In a report released Friday, the University of Missouri Food and Agricultural Policy Research Institute details possible consequences of key provisions within the Senate-passed and House Agriculture Committee-passed farm bills.
The Senate Farm Bill, titled the "Agriculture Reform, Food and Jobs Act of 2012" was passed in mid-June, whereas the House Farm Bill, titled the "Federal Agriculture Reform and Risk Management Act of 2012" was only passed out of committee before Congress' August recess.
The report compares the largest changes in both bills, including the elimination of direct payments, the addition of the Stacked Income Protection Plan, Agriculture Risk Coverage and Supplemental Coverage Option programs in the Senate version and the establishment of Price Loss Coverage and Revenue Loss Coverage plus STAX and SCO in the House version.
Differences and similarities between the two bills were calculated using MU baseline data that assumes continuation of current farm bill policy. The report explained that the two bills are very similar in that they both replace direct payment programs with programs that focus on current production levels, and farm spending would be reduced under both.
According to the report, the Congressional Budget Office has determined savings from the Senate bill to be approximately $18 billion and savings from the House bill to be $18.5 billion. The study also found that impact on commodity markets would be minimal.
A key difference between the two bills is the additional support to peanut, wheat, rice and barley growers offered in the House Committee bill, but not in the Senate's version. However, protections for corn and soybeans would be greater under the Senate bill than under the House Ag Committee bill.
Under both bills, the report found, farm real estate values would decline, as would net farm income.
Possibly one of the most significant differences between the two bills is the level of coverage for different crops.
"In the House Committee bill, the combination of PLC, RLC, SCO and STAX provide similar levels of average support to producers of corn, soybeans and cotton relative to that provided by the Senate bill. In contrast, average producer program benefits are far greater under the House Committee bill for wheat, rice, barley and peanuts. These programs provide an average of about $17 per acre for corn, $9 per acre for soybeans, $14 per acre for wheat, $41 per acre for upland cotton $94 per acre for rice and $86 per acre for peanuts. For most crops, prices are lower under the House Committee bill than under the Senate bill, so the market value of production per acre is also lower," the report says.
The $5 billion spending difference between the two bills is relatively small when compared to outlay changes cause by DCP and ACRE elimination, the report says.
"In the House Committee bill, the new PLC, RLC, STAX and SCO provisions offset some of the savings from eliminating the DCP and ACRE programs. The estimated 10-year budgetary effect of the provisions examined is to reduce net outlays by $12.5 billion relative to the Baseline. Expenditures by the Commodity Credit Corporation for traditional farm programs, PLC and RLC are reduced by a net of $28.1 billion, while crop insurance costs associated with SCO, STAX and changes in producer participation and coverage levels increase net outlays by $15.7 billion," the report notes.