We Told You So

A new analysis by economists at Ohio State University and the University of Illinois concludes that lavish subsidy programs created in the 2014 farm bill could cost taxpayers billions more than expected.

Surprise, surprise.

After the 2014 farm bill was signed into law in January, Environmental Working Group’s analysts predicted that a drop in crop prices could result in huge payouts.

That’s because two new subsidized crop insurance programs created in the bill – Price Loss Coverage (PLC) and county-based Agriculture Risk Coverage (ARC-CO) – were designed to pay farmers when prices drop even the smallest amount.

Last week, USDA predicted that the 2014-2015 U.S. corn harvest would be the largest ever. This glut of corn has driven prices down to the lowest point in more than four years. The current price estimates are already low enough to trigger major payments to farm operators

When he was asked in February about the potential for big payouts due to low crop prices, House Agriculture Committee Chairman Frank Lucas (R-Okla.) said, “Either program potentially … has an impact on the U.S. treasury.”

That’s putting it mildly.

In their analysis, Carl Zulauf and Gary Schnitkey predicted in one scenario that ARC-CO and PLC would pay $79 and $65 per acre of corn, respectively, enrolled in the programs.

These figures would amount to payouts billions of dollars more than Congress originally promised.

During the farm bill debate, EWG strongly supported reforms that would have limited taxpayer exposure to massive payouts. Taken together, these reforms would have saved taxpayers billions of dollars while creating federal farm subsidy programs that would still help farmers when they need it most.

But instead of budget savings, Congress left taxpayers to pick up a multi-billion dollar tab.

Maybe next time they’ll listen.

Disqus Comments

Related News

Continue Reading

Do billionaires get farm subsidies?

A blockbuster report by the Government Accountability Office revealed that more than 1,300 “high-income” farmers received subsidies from the federal crop insurance program. But Congress has barred the...