News / USA

US House Passes Farm Subsidy Changes

File - Congress moved one step closer to ending a politically unpopular $5 billion subsidy that pays farmers regardless of need.
File - Congress moved one step closer to ending a politically unpopular $5 billion subsidy that pays farmers regardless of need.
The U.S. House of Representatives has approved a Farm Bill, bringing changes in farm subsidy programs and reforms to international food aid one step closer to passage.

The 10-year, $1 trillion bill includes $23 billion in cuts in conservation measures, nutrition programs and crop subsidies.

It ends a politically unpopular $5 billion subsidy that paid farmers regardless of need.  In its place, lawmakers added subsidized insurance programs that compensate farmers for crop losses or price declines.

Backers say it will provide support only when farmers need it.

But opponents see it as providing the bulk of the benefits to the wealthiest farmers, and they expect large payouts as prices for major crops decline from recent record highs.

“Almost surely, farmers are going to get a lot more money out of these programs than they got out of the direct payments program,” said Montana State University agricultural economist Vincent Smith.

Critics also say the subsidy changes may trigger an international trade dispute.  Smith said by cushioning U.S. farmers against price declines in global markets, these programs interfere with international trade more than the programs they replace.

“Expenditures are all going to be viewed as distortionary programs.  They are all going to be grist for the mill for trade disputes, and the U.S. is going to be in the wrong,” Smith said.

American Farm Bureau Federation chief economist Bob Young said he expects a case to go to the World Trade Organization, but says the programs are sound.

“Somebody is going to be very hard-pressed, I think, to challenge us on this front,” he said.

The U.S. has already lost a WTO case to Brazil on cotton subsidies. It is unclear if the new Farm Bill will resolve the dispute.

The Farm Bill also increases funding to purchase international food aid closer to where it is needed.

Advocates say local and regional purchase is faster, less costly and helps more of the needy than the current model of U.S. food aid, which involves shipping U.S.-produced crops on U.S. flagged ships.

Former agriculture secretary Dan Glickman says the $80 million measure is a small improvement in the $1.5 billion annual food aid budget.

“It doesn’t go all the way.  It will still largely be commodity-based.  But it still moves in that direction,” he said.

Funding for domestic food aid programs has been among the most contentious parts of the bill. Negotiators compromised on $8.6 billion in cuts, mostly to stiffer eligibility requirements.

Conservatives wanted more cuts and tighter enrollment for a safety net program that has continued to grow as the economy has improved.

But liberals fought against a bill that they see as cutting protection for the hungry while increasing it for farmers.

The Farm Bill went through three years of difficult negotiations through partisan divisions and fights within the Republican Party. It now goes to the Senate for a vote expected later this week.

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