Direct Payments are Likely to Be Cut

Grassley says changes will come in Farm Bill, not the budget processs.

Published on: Apr 15, 2011

With the cuts to agriculture that have been proposed in the fiscal year 2012 budget resolution, questions about the impact on the 2012 Farm Bill are starting to surface.

Senator Chuck Grassley, R-Iowa, says he thinks direct payments will be done away with, it's a question of whether the $5 billion every year be saved or will it go into other programs.

"I think some of it is going to be used to strengthen crop insurance and maybe even other programs like the target and loan rate and the counter-cyclical," Grassley said. "When money is paid out under counter-cyclicals it's based upon what's the price, and if the price is below the cost of production then there is a legitimacy for it if you want to maintain the certainty of food production and you want to do it from the family farm."

Grassley also expects more emphasis on crop insurance as he says people are seeing crop insurance as a better safety net than anything else in the farm program. However, Grassley says none of that will likely be decided this year.

"I think it's going to be changes made as part of the 2012 Farm Bill," Grassley said. "Not in 2011 as part of a budget."

Grassley admits it will not be easy to end or cut back on direct payments, especially as it's not a popular position with those who represent southern agriculture. Iowa Farm Bureau President Craig Lang has echoed those sentiments.

Delegates at the Iowa Farm Bureau Meeting last week endorsed a resolution to replace direct payments with some other risk management system. The resolution will be forwarded to the American Farm Bureau for consideration at their annual meeting in January. However Iowa Farm Bureau is pursuing discussions over with several other states including Texas, Illinois and Tennessee.

"If a change comes," Lang said. "I believe it's going to have to come from a Southern state that says we want something better than we have today that's going to cost less."