WASHINGTON (AP) — The Senate has begun laying the groundwork on a massive farm bill that would cut spending while also creating new subsidies for farmers.
The legislation the Senate Agriculture Committee is considering Tuesday makes concessions to Southern rice and peanut farmers, thanks to a new top Republican on the committee, Mississippi Sen. Thad Cochran. The bill eliminates $5 billion in annual subsidies called direct payments that are important to those Southern farmers but makes it easier for them to receive alternate subsidies if prices dip.
The Senate bill calls for a total of roughly $2.4 billion a year in cuts, while a House version to be considered Wednesday would save $4 billion out of about $100 billion annually. Those cuts include more than $600 million in yearly savings from across-the-board cuts that took effect this year.
Much of the savings in the House and Senate bills comes from eliminating the direct payments, which aren't tied to production or crop prices. Part of that savings would go toward deficit reduction, but the rest of the money would create new programs and raise subsidies for some crops while business is booming in the agricultural sector.
Republican Sen. Pat Roberts of Kansas, the top Republican on the committee in the last session of Congress, criticized the higher subsidies for Southern farmers, which are essentially a lower threshold for rice and peanut subsidies to kick in. Roberts said the new policy could guarantee that those farmers profits are average or above average.
"I simply don't know how to justify a program that pays producers more than the cost of production and essentially becomes nothing more than another income transfer program, not a risk management tool," Roberts said.
Under the House bill, authored by Rep. Frank Lucas, R-Okla., those subsidies for rice and peanut farmers could kick in even sooner. These "target price" programs allow farmers to receive subsidies if prices fall below a certain threshold.