Monday, May 14, 2007

Lugar Proposes Huge Farm Bill Overhaul

Last week Indiana Senator Richard Lugar proposed massive changes to the way farm payments are made. Instead of focusing soley on cotton, rice, corn, soybeans and wheat, Lugar would eliminate payment for these crops in favor of a risk mangement plan that uses crop insurance as a tool. Monies being currently paid to farmers would wind down over a 5 year period, placed into an account at a bank and then used to help purchase the insurance in future years.

Lugar has been a longtime critic of traditional farm payments, “The bulk of
these payments are made to growers of just five crops. Cotton, rice, corn,
wheat, and soybean farmers receive about 85-percent of the annual payments
provided by taxpayers.” He complains, as he did when he was last Senate Ag
Committee Chair, that the farm program is inequitable, inefficient and
stimulates overproduction, leading to stagnant prices and more payments.At a
Capitol Hill press conference, Lugar explained how the program would work on his
own Indiana farm, “Under this new plan, the Lugar farm would continue to receive
(these) payments for one-year. After that year, my farm will receive direct
payments that decline over the next five years. And most of those payments would
be deposited in our individual risk management account, held in conjunction with
the secretary of Agriculture, at a lending institution of our choice.” All the
funds would be used by producers of program and non-program crops to buy crop or
revenue insurance or cover non-covered losses, after existing programs end. “In
order to give the Administration the time to write the regulations required
under this proposal, the current Farm Bill would be extended by one year in the
Senate plan, and, I understand, two-years in the House plan. Thereafter, farmers
would rely exclusively on these accounts, and on their revenue and crop
insurance policies to manage the ups and downs of agriculture,” Lugar added.


A version of this plan was also introduced into the US House by a group of 5 Congressmen.

U.S. Rep. Ron Kind, D-Wis., and three other congressmen announced Thursday
they will introduce a proposal that would gradually change the current system of
farm subsidies.The system would change to one with farmer-held “risk management
accounts,” which Kind compared with tax-free individual retirement
accounts.“This legislation will provide a more effective safety net and a more
sound agriculture policy for farmers, rural communities, and low-income
Americans while improving our environment and reducing the deficit,” Kind said
from Washington.

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