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Last year the Senate determined that direct payments were best replaced with a more focused risk-coverage program, termed the Agricultural Risk Coverage or ARC program. While the House version of the farm bill opted to keep direct payments, Senate Ag Chair Debbie Stabenow says eliminating them is a way for agriculture to do its part to avoid sequester on March 1.
Stabenow says the proposal is an alternative to the sequester, and would fulfill the non-defense domestic cut required between now and January. Cutting direct payments would reduce the deficit by $31 billion over the next decade, but because $3.5 billion is injected back into farm policy for disaster assistance in 2012 and 2013, the net reduction is $27.5 billion.
Meantime House Ag Committee Chairman Frank Lucas says the plan from Senate Democrats to avoid the sequester cuts slated to take effect March 1st is both unbalanced and unacceptable. He says his committee demonstrated that commitment in passing a comprehensive, balanced farm bill that cut more than 35-billion dollars from all agricultural spending, and Lucas says the House Ag Committee made those reforms in the context of a comprehensive, five-year farm bill. According to Lucas, the Senate approach takes away investment in rural America without addressing the hole it will create.
Direct payments are more popular in the South than in the Corn Belt; Iowa State University’s Center for Agricultural Law and Taxation Director Roger McEowen said earlier in the month that the survival of direct payments in the 113th Congress and the new farm bill will hinge on that fact.
According to USDA’s Economic Research Service:
Direct payments per acre vary signi?cantly by commodity. In 2008, rice and peanuts received the largest direct payments per acre ($96.25 and $45.85, respectively), but combined they only accounted for about 2 percent of total base acres. Corn, wheat, and soybeans accounted for more than 80 percent of total base acres in 2008, but received lower direct payments per acre ($24.39 per acre, $15.21 per acre, and $11.54 per acre, respectively).
