Farm bill costs may exceed expectations

January 29, 2015

e503e054b1e4c6141ad29f9b05f78adc_clientImage_300x225_medium_original_1

From WATTAgNet:

Falling crop prices have raised cost projections for the farm bill.

The Congressional Budget Office (CBO) said annual payments to farmers could average $4.8 billion over the next decade, which is almost 50 percent more than what was predicted less than a year ago, after the 2014 farm bill passed.

Some relief will come for taxpayers because costs for the crop insurance program will be lower. The CBO says there will be a $200 million drop from its past projections for average yearly crop insurance costs.

“History shows there is a close correlation between crop prices, as represented by corn, and the total crop insurance premium and premium subsidies,” Keith Collins, a former chief economist for the Agriculture Department and a consultant now for the crop insurance industry, told Politico. “So when prices drop, as over the past two years, premiums and subsidy costs fall.”

The CBO is projecting a combined annual cost of the Agricultural Risk Coverage program and the price-loss coverage plan to be $4.4 billion, compared with its projection of $2.94 billion in April. Other smaller subsidy programs bring the total to $4.8 billion.

Payments to farmers may exceed farm bill’s expectations

Falling crop prices are raising cost projections for new farm programs even before producers have signed up this spring. The Congressional Budget Office weighed in this week with a revised baseline that shows annual payments to farmers could average $4.8 billion over the next decade — a nearly 50 percent increase over what CBO had predicted less than a year ago after passage of the 2014 farm bill.