What is in this article?:
- 2010 Election Results Likely Mean Status Quo for Agriculture, Farmers
- Where will cuts/additions be made?
- New ag committees in house and senate aren't likely to touch farm subsidy programs
- Direct payments are expected to be considered when Congress takes up new farm bill
- Political, ideological differences between divided House and Senate will stall movement on climate-change, trade policy, economic stimulus legislation
Farmers who favor continuation of federal commodity payments should come away from Tuesday's election feeling good, says Otto Doering, a Purdue University agricultural economist.
While Republicans regained control of the U.S. House of Representatives and Democrats held onto the majority in the Senate, the new agricultural committees in each chamber aren't likely to touch farm subsidy programs, says Doering, a farm policy specialist. There's even a good chance both committees will abandon attempts by current House Agriculture Committee Chairman Collin Peterson (D-MN) to eliminate direct payments, he says.
"Congressman Peterson's desire is to back off direct payments and, instead, strengthen counter-cyclical payments to make agricultural subsidies more reasonable and fair to the public," Doering says. "I think that's dead meat at this point as farm groups rally again to preserve the direct payment, particularly in this time of high commodity prices."
Counter-cyclical payments date back to 1933 and are traditional price support subsidies provided to qualifying crop farmers when the prices for their crops are lower than a specified level. The payments were replaced in 1996 by direct payments, which qualifying farmers receive regardless of whether crop prices are high or low. Congress reintroduced counter-cyclical payments in 2000 and have left the two subsidies in place ever since.
Direct payments are expected to be considered when Congress takes up a new farm bill next year – if farm legislation is debated at all, Doering says.
Federal spending on farm income subsidies is about $20 billion/year. Farmers are receiving the payments this year despite enjoying high prices for corn, soybeans and wheat. Even with high land rental rates, fertilizer and equipment prices, farmers can make a living with current crop prices, Doering says.
"The Republican House leadership indicates it will keep the direct payments fully intact even when prices are high," he says. "However, recognize that one of the leaders of the tea party movement is Dick Armey of Texas, a former whip for the Republican House under Newt Gingrich. There is nothing on earth that Armey hates more than agricultural subsidies. So we may see change."