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Thursday, December 15, 2011

Farm Safety Net Proposals and the Joint Select Committee on Deficit Reduction

Dennis A. Shields
Specialist in Agricultural Policy

Randy Schnepf
Specialist in Agricultural Policy

Budget deliberations by the Joint Select Committee on Deficit Reduction in fall 2011 generated concerns that a farm bill to reauthorize farm programs expiring in 2012 might be written by budget negotiators rather than by the House and Senate Agriculture Committees. Various proposals emerged that recommend lower federal spending, including cuts to agriculture programs ranging from $10 billion to more than $80 billion over 10 years.

In response, Members of Congress, the Administration, and a number of farm groups put forward proposals to reduce government expenditures on farm subsidies and revise farm programs. Many of these farm program proposals were unveiled in September 2011 as the Joint Select Committee on Deficit Reduction began its deliberations on government-wide budget cuts.

Ultimately the joint committee failed to reach a bipartisan consensus on deficit reduction. As a result, it is likely that the 2012 farm bill will now follow a more traditional legislative process starting sometime in 2012. However, the joint committee process generated substantial movement toward reshaping the policy framework underlying the farm safety net and other major farm bill issue areas, such as conservation and nutrition.

Many proposed cuts and policy changes have been directed at commodity programs and crop insurance because these programs account for the bulk of agricultural funding (excluding conservation and nutrition programs, which are also considered part of the agricultural budget). Commodity programs, crop insurance, and the recently expired farm disaster programs comprise the so-called “farm safety net”—the federal government’s suite of programs designed to support farm income and help farmers manage risks associated with variability in crop yields and prices.

To generate budget savings and provide funding for proposed changes to the farm safety net, nearly all of the proposals either reduce or eliminate direct and counter-cyclical payments. Most proposals either leave the marketing loan program unchanged or retain it with modest modifications; however, it would be eliminated under two proposals. To facilitate comparisons, the various proposals are loosely grouped into five categories: (1) minor policy changes, (2) revised revenue programs, (3) enhanced crop insurance, (4) whole-farm insurance, and (5) other. The major policy features of each proposal are highlighted and briefly discussed.

These proposals and the work of Congress related to the joint committee might serve as a starting point for the farm policy debate that is expected in 2012, prior to expiration of the 2008 farm bill.

Date of Report: November 2
8, 2011
Number of Pages:
Order Number: R4
Price: $29.95

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