A new analysis of the two Farm Bills out there … the Agriculture Reform, Food and Jobs Act of 2012 that passed the full Senate in June and the House’s Federal Agriculture Reform and Risk Management Act of 2012, which made it out of the House Ag Committee last month … shows some similar impacts of the two bills, especially when it comes to direct and counter-cyclical payments. Pat Westhoff, Director, Food and Agricultural Policy Research Institute (FAPRI), which did the report, says both bills mark a fundamental change away from those payments that were tied to historical yields on farms. “Instead, the new policies would create policies that would make payments only tied to what farmers tried to produce in a given year,” adding that they would also be tied to market conditions. “A very different world that what we’ve been used to.”
Westhoff says the elimination of those payments means less predictability in payments. “You may get a very large payment if you have a drop in prices or yields, but there may be other years where you get nothing at all,” he said. Even though things could change by the time the House bill is brought before the full chamber and both versions are worked out in committee, the end of direct payments is likely a done deal. “It may or may not happen for 2013, but I do think it is likely that we’ll see the end of direct payments in the not-too-distant future.” He added that while it might not mean that much for corn and soybean growers, other crops, such as peanuts and rice, could see a bigger impact.
The report also highlights the importance supplemental insurance coverage will play. “That’s something that’s in both the House and Senate bills,” Westhoff says. “We found what you assume about participation in that possible new program is incredibly important in trying to estimate what it will mean for taxpayers and farmers. That’s one that’s been kind of a sleeper out there that may become front and center of the farm policy debate in the next few weeks.”
Listen to my conversation with Pat here: Pat Westhoff, Director of FAPRI Read FAPRI’s report here.