A Senate proposal to end direct federal payments to farmers and
replace it with a new subsidy program gambles that crop prices will
remain at historically high levels, a tactic that could backfire and
double its cost, some experts say.
The proposed “shallow loss”
program would pay farmers when decreasing yields or declining crop
prices result in a farmer’s revenue falling below historic averages. The
program would save about $2 billion annually compared with the current
$5 billion direct payment system — but only if crop prices remain near
their current levels. If prices dip, the saving could disappear and the
cost could exceed the direct payment price tag, experts say.
“On
balance, the policy shift is ill considered from a broader public policy
perspective,” said Vincent Smith, an economics professor at Montana
State University and a visiting scholar at the American Enterprise
Institute, a conservative-leaning Washington think tank.
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