Last week the U.S. Senate began debate on the latest five-year plan for food and fiber policy commonly referred to as the farm bill. The House is expected to start crafting its own version later this month.
The Senate plan would end direct payments currently given to producers regardless of crop yields or commodities prices. In their place would be more generous federal subsidies for crop insurance protecting farmers for income lost due to poor yields or low prices.
Net savings to taxpayers are estimated at $23 billion over 10 years as compared to the current system.
While agriculture is vital to our economy and our national security, this change makes sense given our swelling federal debt. It eliminates payments farmers don’t need in the current era of high yields and higher prices yet maintains a vital safeguard against losses due to fickle weather or volatile markets.
As with any federal program, however, there are areas of concern and possibilities for abuse.
Direct payments have been tied to basic conservation compliance provisions that prevented farmers from converting previously untilled ground to cropland or extensively draining wetlands. Producers were also required to practice good soil and water conservation on cropped land.
No such requirements have been included with the federal crop insurance program since 1996.
While most tillable land in Iowa is already under tillage, large blocks of land in Nebraska, the Dakotas and elsewhere once considered too drought-prone, flood-prone or highly erodible for production agriculture are now being rapidly converted to cropland.
While this change is at least partially driven by market forces, a poorly crafted farm bill could artificially incentivize and accelerate the trend with taxpayers picking up the tab.
The new insurance-only program would offer farmers additional protection against “shallow losses” incurred when prices and/or yields are marginally, rather than significantly, below expectations.
Absent conservation requirements, such a program would allow producers to convert previously unfarmed land with low yield potential into cropland while incurring minimal financial risk.
A farmer might, for example, choose to drain a slough knowing full well the area would remain too wet for optimal crop production in most years. By collecting federal crop insurance payments, the producer would make money from land that could not have been profitably farmed otherwise.
Taxpayers wouldn’t just be paying the farmer to work marginal land. They would also pay for the reduced water quality and increased flood damage that would result.
Further, they would be subsidizing the destruction of wildlife habitat, which offers significant recreational and economic value in rural areas.
This and similar scenarios could play out hundreds or thousands of times on wetlands and grasslands across the region.
Fortunately, the Senate bill includes a Sodsaver provision sponsored by Sens. John Thune of South Dakota and Mike Johanns of Nebraska. In the House, Reps. Kristi Noem of South Dakota and Tim Walz of Minnesota have proposed similar legislation with bipartisan support.
Under their plan, federal insurance payments for crops grown on native sod and certain grasslands would be limited for the first four years after conversion.
This would allow producers to convert ground they could farm profitably while discouraging them from converting and tilling marginal land based largely on the promise of federal insurance payments. Taxpayers would save an estimated $200 million as a result.
An insurance-only farm safety net would also make traditional conservation titles such as the Conservation Reserve Program (CRP) and the various long-term or permanent conservation easement programs even more valuable and important.
In the past these programs have sometimes removed large blocks of land from production even when only parts of the tract were environmentally sensitive. Current market and budgetary forces will likely curtail this practice significantly.
Still, most farms include some areas that are flood-prone, drought-prone, highly erodible, difficult to farm or otherwise unproductive. Restoring such areas to wetlands or grasslands can improve water quality, reduce flooding and provide valuable wildlife habitat.
Under current budget constraints, many will argue we cannot afford to fund such programs. Yet the alternative is to let farmers collect larger payments from subsidized federal crop insurance to cover shallow losses they will incur almost annually on such land.
Given these options, a more pertinent question might be, can we afford not to fund such programs?
Others may claim this is an example of too much government regulation. Participation in conservation programs is voluntary, however, and farmers are not required by the government to purchase federal crop insurance. (Many lenders do require such coverage.)
Producers who find federal regulations unnecessarily burdensome are free to take their chances on the open market without government assistance.
The current farm bill expires at the end of September. Given past history and the realities of election-year politics, however, this debate is unlikely to be settled prior to November.
Politicians in both parties, especially those whose names are on the ballot this fall, will be particularly attentive to the opinions of constituents over the next few months.
An insurance-based farm safety net including soil and wetland protection provisions coupled with streamlined conservation titles focused on the most environmentally sensitive and least productive ground makes sense for producers, taxpayers, wildlife and the environment.
Our elected officials need to hear this message loudly and often between now and Nov. 6.
- Tim Ackarman lives in Miller. My Turn is the work of selected community columnists and appears Fridays on this page.