As the feared year-end “fiscal cliff” approaches without a federal spending and taxing agreement in sight, the farm bill languishes in Congress.
Among the impasse’s threats for some farmers are potential hikes in the estate tax as well as capital gains tax on soaring land values. Dairy farmers’ support programs are also at risk as they expire Jan. 1. Some economists expect big price increases in retail dairy products if that occurs.
All of those issues may yet be resolved before year’s end. But a bigger issue less likely to be addressed affects more Iowa farmers and taxpayers over the long term: subsidized crop insurance.
Backing up a bit: It’s likely that direct payments to farmers will be eliminated in any new 5-year farm bill plan. That will save taxpayers from $23 billion to $35 billion over 10 years, depending on the version approved. We have supported that change, as have some farm organizations, along with more reliance on crop insurance to protect producers from natural disasters when they most need it. A reasonable safety net, not guaranteed payments, for farmers makes sense to help ensure a stable national food supply.
However, direct payments have been tied to compliance with conservation requirements when planting on highly erodible soils or wetlands. Crop insurance is not. A change is in order.
Last June, we supported the idea of charging farmers more for subsidized crop insurance if they don’t use conservation practices on fragile soils. That’s still one valid approach.
But this year’s widespread drought has further illuminated this issue. With record corn and soybean prices, farmers planted more crops on more marginally productive land. Which means more erosion, more runoff that can damage water quality and wildlife.
So, there’s a solid case for conservation compliance tied to subsidized crop insurance. The impact on the “fiscal cliff” wouldn’t be great.
But taxpayers certainly have an interest in a reliable food supply as well as water and environmental quality – and rightful expectations when they’re paying the subsidies.
Most farmers get that, too. A statewide poll of Iowa farmers last year showed 81 percent agreed with connecting conservation compliance to eligibility for farm program benefits.
Congress should make it happen in the new farm bill.