Obama plan would cut direct farm payments

President Obama unveiled his plan to eliminate $3-plus trillion deficit in ten years on Monday. The plan calls for elimination of direct farm payments. The White House says while the President is committed to having a strong safety net for farmers including crop insurance, “There are programs and places where funding is unnecessary or too generous.” The Administration says the federal government pays owners of cropland $4.9 billion in “direct payment” subsidies each year regardless as to whether the farmer is planting those crops or any crops for that matter. These payments are not tied to the actual production of crops, but rather are based upon historic crop acres and yields on farms. The President says “In a period of severe fiscal restraint, these payments are no longer defensible, and eliminating them would save the Government roughly $3 billion per year.”

The plan also would lower federal support for crop insurance, the Administration says even with the latest changes, crop insurance companies get a return on investment of around 14 percent, above the industry standard of 12 percent. The President says that reduction would save the federal government $2 billion per year. In addition, the current cap on administrative costs for crop insurance is based upon the year 2010 when premiums were among the highest ever. The President says 2006 rates would be more appropriate, neutralizing the price spikes of the last four years.

Finally, the Administration proposes to price more ac¬curately the premium for catastrophic (CAT) coverage policies, which will slightly lower the reimbursement to crop insurance companies. The premium for CAT coverage is fully subsi¬dized for the farmer, so the farmer is not im¬pacted by the change. This change will save $600 million over 10 years.

The Administration also proposes modest changes in subsidies for producers. Today, pro¬ducers only pay 40 percent of the cost of their crop insurance premium on average, with the Government paying for the remainder. The President’s plan puts the farmer’s share at 50 percent.

The plan also extends the current federal disaster assistance programs for farmers through the 2016 crop year.

You can read the President’s plan here:

  • Ha ha ha ha ha – hey Obama when you take away the price supports they won’t be grossing $100,000 per year any more & the gross will drop as will the net….(net is what is left over after paying all the bills, something I don’t think you know about) then when the farmers start going out of business you will have that usual deer in the headlights look because you went and tinkered with that too….then Obama can start his nationalization of the farms & start his communist collective farm system. Remember your democrat neighbors who voted for this guy.

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