FAPRI analyzes Senate Farm Bill

Is the proposed Senate Farm Bill equitable to growers of all crops? The Food & Agricultural Research Institute (FAPRI) analyzed several key provisions of the bill: Among them – the elimination of the current direct payment programs and the ACRE program replaced by the Agriculture Risk Coverage (ARC) and the Stacked Income Protection Plan (STAX).

Whether the bill is equitable to both Corn Belt crops and southern crops, FAPRI director Pat Westhoff tells Brownfield, is a matter of perspective.

“If your focus is on what farmers are getting today,” says Westhoff, “It is certainly true that there would be much larger reductions in payments to rice and peanut farmers, for example, than there would to producers of corn and wheat.”

Westhoff says things change when you compare expected payments to what the value of a crop is.

“It turns out that for most of the major crops,” he says, “The average payouts under this package would be roughly 2% of the value of the crop. It’s a bit higher for some crops than others but not dramatically different across the board.”

He tells Brownfield this was a “very complicated” set of analyses to do because the new ARC program, for example, makes payments that are tied to farm-level and county-level results and it’s difficult to estimate how revenues might change at those levels.

Westoff says the overall impact of the legislation on income and crop prices would be small.  In addition, the report says “reducing the CRP acreage cap would result in increased crop production and lower crop prices.”

Westhoff says they did not look at possible changes in crop insurance provisions of the Senate bill which could be attractive to growers but that is what they will be analyzing next.

Meanwhile, ag economists with the American Enterprise Institute say the so-called “shallow loss” provisions proposed for the 2012 farm bill “could cost the taxpayer as much or more than the direct payment programs they would replace.”  The analysts note the plan uses five-year averages for prices and would lock farmers into near-record incomes at taxpayer expense. The economists say if commodity prices return to the average levels from 1996 to 2011, “the Stabenow-Roberts shallow loss proposal would likely cost taxpayers between $5 billion and $7 billion.”

The economists are: Vincent Smith, professor of economics at Montana State University; Bruce Babcock, professor of economics at Iowa State University: Barry Goodwin, professor of economics at North Carolina State University.

AUDIO: Pat Westhoff (7:00 mp3)

~Brownfield’s Bob Meyer contributed to this story

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