WASHINGTON — Lawmakers on Capitol Hill have the next six months to craft a new farm bill, but it won't be easy with the current federal budget situation.
The Obama administration has proposed various cuts to farm programs, including the elimination of subsidies known as direct payments.
Those are subsidies paid out to farmers on the basis of acres historically farmed, without regard to current crop prices. They've become especially difficult to defend to taxpayers in an era of budget deficits and booming farm revenues, as everyone acknowledged at a Senate Agriculture Committee hearing this week.
"The era of direct payments is over," the committee chairwoman, Sen. Debbie Stabenow, D-Mich., flatly declared.
But administration proposals to cut funding for crop insurance face much greater resistance.
American Soybean Association President Steve Wellman, a farmer from Syracuse, Neb., testified Thursday that while direct payments have become untenable, his organization opposes restructuring or cutting crop insurance.
He said crop insurance is the foundation of farmers' risk management.
He told The World-Herald after the hearing that his biggest concern is that Congress will fail to pass anything before the current farm bill expires at the end of September. If it expires, federal farm policy will revert to what existed in 1949.
"It's just falling off a cliff and not an option you even want to think about," Wellman said.
Even a temporary extension would be unfortunate, he said, because stopgap approaches don't give farmers the certainty they need to plan.
Assuming Congress does tackle the farm bill in time, it will wrestle with how to make some sweeping changes.
Eliminating direct payments would save about $31.1 billion over 10 years, the committee heard from Michael Scuse, acting undersecretary for farm and foreign agricultural services.
Scuse testified that federal crop insurance covered 264 million acres in 2011 and paid out more than $10 billion in claims for lost revenue or damaged crops.
The administration wants to trim what the government spends to provide that coverage, though.
That includes saving $2.9 billion by reducing administrative and operating expenses provided to companies delivering the program, $1.2 billion by reducing the expected return to companies and $3.3 billion by cutting premium subsidies.
Sen. Mike Johanns, R-Neb., questioned Scuse on why Congress should cut crop insurance while spending money on disaster programs farmers have said are complicated and too slow to provide assistance.
Scuse suggested that in case of extreme disasters, crop insurance won't provide enough help for farmers.
"In areas of extreme disaster, they're going to wait an eternity for any kind of help," Johanns responded.
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