Farm program payments as a share of government support for agriculture are less today than they were a few years ago. Rather, ad-hoc assistance has grown more common and in recent years has comprised most of federal support. One reason for farm programs’ shrinking share is the mechanisms within the commodities title which trigger support payments haven’t keep pace with market conditions. The recently passed budget reconciliation bill by the House of Representatives seeks to remedy this.
The reconciliation bill makes several changes to the Farm Bill’s commodity title, one of which increases the reference prices which are figured into the calculations of payments under the Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs. Table 1, taken from a farmdoc daily article published by the University of Illinois, shows the proposed increases. The largest percentage increases are for rice and soybeans, 21% and 19% respectively. The increase for corn is 11%. Table 2, from the same article, shows the Congressional Budget Office’s (CBO) estimates of spending on each commodity under the changes compared to the current program over the next 10 years. Federal outlays are estimated to increase by nearly $30 billion over ten years with spending on rice, peanuts, and seed cotton estimated to see the greatest gains.
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