CBO confirms farm bill falls short of reformer goals

The Congressional Budget Office late Monday confirmed that the draft Senate five-year farm bill falls short of the cost-cutting sought by critics of crop subsidies.

The CBO estimates that the farm bill, authored by Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) and ranking member Pat Roberts (R-Kan.) reduces deficits by $26.4 billion over 10 years.

The farm bill will be marked up in committee on Wednesday.

President Obama had sought $33 billion in savings, while the House Republican budget calls for $30 billion.

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.

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