WASHINGTON — The Senate has begun laying the groundwork on a massive farm bill that would cut spending while also creating new subsidies for farmers.
The legislation the Senate Agriculture Committee is considering Tuesday makes concessions to Southern rice and peanut farmers, thanks to a new top Republican on the committee, Mississippi Sen. Thad Cochran. The bill eliminates $5 billion in annual subsidies called direct payments that are important to those Southern farmers but makes it easier for them to receive alternate subsidies if prices dip.
The Senate bill calls for a total of roughly $2.4 billion a year in cuts, while a House version to be considered Wednesday would save $4 billion out of about $100 billion annually. Those cuts include more than $600 million in yearly savings from across-the-board cuts that took effect this year.
Much of the savings in the House and Senate bills comes from eliminating the direct payments, which aren't tied to production or crop prices. Part of that savings would go toward deficit reduction, but the rest of the money would create new programs and raise subsidies for some crops while business is booming in the agricultural sector.
Republican Sen. Pat Roberts of Kansas, the top Republican on the committee in the last session of Congress, criticized the higher subsidies for Southern farmers, which are essentially a lower threshold for rice and peanut subsidies to kick in. Roberts said the new policy could guarantee that those farmers profits are average or above average.
"I simply don't know how to justify a program that pays producers more than the cost of production and essentially becomes nothing more than another income transfer program, not a risk management tool," Roberts said.
Under the House bill, authored by Rep. Frank Lucas, R-Okla., those subsidies for rice and peanut farmers could kick in even sooner. These "target price" programs allow farmers to receive subsidies if prices fall below a certain threshold.
The bill includes generous protections for other crops as well. Both bills would boost federally subsidized crop insurance and create a new program that covers smaller losses on planted crops before crop insurance kicks in, favoring Midwestern corn and soybean farmers who use crop insurance most often.
Sen. Debbie Stabenow, D-Mich., chairwoman of the Senate Agriculture Committee, said all of the changes are meant to make farm programs more efficient.
"Instead of subsidies that pay out every year even in good times, the bill creates risk management tools that support farmers when they are negatively impacted by weather disaster or market events beyond their control," she said.
House and Senate bills are further apart on domestic food aid. The Senate bill would cut $400 million out of almost $80 billion spent annually on food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP. In an effort to appease conservatives, the House bill would cut $2 billion annually from the program and rewrite policy that allows some people who already receive benefits to automatically receive food stamps.
Balancing the cutbacks important to conservatives with maintaining the generous safety net that farmers have relied on for decades will be key to getting the bill passed before current farm programs expire Sept. 30.
This is the third year in a row that farm-state lawmakers have tried to push the bill through; though it passed the Senate, the House declined to take up the bill last year after conservatives in that chamber objected to the bill's cost and insisted on higher cuts to food stamps. House leaders have given supporters more optimism this year as they have said they plan to put the measure on the floor this summer.
Longtime critics of farm policy say that even with the belt-tightening, the legislation is still a giveaway to the largest farms which tend to receive the largest shares of the subsidies.
"It's very disappointing in a time of runaway deficits and record farm income," says Scott Faber of the Environmental Working Group.
Farm groups defend the policy by using last year's drought as an example. Despite widespread losses, federally subsidized crop insurance helped farmers recover.
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