The Heritage Foundation, a conservative think tank, has released a report calling on Congress to phase out commodity subsidies and end federal support for revenue-based crop insurance.
Daren Bakst with the foundation tells Brownfield the subsidies provide harmful incentives to farmers.
“Farmers will farm the subsidies. So they’ll make planting decisions based on how to maximize the subsidies they would receive as opposed to meeting the needs of consumers and the market. And that’s not a criticism of farmers, it’s a criticism of the government program that provides and incentive for farmers to do that.” says Bakst.
The report calls for eliminating the Agriculture Risk Coverage and Price Loss Coverage programs and the Margin Protection Program for dairy producers. It also recommends that federal crop insurance only protect against deep yield losses and disasters, not against losses in revenue and recommends one-time block grants to be given to states to help with the transition.
Bob Young, chief economist with the American Farm Bureau says they’re opposed to the proposal. He tells Brownfield the data used to support it was based on a better economic situation.
“The time period that they’re picking to look at the data was a period where the ag sector was doing reasonably well. We’re obviously in a very different situation today, commodity prices have come down fairly hard and farm income is off substantially.” says Young.
The National Farmers Union is also opposed to the proposal saying it would create financial hardships for farm operations.
Source: brownfieldagnews.com