Would a new farm bill save money?

What will happen to farmers if the farm bill expires at the end of this month?

Jeremy Hobson: The federal farm bill expires at the end of this month, and it appears that rather than passing a new one right now, Congress will extend the current law for a few months until after the election. That means lawmakers will put off decisions, like whether to replace direct subsidies for farmers with new forms of support.

But David Nogueras reports that those new programs could wind up costing even more than the current one.

David Nogueras: Greg Horner isn't paying much attention to Congress these days. He's got pumpkins to harvest. Horner is manager of operations at Deep Run Farms in Carroll County, Maryland. He says his farm receives federal subsidies on its corn and soybeans, but a change in federal programs wouldn't have that much of an effect.  

Greg Horner: We're not a huge farm, you know the larger your farm, the more subsidies you're going to get.

Economist Vincent Smith says that could well be true. He's a co-author of a new paper from the conservative American Enterprise Institute.

It crunches the numbers on a new a supplemental insurance program  in the House bill. Smith says, if commodity prices remain high, that program would cost a little more than a billion dollars. But, he says if those prices slide toward their historical averages...

Vincent Smith: The taxpayer would be on the hook for $18 or 19 billion a year, and that's a lot of money.

Smith says there's another risk. Both bills arguable create incentives for farmers to increase production. That could violate current U.S. commitments under existing trade agreements.

I'm David Nogueras for Marketplace.

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The objective CBO economists say "yes" to the question of whether the farm bill would save money: to the tune of $35 billion in the House bill. And yet you give free press to an economist-for-hire doing a job for the American Enterprise Institute (not objective in the least) who somehow concludes that a supplemental insurance policy could cost taxpayers an additional $18-$19 billion per year. Nonsense. The CBO estimates this supplemental coverage would cost $400 million per year, with a high of $543 million in 2021 — this is less than a 5% increase overall to the crop insurance system which protects taxpayers by shifting risk to private insurers. Crop Insurance as a whole has never spent more than $6.8 billion in a year (when it has covered more than $114 billion in liability and paid up to $11 billion in indemnities). Responsible reporting would provide more balanced coverage, perhaps disclosing the fact that farm policy spending has consistently come in under budget — under even the CBO's estimates – and is at record lows even as foreign subsidies and tariffs increase, reaching record highs. And yet Marketplace gives free press to the chicken little who fabricates that a rider policy is going to be nearly 50 times what CBO economists say, and balloon the overall program 300% relative to CBO's estimate of a < 5% increase. I know a lot of people make a living by being critics of farm policy, but we should all be more careful with the facts if we are to have an informed debate, and we should certainly all recognize that a Phd does not make someone credible or forthcoming with the facts.

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