,” Doering told the House Committee on Agriculture in May, 2010. “Today, we can no longer afford to do this.”
“The other side of the coin is that if we actually believe in markets, more of the private gains will have to cover losses.”