Now that It’s Law, Farm Bill’s True Price Tag Continues To Grow
One new program in the recently enacted farm bill is going to cost at least $21 billion more than we’d bargained for, according to a report just issued by the authoritative Farm and Agriculture Policy Research Institute.
The Institute’s analysis shows that the farm bill’s Price Loss Coverage program – funded through a bait-and-switch ploy that swallowed 80 percent of the savings garnered by ending the long-discredited direct payments – will now likely cost taxpayers upwards of $34.2 billion over the next 10 years.
Bye-bye budget savings.
Given that crop prices are now falling, the authors of the farm bill won’t be able to deliver the $23 billion in farm bill and sequester savings as they promised. The Price Loss Coverage program is a big reason why.
The program puts price floors under commodity crops – and sets them in stone. These “floors” are really high because they’re based on the record-breaking crop prices of recent years. When Congress was writing these so-called “reference prices” into law, the projections were exceedingly optimistic. Even so, the Congressional Budget Office forecasted that the Price Loss Coverage program would end up costing taxpayers $13.1 billion over the next 10 years.
But as we’ve previously noted, the latest projections of crop prices by the U.S. Department of Agriculture (USDA) indicate that the prices of corn, soybeans, wheat, and other crops aren’t going to continue to climb toward still higher records in the coming years. USDA now predicts many will dip below the freshly minted price floors – and in some instances stay below them.
Not even a month and a half after the new farm bill was signed into law, it’s becoming increasingly clear that the supposed savings in the price support programs will almost certainly cost a good deal more than the programs they were designed to replace.