A $5 billion-per-year subsidy program for U.S. farmers is a step closer to ending. The House of Representatives has passed its version of the Farm Bill - 5-year, $100 billion legislation directing U.S. agriculture policy.
It cuts a subsidy called direct payments, which farmers received regardless of need and even went to people who no longer farmed, said House Agriculture Committee Chairman Frank Lucas, a Republican from Oklahoma.
“That thing that’s caused such great angst - people getting money for not doing anything - that’s gone," said Lucas.
But the House put in place new programs providing more generous support to corn, wheat, cotton and other commodity farmers if prices for their products fall, says Montana State University economist Vince Smith.
“...which, truthfully, from an economic policy perspective, represents a ludicrous step backwards," said Smith.
Smith says increasing U.S. subsidies when prices are falling would hurt farmers in other countries who don’t get the same support. But he notes the House bill caps the amount paid to U.S. farmers.
The Senate passed its Farm Bill last month. It also eliminates direct payments, and adds a somewhat different price support program. Unlike the House version, it also includes a small measure intended to make international food aid more efficient.
The two chambers will now attempt to work out their differences.
The biggest difference is that the House removed all domestic food aid programs from its bill, a move that split the vote almost entirely along party lines. President Barack Obama has threatened to veto any bill that does not include nutrition assistance programs.