A bedrock farm subsidy program appeared dead as a new Senate farm bill proposal relying on crop insurance programs and disaster assistance was rolled out Thursday.
Sen. Max Baucus, D-Mont., along with North Dakota senators Kent Conrad, a Democrat, and Republican John Hoeven, introduced a crop insurance plan that assures federal aid for farmers kicks in only when needed.
What the proposal doesn’t include are direct payments — a cash-per-acre program that guarantees farmers a fixed subsidy regardless of how much crop was grown or what its market value was.
Direct payments emerged in the 1990s as a support tool when commodity prices were low. Last year, the payments cost taxpayers about $4.9 billion.
Montana farmers collected $829 million in direct payments from 2002 to 2010, according to the Environmental Working Group’s farm subsidy database.
But with farm prices strong and Congress looking to cut deficit spending, direct payments became a target.
As early as February 2011, Baucus and other members of the Senate and House ag committees were warning that direct payments weren’t likely to survive.
Cutting direct payments freed up money for other programs in what lawmakers like to call the “farm safety net,” a mix of crop insurance and disaster assistance programs that shield agriculture from volatile market prices, weather and predator losses.
Even after adding new programs, the elimination of direct payments still saved taxpayers $16 billion, according to Baucus’ staff.
The savings was $1 billion more than Agriculture Committee leaders had previously discussed and put the committee closer to reaching its goal of $23 billion in farm bill cuts, with more cuts to come from conservation programs and others.
Baucus, in a prepared statement, said the cuts combined with the new programs were crafted with input from Montana farmers and ranchers who realized agriculture would have to help solve deficit spending but didn’t want to bear an undue or economy-deflating burden.
“They understand the budget crunch we are facing, and they are ready and willing to chip in their fair share,” Baucus said. “But they aren’t willing to shoulder the burden for the rest of the country — and I’m fighting to make sure they don’t have to. It’s not an easy fight, but it’s one I think we can win.”
Baucus and the two North Dakota senators proposed streamlining current assistance programs by combining existing disaster assistance and revenue-averaging programs into a new proposal, which would assist farmers with losses of 12 to 25 percent of their historical average revenue.
This proposal is the Revenue Loss Assistance Program and works with crop insurance and kicks in for losses related to weather, markets or poor-quality crops.
The program is triggered differently than past proposals; it’s farm specific.
Losses covered are specific to conditions on the farm receiving aid. In the past, aid was triggered by regional conditions.
A farm hit by bad weather or crop conditions might receive nothing if its region didn’t suffer the same conditions.
Conversely, a farmer in good shape would receive government money if his region did poorly.
“We think RLAP will be a pretty good shallow loss, farm-level revenue program for our grain producers,” said Lola Raska, farmer and executive vice president of Montana Grain Growers Association.
To cover losses not picked up by the Revenue Loss Assistance Program, the senators proposed a supplemental coverage option; an area-wide federal crop insurance farmers could chose to give their safety net more bounce.
Raska said the supplemental coverage program might not work as well for Montana farmers because it is regional in nature, but farmers really don’t know yet.
The new proposals also extend three livestock disaster programs, including compensation for livestock killed by federally protected species, like grizzly bears or — in some parts of the country — wolves.
Baucus is expected to speak about the new programs in detail on Monday at a farm bill listening session with the Montana Farmers Union in Great Falls.