A better way to provide farmers with financial security while reducing the cost to taxpayers
By Sen. Richard Lugar (R-Ind.)
As published in The Hill, October 02, 2007

Providing a strong agriculture safety net ensures our national security, provides access to nutritious foods, protects rural development, enriches our energy supplies and encourages appropriate environmental practices and conservation. However, our current farm policies, sold to the American public as a safety net, are anything but.

Over the past 10 years, farm subsidies have gone to just one out of three farmers, with 6 percent of farms receiving more than 70 percent of that money — $120 billion. 

One subsidy program, “direct payments,” has rapidly become the biggest farm entitlement. These payments were originally designed as a transition program, but were made permanent in the 2002 farm bill. These policies are particularly irresponsible because the direct subsidies go out to farmers regardless of whether cash is flowing in or out of their farms, whether they farm at all or, as the Government Accounting Office has reported, whether those farmers are even alive. Even worse, existing programs that are improperly labeled as a “safety net” are poorly designed and can provide additional payments to farmers during record harvests but don’t provide support when farmers may most need it, in times of crop loss. This is exactly why Congress is called upon, yearly, to add billions in emergency disaster payments to farmers. 

Unfortunately, the House of Representatives passed up the opportunity to provide a true safety net. Instead they increased market-distorting subsidies that will only exacerbate our nation’s ability to trade our own products and employed budget gimmicks and questionable tax offsets from outside the Agricultural Committee’s own budget. 

We should not make that same mistake in the U.S. Senate. Unfortunately, there are concerted efforts by the few interest groups that have dictated agricultural policy to ignore fixing the root problem and to add an additional $5 billion in “permanent disaster assistance” to the already overloaded $33.5 billion subsidy pot devoted primarily to five crops (cotton, rice, wheat, soybeans and corn). Indeed, too much of the Senate discussion about the farm bill has been about the how the Finance Committee is going to pay for new spending priorities rather than about how the Agriculture Committee itself is going to rebalance the farm bill to serve all of America better.

That is why Sen. Frank Lautenberg (D-N.J.) and I, along with other members of the Senate, are introducing legislation that would provide an alternative safety net for all farmers, regardless of what they grow or where they live. For the first time, each farmer would receive — at no cost to the farmer — either expanded county-based crop insurance policies that would cover 85 percent of expected crop revenue or yield, or 80 percent of a farm’s five-year average adjusted gross revenue. These subsidized insurance tools already exist, but our reforms would make them more effective and universally used, while controlling administrative costs. Farmers would also be able to purchase insurance to cover the remainder of their revenue and yields. 

Farm revenue may be high today, due to exports and energy production, but it may not always be so. Regional disasters such as floods and droughts do happen, and threaten the livelihoods of many farmers. Unlike current programs, our reforms assist all farmers who may experience these events, and do so in a much less expensive and less trade-distorting way.

This proposal is important because savings from these reforms will allow us to provide billions in new investments to assist farmers with conservation practices, develop renewable energy, expand access to healthy foods for children and consumers and assist more hungry Americans. 

The bill would add an additional $4 billion for hunger relief efforts, including major improvements to the Food Stamp Program, our nation’s primary safety net for the disadvantaged. It also expands nutrition programs for disadvantaged children in the summer, when school meals are not available. 

The bill invests $3 billion into specialty crop programs that improve research and marketing opportunities for the majority of American farmers who currently do not benefit from our farm programs.

This legislation also focuses on important environmental and conservation programs by providing an additional $6 billion. These programs encourage farmers and other private landowners to protect environmentally sensitive lands and prevent soil erosion, improve water quality, create wildlife habitat and reduce greenhouse gasses. Private farm- and forestlands receive greater protection from suburban sprawl through increased funding for voluntary land-preservation programs. The bill also expands agricultural markets and decreases oil dependency by dramatically increasing research and development efforts for cellulosic ethanol and other renewable fuels and expanding clean renewable energy opportunities to all of our rural areas.

Most importantly, our proposal pays for itself from the existing agricultural budget passed by Congress without employing budgetary maneuvers that delay the true costs of the bill. In fact, our bill will save taxpayers $3 billion.

The current farm bill programs are archaic and complicated and have stimulated overproduction and consolidation, in addition to distorting markets worldwide. We propose a smarter and more equitable way to support American farmers.

Lugar is a member of the Senate Agriculture, Nutrition and Forestry Committee.