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WASHINGTON (April 14, 2018) – The R Street Institute is deeply disappointed by the first draft of the Agriculture and Nutrition Act of 2018, unveiled this week by the House Committee on Agriculture. The draft farm bill represents a missed opportunity to enact pragmatic, commonsense reforms to our badly outdated farm programs.

As R Street has documented repeatedly, the farm safety net is broken. It provides overly generous subsidies to a small segment of large agri-businesses while failing to provide an adequate safety net to those truly in need. This arrangement hurts taxpayers, the environment and damages our trade relations. Regrettably, the draft farm bill doubles down on this misguided approach.

“While it makes sweeping changes to the nutrition title, the draft legislation does nothing to target the rampant cronyism and waste in the commodity and crop insurance programs, which allow highly profitable agribusinesses to reap millions in taxpayer subsidies,” R Street Policy Analyst Caroline Kitchens said. “Before it moves through Congress, the bill should be amended to include reasonable restrictions around the federal crop insurance program, including a means test that would bar farm operations with an adjusted gross income of $500,000 or more from receiving premium subsidies for crop insurance.”

Created in the last farm bill, the “shallow-loss” Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs provide payments to farmers of covered commodities when revenue falls below a guaranteed level. These programs go beyond the concept of a safety net by protecting farmers from minor dips in revenue and have cost more than twice their original projections. The draft legislation adds “seed cotton” as a covered commodity and increases reference prices, both of which likely will result in the programs being even costlier to taxpayers.

Section 1301 of the draft also reauthorizes our outdated sugar program in its current form. R Street Trade Policy Counsel Clark Packard noted the program provides a dizzying array of price supports, marketing allotments and import restrictions, like tariff rate quotas, to inflate sugar prices and benefit a small segment of domestic sugar producers. In fact, it is estimated that sugar prices in the United States are roughly double the price in the rest of the world. The Agriculture Committee should incorporate the bipartisan Sugar Policy Modernization Act into the farm bill in order to reform the broken program thoughtfully.

“As trade tensions between the United States and China continue to rise, it appears likely that Beijing is going to target for retaliation American agricultural exports, among other products,” Packard added. “This is misguided. Most farmers and ranchers want expanded market access, not more government subsidies. Members of the Agriculture Committee should push the administration to ease tensions with China, complete renegotiation of the North American Free Trade Agreement and begin to push for more trade agreements in order to liberalize trade and expand market access.”

Before the bill moves through Congress, R Street strongly encourages significant amendments to the commodity and crop insurance titles of the bill. In addition to means-testing the crop insurance program, Congress should consider ending premium subsidies for the harvest price option, making crop insurance payments transparent, enacting payment limits and removing duplication that allows farmers to collect ARC and PLC payments already covered by subsidized crop insurance.

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