Monday, May 09, 2011

Changing Direct Payment Program

It's sounding more and more as if the direct payment program will be eliminated or drastically changed in the new farm bill.  The wheat and corn people like crop insurance, but not the cotton and rice people. Of course, the number of cotton and rice farmers is down, and only a fraction of the wheat and corn.  I'm not sure though how many wheat, corn, and soybean farmers in the South there are who don't grow cotton or rice and who might be satisfied with crop insurance.  That is, whether the problem the South sees with the actuarials for crop insurance is limited only to cotton and rice.

The Doha round of negotiations appears to have fizzled out.  I'm not sure whether or not that makes it easier to move money from the direct payment program, which complies with the WTO restrictions, to something else which is less compliant.

[Farm Policy cites an ERS study:
Meanwhile, an update from USDA’s Economic Research Service yesterday explained that, “While the Direct and Counter-cyclical Program and Federal crop insurance are both part of the farm safety net, they do not necessarily serve the same farmers. Looking at counties that received at least $20 in direct payments per cropland acre in 2008, or $20 in crop insurance indemnity payments averaged over 2007 to 2009, clear geographic patterns emerge [see graphical illustration here]. Direct payments tend to be higher in the Corn Belt (corn and soybeans), Mississippi Delta (cotton and rice), and the Texas-Louisiana Gulf Coast (cotton and rice). They are also high in Arizona (cotton), California (cotton and rice), and parts of the Southern Atlantic Seaboard. Crop insurance indemnity payments tend to be higher in the wheat-growing regions in the Northern Plains and parts of the Southern Plains, as well as North and South Carolina. Both programs are high in the Texas Panhandle (cotton and wheat) and across Alabama and Georgia (cotton and peanuts).”

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