By Erik Wasson
Most of the savings come from ending direct payment subsidies, which pay farmers cash even if they do not produce crops any longer. However, more than half of the $50 billion in savings from cutting subsidies is used to create new crop insurance programs.
The farm bill creates a shallow-loss crop insurance scheme favored by producers of commodities like corn and wheat. Peanut, cotton and rice farmers were not pushing for this program, instead wanting increased counter-cyclical payments, which are made when commodity prices fall beneath set target prices.
Cotton’s support has been sought by the creation of a new stacked income program that CBO says costs $3 billion over 10 years. That program functions as a revenue-based crop insurance and is being implemented in part to satisfy a ruling in the World Trade Organization against current cotton programs.