House conservatives oppose higher subsidies in new farm bill

Half a dozen House Republicans pushed back on Wednesday against a drive by farm groups for higher reference prices in the new farm bill, while analysts said that an expansion of federally subsidized crop insurance could cost nearly $600 million a year. Farm groups say that despite high farm income, a stronger safety net is needed because of increased production costs.

Meanwhile, the senior Republican on the Senate Agriculture Committee is working on a farm bill framework. “This would be a minority’s vision, not a full committee project, but it would serve as a way to continue the conversation. Still a few weeks out,” said a spokesman for Arkansas Sen. John Boozman. Agriculture Committee chair Debbie Stabenow of Michigan suggested some areas for farm bill compromise in a letter last week.

The new farm bill is four months overdue, with little visible progress in weeks due to deadlocks over reference prices and climate funding, with arguments over SNAP looming beyond that. Leaders of the House and Senate Agriculture committees have yet to write a farm bill draft.

Backed by five free-market and small-government groups, six conservative House Republicans declared their “strong opposition to potential increases in crop reference prices” in a letter to House Agriculture Committee leaders. None of the six are members of the Agriculture Committee, so they have no direct role in writing the bill. But there have been repeated reports that a sizable number of House Republicans would not be willing to vote for a farm bill with higher subsidies.

“While our farmers face unique risks, our farm safety net already provides significant tools to help our farmers manage the ups and downs of agriculture, including government-subsidized crop insurance and other subsidies designed to offset low prices,” said the letter signed by Reps. Andy Ogles of Tennessee, Andy Biggs of Arizona, Brian Mast of Florida, Nancy Mace of South Carolina, and Alex Mooney and Carol Miller of West Virginia. “Now is not the time to increase federal spending through additional reference price increases.”

Reference prices are a key factor in determining crop supports. Higher reference prices would make it easier to trigger subsidy payments and increase their size.

In recent years, Congress has devoted a larger amount of disaster aid to commodities outside of the traditional farm program, a step that historically is an early indicator of an expansion of the farm safety net, wrote four university analysts at the farmdoc daily blog. “If this historical indicator holds for the next farm bill, the U.S. farm commodity insurance program should continue to broaden, and higher coverage levels should become more attractive,” they said.

A likely step would be to increase the premium subsidy for rainfall index, animal, and animal product insurance to the same level as crop revenue or yield policies, which would cost $589 million a year, or $5.9 billion over 10 years, wrote agricultural economists Carl Zulaf of Ohio State University and Gary Schnitkey, Jonathan Coppess, and Nick Paulson of the University of Illinois.

“Over the last five years, the rapid growth in rainfall index, animal, and animal product insurance has transformed the U.S. field crop insurance program into a U.S. farm commodity insurance program,” the economists wrote.