News / Economy

US Senate Ends One Farm Subsidy, Adds Another

Sen. Debbie Stabenow, D-Mich., chairwoman of the Senate Agriculture Committee, speaks to reporters, June 10, 2013.
Sen. Debbie Stabenow, D-Mich., chairwoman of the Senate Agriculture Committee, speaks to reporters, June 10, 2013.
The U.S. Senate has cut a $5 billion-per-year farm subsidy program as part of a bill shaping U.S. farm policy and much more. But lawmakers have added new subsidies that critics say could end up hurting other countries’ farmers more than the old program did.

The $955 billion Farm Bill passed the Senate with a wide, bipartisan majority. It cuts about $24 billion from the budget over 10 years, in part by doing away with $5 billion a year in what are called “direct payments.” Farmers got those payments in good years and bad.

High crop prices, historic farm profits and tight federal budgets made that subsidy politically unpopular.

Getting rid of it was one big change in the new bill, says Agriculture Committee chairwoman Debbie Stabenow.

“It’s a reform bill, it ends subsidies and moves us in the direction of risk management and we are very proud of the work that we have done," said Stabenow.

The Senate bill helps farmers manage the risks of bad weather as well as bad markets. It offers crop insurance to farmers raising crops that have not previously been eligible. And it provides farmers with payments if prices drop below a certain point.

Stabenow says it’s intended to help the farmers who provide the U.S. with a safe, affordable food supply.

But critics say the bill goes too far. Montana State University economist Vince Smith says the new guarantee against market drops could get the U.S. in trouble with the World Trade Organization.

“When prices fall from the current levels, subsidies to a whole plethora of crops go up. Well, that’s exactly when countries like Brazil will bring trade dispute cases claiming price suppression in world markets," said Smith.

Brazil already has won a WTO case against the United States over cotton subsidies. Smith says the new Farm Bill could revive that dispute.

The bill also permits $60 million to be spent buying emergency food aid closer to where a crisis is happening, rather than shipping food from the U.S. Supporters say it’s faster and cheaper and could save more lives.

Eric Munoz with the anti-poverty group Oxfam says it’s a step forward. But he points out that it’s just $60 million out of a food aid budget of more than $1 billion.

“It is a very small portion of a relatively large program. So I think we’re just at the beginning, really, of creating the kind of flexibility for food aid that we’d like to see on a much larger scale," said Munoz.

But farm groups, food processors and shippers object to changes that they say will cost American jobs.

The changes are not included in the version of the Farm Bill the House of Representatives is expected to begin debating in the next few weeks. And the House and Senate are even further apart on domestic food aid programs.

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