Last week, President Obama proposed cutting more than $40 billion from agricultural subsidies over the next 10 years to pay for his new jobs bill. Direct payments to farmers would be eliminated and the federal crop insurance program would be cut dramatically. However, programs providing disaster assistance like the Supplemental Revenue Assistance Payments program, or SURE, would remain in place until 2016.
The plan drew sharp criticism from Republicans. House Agriculture Committee Chairman Frank Lucas, and the ranking member of the Senate Agriculture Committee Pat Roberts adamantly objected to the Administration’s plan. In a statement, the lawmakers said the President fails to recognize how wholesale changes in farm policy would affect the people who produce America’s food.
Those concerns were echoed by other farm state lawmakers. Democratic Senators Sherrod Brown of Ohio and Dick Durbin of Illinois, along with Republican Senators Richard Lugar of Indiana and John Thune of South Dakota are proposing legislation they call the Aggregate Risk and Revenue Management Program or AARM. The bipartisan measure is designed to consolidate and streamline existing commodity programs authorized under current farm law. If adopted, AARM would eliminate direct and counter-cyclical payment programs.
In the past, proposed cuts to the traditional farm safety net have spawned programs like the 1996 Federal Agriculture Improvement and Reform Act, or FAIR. More commonly known as “Freedom to Farm” the legislation decoupled farm payments from commodity prices. There was no requirement to sign-up for the program and some said it helped appease those who proposed radical reforms to federal farm subsidies.
That attempt was followed in 2008 with the Average Crop Revenue Election or ACRE program. Its revenue-based payments were an alternative to receiving price-based counter-cyclical payments through the Direct and Counter-Cyclical Payment Program.
And a proposal unveiled last week by the National Farmers Union, or NFU, outlined merits of keeping some federal farm subsidies intact. In a study conducted by the University of Tennessee, and funded by the NFU, proposes a return to the “farmer-owned reserve” concept abandoned in 1997 when the FAIR Act was adopted. NFU President Roger Johnson likes the program because he believes it will reduce the budget for farm programs while continuing to provide the same level of protection for farmers and ranchers in times of need.
According to the recently released whitepaper, if a farmer-owned reserve had been in place over the past 12 years:
-government payments would have been cut by nearly two-thirds from $152.2 billion to just over $56 billion
-exports would have been worth almost $5 billion MORE than without the program
-and farmers could have benefited from price signals reflecting supply and demand instead of what was referred to as “herd-following speculative behavior.”