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Farm Bill Needs Real Reform, Not New Entitlements, Say Free-Market Groups

CEI joined with 10 other free-market groups in a letter today urging Congress to take on real reform of agricultural subsidies in the next farm bill and to resist attempts for new entitlements. The letter noted that farm businesses are doing quite even in this recession, with net income at $98 billion. With negotiations on reauthorization of the farm bill underway, it's essential that Congress review federal agricultural policies that distort market decisions. The letter pointed out some specific areas that deserve attention:

We believe the nearly $30 billion reduction in federal spending on agriculture agreed to in the House Budget Resolution should be the minimum reduction in the Farm Bill. Eliminating direct payments, as the resolution suggests, is long overdue. Making meaningful reforms to the largest Washington-based support for agriculture, federally subsidized crop insurance, is also a must. The Congressional Budget Office estimates this program—which provided $2.2 million in subsidies for just one agricultural producer’s insurance premiums in 2011—will cost more than $90 billion over the next ten years.

Also, we believe Congress must not create any new potentially budget-busting entitlement programs that would increase Washington’s role in farm business decisions, such as efforts to put taxpayers on the hook for “shallow losses” in annual farm business revenue. And Congress should not use the Farm Bill to undo the responsible cuts to biofuels programs the House achieved in last year’s minibus appropriations bill.

The letter noted that, given the strength of the agricultural sector and the "glaring weakness of the federal budget," it is essential for Congress to reform agricultural policy. And, the letter urged, there must be "full and open legislative debate on Farm Bill reauthorization."