What is in this article?:
- Economic realities will bring change to farm programs
- ACRE compromise
- Rep. Frank Lucas, new chairman of the House Agriculture Committee, is expected to take a measured approach, not starting on the new law until closer to 2012.
- A convergence of current economic realities and changes in party alignments will force Congress to take a hard look at farm programs.
- Some farm groups may also be having second thoughts about traditional farm programs given the incessant criticism from the likes of the Environmental Working Group and Oxfam International, a British charity organization that has accused U.S. cotton producers of “impoverishing” African farmers.
The ACRE program in 2008 was a compromise between those who believed that farm program payments should be targeted at revenue rather than price and those farmers, mostly from the South, opposed to replacing counter-cyclical payments with crop-insurance-based programs.
“The usefulness and acceptance by farmers of ACRE has been limited because of budget and political considerations,” says Babcock. “ACRE covers only 83.3 percent of planted acres rather than 100 percent. This makes it less suitable as a replacement for crop insurance.
“In addition, farmers who choose ACRE give up 20 percent of direct payments. Crop insurance industry leaders also believed ACRE would reduce farmer participation in crop insurance and their compensation from taxpayers. Thus there was no integration of ACRE with crop insurance and ACRE insured state revenue rather than country revenue.”
The latter, Babcock said, would make the program much more effective in protecting farmers against specific weather losses. Switching from a state ACRE to a county ACRE program could cost about what the federal government is spending on direct payments, depending on the coverage level.
“The projected total cost of a 90-percent program for the program crops is $3.78 billion; increasing the coverage level to 95 percent would increase projected annual costs to $5.4 billion,” says Babcock.
For more on Babcock’s analysis, see Costs and Benefits of Moving to a County ACRE Program.