Durbin & Brown Introduce Bill to Reform Farm Bill Commodity Programs
Press Release
U.S. Senators Dick Durbin (D-IL) and Sherrod Brown (D-OH) today introduced legislation to provide a better safety net for farmers by replacing current price-support programs with a comprehensive revenue protection program.
"The intent of this new farm bill is the same as it was in 1933 - to ensure that farmers can survive a bad year," said Durbin. "Unfortunately, much has changed in the past 70 years and we haven't revised our strategy. The current program wastes taxpayer dollars, doesn't enhance farmer profitability and makes commodity programs hard to defend. If market price isn't the only factor that affects what a farmer makes, it shouldn't be the only factor on which we base commodity calculations. This bill recalculates the way we allocate funding to correct program inefficiencies and target farmers in need."
"Given the drought conditions that many Ohio farmers are facing this summer, we need reforms our commodity programs. During a statewide farm tour this spring, I visited Mark Schwiebert in Henry County, who first introduced me to the idea that Congress should be considering a broad reform of our nation's farm safety-net and in particular considering a revenue protection approach. This legislation represents a forward-looking safety-net that provides better protection for American farmers while making needed reforms to our farm policy," said Senator Brown, the first Senator from Ohio to serve on the Agriculture Committee in over 40 years.
The Durbin-Brown bill provides a better safety net for farmers by replacing price-support programs with a comprehensive two-tier revenue protection program. Under the bill, farmers rely on private revenue insurance at the individual level, while the government handles widespread losses at the state level where the private insurance market is ineffective.
According to the Durbin-Brown proposal, the federal government provides a payment when a farmer's actual revenue falls below 90 percent of the forecasted revenue for a specific crop. Private insurance is integrated with the state program operating much like it does currently. However, private insurance would only cover a farmer's individual revenue losses beyond what the government covers. In doing so, farmers will see a significant decrease in their crop insurance premiums.
The Durbin-Brown proposal replaces existing counter-cyclical payments and loan-deficiency payments with a state-level revenue protection program which will not cost the taxpayers any additional money over what is spent today. Congressional Budget Office estimates indicate the cost savings from integrating crop insurance and replacing the current crop payment programs fully offset the cost of the Durbin-Brown legislation. Direct Payments are not affected by this revenue protection proposal.
"Senators Durbin and Brown are helping take farm policy to a new level by introducing legislation that is forward-looking and emphasizes a market-based farm program," said NCGA President, Ken McCauley. "This is a proposal that growers in the Heartland want, and NCGA appreciates these senators for being on the side of producers."
"The Farm Safety Net Improvement Act provides better protection, less market distortions and equity across crops, all at no additional costs to taxpayers ," said Ralph Grossi with AFT. " American Farmland Trust applauds Senators Durbin and Brown for introductng a new risk management policy that gets farm policy reform right for producers and the public. "
The benefits of this approach are:
* Better protection for farmers by protecting revenue rather than merely price as the current system does. Revenue protection fixes many of the holes in the existing safety net. Currently, farmers fail to receive assistance even though they face real losses in revenue when prices are high but yields are low. By protecting farmers' yields, this program also reduces the need for ad hoc disaster assistance.
* Less production distortions by using a revenue target that adjusts with the market rather than politically set target prices and loan rates. Current programs discourage farmers to plant for market demand. This revenue protection program reduces the incentive to overproduce on marginal land and helps reduce production distortions.
* Equitable treatment across crops resulting in planting decisions being made based on market signals not the government program. All commodities are given equal protection based on market risk rather than politically set targets.
* Private crop insurance works better by integrating private revenue insurance with federal revenue protection into a comprehensive programmaking private revenue insurance more cost effective and allowing higher coverage levels at a lower cost for farmers.
* No additional costs because of the efficiencies created by integration with crop insurance and elimination of excessive payments.
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