Lawmakers aim to curb costly subsidies in farm bill

Senate Agriculture Committee Chairwoman Debbie Stabenow is fond of saying that the five-year farm policy bill is "not your father's farm bill."

There's some truth to the Michigan Democrat's comment: While the core missions of farm bills -- protecting farmers from bad times, conserving rural lands and funding food stamps and other nutrition programs -- are unchanged, this farm bill takes some very different approaches.

The Senate is expected to pass the bill Thursday, sending it to the House, which is now writing its version. The current farm act expires at the end of September.

A major change is in the farm safety net system. Direct payments to farmers, regardless of whether they plant a crop, are gone, to be replaced by strengthened crop insurance and a new program that compensates farmers for modest revenue losses on fields actually planted. Direct payments, costing $5 billion a year, were no longer tenable in an age of soaring federal deficits and prosperity for most farmers.

Three other subsidy programs, including countercyclical target prices that pay farmers the difference between set prices and the actual prices of crops, were also eliminated. Net savings over 10 years in this commodity area are $15 billion. The entire bill is estimated to cost nearly $500 billion over its five-year life or $969 billion over 10 years, with savings of $23 billion over current levels.

The Senate bill also limits commodity subsidies to those with adjusted gross income of less than $750,000, half the current ceiling, and caps payments at $50,000 an individual or $100,000 for a couple. An amendment approved Wednesday would also reduce by 15 percentage points the taxpayer share of crop insurance premiums for those with incomes of more than $750,000. The government now pays an average 62 percent of crop insurance premiums.

The bill also ends payments to "farm managers," sometimes wealthy people who may have an interest in a farm but don't live on the property or actively engage in farming.

The legislation saves $6 billion over a decade by consolidating 23 conservation programs into 13. Those receiving direct payments in the past were required to participate in conservation programs, as will those taking part in the new revenue protection program, known as Agriculture Risk Coverage, and in the crop insurance program.

Crop insurance has grown exponentially in recent years. Last year more than 1 million policies were written, covering 83 percent of America's eligible farmland. It is estimated the government will spend about $10 billion a year on insurance programs over the next decade, up about $500 million a year over current spending.

Food stamps, formally known as the Supplemental Nutrition Assistance Program, or SNAP, continue to command the great majority of farm bill dollars. Spurred by the bad economy, there are now 46 million people getting food stamps, at a cost of about $80 billion a year. That's 80 percent of the entire farm bill budget.

The farm bill does make an effort to end abuse or misuse of SNAP benefits. Lottery winners and college students being supported by their non-low-income families no longer qualify. The bill cracks down on benefit trafficking, prevents liquor and tobacco stores from accepting food stamps and closes a loophole in which some states give as little as $1 a year in heating assistance to people, even when they don't have heating bills, to increase their food stamp benefits. That saves about $4 billion over 10 years, a tiny part of the $770 billion the program is expected to spend, and senators rejected amendments that would have made deeper cuts in the program.

The measure also differs from past farm bills in paying more attention to what are called specialty crops, mainly fruits and vegetables. It expands block grants to states to support research and promotion of specialty crops, assists organic farmers and expands support for farmers' markets and programs that help get healthy foods to low-income areas.

Still, there are numerous groups that say the bill doesn't go far enough in casting off old farm bill habits. The conservative Club for Growth said it still asserts too much government control in the private sector. The public interest advocacy group U.S. PIRG said the bill "will continue the current practice of disproportionately subsidizing the largest agribusinesses, who are already profitable and don't need taxpayer handouts."

Sen. John McCain, R-Ariz., long a watchdog for special interest projects included in highway and farm bills, noted that the bill doesn't change the program that protects sugar growers from foreign competition and creates a new $3 billion program for cotton growers. He said there is also money in the bill to improve the U.S. sheep industry, study the health benefits of peas and lentils and plant trees in urban parks.