Future of the farm safety net
By Seymour Klierly
"Don't hang on, nothing lasts forever but the earth and sky. It slips away; all your money won't another minute buy." Lyrics made popular by the band Kansas in 1977 ring true as the farm safety net could be left like the rest of us as, "all we are is dust in the wind."
Record drought, record commodity prices, record input prices especially land, record farm income, record deficits, and throw in near record dysfunction in Congress and you get a sticky situation for farm country. Not only did Washington miss several opportunities to support farmers and ranchers, the current situation in D.C. is turning more and more heads to target agriculture.
Since the 1996 Freedom to Farm legislation, the farm safety net has been a three-legged stool made up of crop insurance, direct payments, and commodity subsidies. The biggest target by outside groups has been direct payments. Even though the payments are the least trade and market distorting, most agriculture committee members have agreed to give up the payments in order to preserve other pieces of the safety net.
Direct payments were set to be eliminated in both the House and Senate versions of the farm bill. The real fight was over the commodity title with the House including target prices while the Senate version did not. However the lack of a bill resulted in an extension of the 2008 farm bill, including another year of direct payments.
With the latest Congressional Budget Office analysis of the 2012 versions of the farm bill, there will be more targeted than just direct payments. Both versions are expected to save $10 billion less than previously thought. In order to move the legislation, the farm bill will need to be changed to save additional money.
Sen. Chuck Grassley, R-IA, a senior member of the Agriculture Committee is already speculating that the safety net resulting from the farm bill could look different than most have predicted. "I think that we're going to end up with probably just one safety net for farmers in the new farm bill, and that's going to be crop insurance," Grassley said."
The agriculture industry in the Midwest has already coalesced around the priority of protecting crop insurance. Now, arrows are already being launched at this last leg of the safety net. Sen. Jeff Flake, R-AZ, has proposed to cut crop insurance by $40 billion and return funding to 2000 levels. "It's a program that loses money for the taxpayers whichever way it goes," Flake told reporters. Rep. John Duncan, R-TN, introduced the House version and said "The biggest beneficiaries were insurance companies and big farmers."
Passing a full farm bill this year will be no easier than 2012, however it is clear that movements and sentiments by national leaders signal dramatic changes to the farm safety net could be coming sooner than later. As another popular Kansas song advises, "carry on wayward son, there'll be peace when you are done."
Editor's note: Seymour Klierly writes Washington Whispers for the Journal from inside the Beltway.