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