The farm bill drafted by House Agriculture Committee chair Glenn Thompson could boost crop subsidy spending by $23 billion — 56 percent — above current levels and favor growers in the South over farmers in the North, according to analysts at two Midwestern universities. To offset the cost, they said, reductions may be needed in conservation, crop insurance, or nutrition programs.
Agriculture Secretary Tom Vilsack said on Wednesday that lawmakers should keep the guardrails on $15 billion earmarked for climate mitigation by the USDA “so that it’s used for climate-smart practices.” As part of Thompson’s package, climate money could be used for any land stewardship practice.
Thompson’s plan also would cut SNAP by $28 billion over 10 years. Farm supports, SNAP outlays, and climate funding are the major disputes in writing the 2024 farm bill. Democrats oppose cuts in SNAP and want to keep climate funds focused on global warming.
The House Agriculture Committee is scheduled to vote on Thompson’s package on May 23. Text of the bill is expected to be released on Friday. A 38-page summary, released last week, proposed a 10 to 20 percent increase in the statutory reference price for major row crops. Reference prices are the trigger for subsidy payments.
Subsidies for cotton, rice, and peanuts, grown mostly in the South, would surge by between 69 and 140 percent, compared with increases of 8 to 40 percent for corn, soybeans, and wheat, commonly grown in the Midwest and Plains, if statutory reference prices are raised 10 percent, estimated the analysts, who are from the University of Illinois and Ohio State University.
“Raising statutory reference prices will have disproportionate impacts across crops, increasing commodity program spending proportionally much more for peanuts, rice, and seed cotton than for corn, soybeans, and wheat,” said the analysts, writing at the farmdoc daily blog. Spending would rise by $17.4 billion over 10 years, mostly in the Price Loss Coverage subsidy program, one of the USDA’s two major sources of crop subsidies.
“Given budgetary rules, that spending increase will have to be offset by reductions in other farm bill programs, such as crop insurance, conservation, or nutrition,” said the blog. “Finding and justifying offsets in those other programs will be difficult.”
The increase in subsidies would rise to $23 billion due to provisions that would increase the amounts farmers could receive through the Agriculture Risk Coverage subsidy, said the analysts. Those changes would aid corn, soybean, wheat, and cotton growers somewhat. However, in percentage terms, crops grown in the South still would see much larger spending increases.
“Rice, peanuts, and seed cotton have higher statutory reference prices than for corn, soybeans, and wheat” when compared to the season-average prices for the crops, said the analysts, Carl Zulauf of Ohio State and Gary Schnitkey, Nick Paulson, Jonathan Coppess, and Bruce Sherrick of the University of Illinois. Higher statutory reference prices would compound concerns about the equitable treatment of crops, they said. “Large differences seem difficult to justify, particularly if they lead to large differences in projected payments per base acre.”
Farm groups have given priority in the farm bill to higher reference prices and a stronger crop insurance program. They say inflation and high production costs make larger federal support imperative.