“The realities of the current federal budget and debt crises make it imperative to find a viable risk management approach that can replace several existing programs,” said ASA President Alan Kemper, a soybean producer from Lafayette, Indiana, U.S., in a joint letter also signed by the National Corn Growers Association (NCGA) and National Farmers Union (NFU). “A new revenue-based program should be designed to complement rather than overlap or replace the existing crop insurance program, which is a key part of the farm program safety net.”
The letter was sent following agreement by Republican and Democrat leaders of both the House and Senate Agriculture Committees to recommend $23 billion in spending reductions in programs currently authorized under the 2008 Farm Bill. The committee leaders indicated that they would make further recommendations to the Joint Committee on how these cuts should be made among the various titles of the farm bill by Nov. 1. Eighty-four percent of the agriculture budget is comprised of nutrition programs, including SNAP (food stamps), with most of the balance in commodity and conservation programs.
“We would note that, under a revenue-based program, compensation for losses that exceed a certain threshold would only be made as they are incurred, on all production and only on a portion of the loss,” the letter stated. “This stands in contrast with the current Direct Payment program under which farmers receive payments regardless of whether they produce a crop or incur a loss.”
Kemper added that “many producers participate in the crop insurance program at levels that require losses of 30% or more before they are compensated. With the elimination of other elements of the farm safety net, a program is needed to offset part of these losses should they occur.”
Under the Budget Control Act, the Joint Committee has until Nov. 23, to propose legislation that would reduce federal deficits over the next 10 years by a minimum of $1.2 trillion. Congress would need to pass the bill, without amendments and by simple majorities in both Houses, by Dec. 23, and President Barack Obama would need to sign it to prevent automatic program cuts from being made in 2013 that would particularly impact agriculture.
“ASA looks forward to working with the Committees in their effort to provide details on their deficit recommendation to the Joint Committee,” Kemper said.