WASHINGTON: Farm-state lawmakers are moving to create a whole new subsidy that would protect farmers when their revenue drops, an unprecedented programme that critics say could pay billions of dollars to farmers now enjoying record-high crop prices, the Associated Press reports.The subsidy, free insurance that would cover farmers shallow crop losses before their paid insurance kicks in, has been pushed by corn and soybean farmers who could benefit the most from the programme.It would replace for the most part several other subsidy programs, including direct payments preferred by Southern rice and cotton farmers. Growers get the direct payments regardless of crop yields or prices. They dont even have to farm.The income insurance plan has a diverse group of opponents environmental groups that have long argued against farm subsidies, conservatives who say the plan wont save the government much and even one of the nations largest farm groups.The American Farm Bureau Federation says the beefed-up insurance could encourage farmers to make riskier decisions and drive up the price of land.Top Republicans and Democrats on the House and Senate Agriculture Committees are looking at folding the new subsidy into a farm bill proposal they are quietly crafting as part of their charge by the deficit-cutting congressional supercommittee to cut farm spending.The four lawmakers Senate Agriculture Chairwoman Debbie Stabenow, D-Mich.; Sen. Pat Roberts, R-Kansas; House Agriculture Chairman Frank Lucas, R-Okla. and Rep. Collin Peterson, D-Minn. have said they will shave $23bn from farm and food aid programs over the next decade.The new revenue insurance program would be considered part of their effort to achieve that goal.The committee leaders have not yet released the proposal. It is unclear just how the revenue insurance will be crafted and what effort will be made to control its costs.Critics fear a worst-case scenario that would use current, record-high crop prices as a baseline for average revenue. Farmers who suffer minor revenue losses in future years could get major payouts, which could eat up some of the $23bn in promised savings.Federally subsidised croporation insurance programs are now costing taxpayers $7bn to $8bn despite the biggest farm profits in nearly four decades. The Agriculture Department predicts net farm income by the end of this year till total $103.6bn, a rise of 31 per cent from 2010. The department says this is the highest value since 1974, adjusted for inflation.Replacing the direct payments seems inevitable. Critics have singled them out and even farm groups now say they are politically indefensible. But critics of the new income insurance subsidy say it could create new problems for taxpayers and farmers alike.The only rationale for a new federal revenue guarantee program on top of existing revenue insurance programs is that it seems politically easier to defend than direct payments, said Bruce Babcock, an agricultural economist at Iowa State University. Babcock released a report last week calling revenue insurance a boondoggle.
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