LegiStorm

Summary:

In advance of the expiration of the 2008 farm bill (P.L. 110-246), numerous proposals have been offered to revise the "farm safety net" for producers of crops covered by farm commodity support programs. Farm safety net proposals by Members of Congress, the Administration, and a number of farm and interest groups surfaced mostly during fall 2011, when budget deliberations by the Joint Select Committee on Deficit Reduction generated concerns that a new farm bill might be "written" or severely constrained from a budgetary perspective by budget negotiators, rather than by the House and Senate Agriculture Committees. Ultimately, the joint committee failed to reach a bipartisan consensus on deficit reduction. Nevertheless, 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. Since early 2012, legislation for the next farm bill has followed a more traditional process, starting with committee hearings prior to expiration of the 2008 farm bill (generally September 2012, but for commodity program crops, prior to the 2013 harvest). Many proposals with policy changes and proposed cuts 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, many 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. Several proposals would make changes in crop insurance, including cuts in producer subsidies. Three major issues are embedded in nearly all farm safety net proposals: (1) how price (or revenue) protection is established (i.e., within-year versus averaging across multiple years or fixed in statute); (2) at what geographic level—the farm level or a more aggregated regional level—program benefits are triggered; and (3) whether the proposal addresses "shallow losses," those not covered by federally subsidized crop insurance but paid by the producer via the policy deductible. Additional issues include whether program benefits should be based on current plantings ("re-coupled") rather than tied to historical plantings (as done since 1996 under direct payments), and to what extent a revised farm safety net program is applicable to crops outside of the traditional farm program mix. The Senate Agriculture Committee approved its version of the 2012 omnibus farm bill on April 26, 2012 (Agriculture Reform, Food, and Jobs Act of 2012), and officially filed the measure, S. 3240, on May 24, 2012. It overhauls the farm safety net by eliminating direct and counter-cyclical payments and establishing a new shallow loss revenue program. For the revenue guarantee, farmers are offered a choice of basing the guarantee on either historical farm or county yields. A separate insurance program is made available for cotton, and other changes are made to the crop insurance program that are designed to provide additional options to all crop producers, not just traditional farm program crops.