State officials, farmers watch progress of farm bill closely
By Ethan Smith
Published in News on June 16, 2013 1:50 AM
The Agriculture Reform, Foods and Jobs Act of 2013, known colloquially as the farm bill, passed the U.S. Senate Monday, ushering in new programs and doing away with others as it now heads to the House.
In one of the biggest changes, the current proposal would repeal the direct subsidy program and institute a crop insurance program.
"It's pretty apparent that the farm bill is signaling a shift and putting more emphasis on crop insurance," said Brian Long, public affairs director of the North Carolina Department of Agriculture.
Under the proposed new crop insurance program, farmers would pay for crop insurance, much like regular insurance premiums, and would not receive benefits unless something affects their crops.
The bill also creates the Supplemental Coverage Option where producers can purchase additional coverage on an area-to-area basis.
Two new programs introduced by the bill are the Agricultural Risk Coverage and Adverse Market Payment programs.
The ARC program pays farmers when losses drop below a market-based historic benchmark, whereas the AMP program pays farmers when market prices drop below a reference point.
"There's a recognition that crop insurance is more advantageous than direct disaster relief programs," Long said.
The Senate version of the bill includes $5 billion in funding for crop insurance, but Long said that that total is likely to reach $8.9 billion when the bill enters the House for debate.
Long said the bill includes a specialty crops block grant program that will be increasingly important as North Carolina farmers move away from standard crops.
"Seeing funding in this area is something we're very happy about," he said.
But Long did express concern about amendments that could be added to the bill as it moves through the House.
According to Long, Sen. Dianne Feinstein of California and Sen. John McCain of Arizona attempted to add amendments to the initial draft of the farm bill cutting government subsidies for tobacco, and the state Department of Agriculture will be watching to see if those amendments resurface as the bill goes into the House.
"There are things in the Senate version that we like," Long said. "And we hope to maintain those things as it goes through the House."
He added that cutting tobacco subsidies would hit Wayne County tobacco farmers especially hard since tobacco is a major crop in the area.
According to the bill, canceling four programs -- Counter Cyclical Payments, Direct Payments, Average Crop Revenue Election program and the Supplemental Revenue Assistance Payments program -- would save $16 billion that can be used for deficit reduction purposes. The new ARC and AMP programs will replace these four programs when they are repealed at the end of the 2012 crop year.
The bill claims that streamlining and eliminating certain programs will save taxpayers a total of $23 billion.
Under Title 1 of the bill, any person or entity that has an adjusted gross income (AGI) of more than $750,000 will be ineligible for payments from the Title 1 programs -- such as ARC and AMP -- under which combined payout from programs to entities is capped at $50,000 per entity.
The $50,000 maximum pay out does not apply to crop insurance payments, and only applies to combined pay outs from the ARC and AMP programs.
Roderick Rejesus, an economist at N.C. State University, said that crop insurance benefits will depend on coverage and types of crops.
"Specialty crops, like blueberries and strawberries, sometimes aren't covered," Rejesus said. "It sometimes just isn't available so not all types of crops can be covered."
Rejesus said that there is a sliding scale for crop insurance.
"You can purchase coverage from 55 to 85 percent," he said. "So if a farmer produces 100 pounds per acre of corn, he can purchase coverage for 55 to 85 percent of that amount."
Long also noted that certain programs not directly related to farming, such as the Supplemental Nutrition Assistance Program, are part of the farm bill, and that those will likely be the source of the most debate and the most potential for delay.
"We don't want to lose our farm bill," he said.
The bill would consolidate 23 existing conservation programs into four fundamental programs: working lands, conservation reserve programs, regional partnerships and easements. Under each of the four programs, subclasses dictate the function and purpose of each program, all dealing with conservation of land and resources.
Broadband Internet access also is provided for rural areas in the Senate version, authorizing the USDA to begin providing combination grants and loans for the expansion of broadband service to isolated rural areas that are of significant distance from densely populated areas.