Ryan has proposed cutting $30 billion over 10 years by spending less on a crop subsidy program called direct payments and giving smaller subsidies to crop insurance. Direct payments were already expected to be a major target in the 2012 farm bill.
Farmers who sign up for direct payments get them regardless of how much they grow or what happens to crop prices in any given year. The fixed per-acre payments are based on a farm's historic production of eligible crops, such as corn or cotton, and don't shrink when crop prices are high, as they are now. Lucas has been a strong defender of the program, which costs about $5 billion a year but is popular with Southern farmers.
The government will spend close to $8 billion this year to subsidize crop insurance, which helps cover farmers' losses due to bad weather and disasters. The Agriculture Department last year renegotiated its agreement with insurance companies to save an estimated $6 billion over 10 years, but Ryan seeks further savings "so that agricultural producers assume the same kind of responsibility for managing risk that other businesses do."
Ryan's plan leaves the details of how to achieve those savings up to Lucas' committee and presumes the changes won't take effect until the next five-year farm bill, which Lucas plans to write next year.
While farm groups said their members are ready to do their part to help balance the budget, they were noncommittal on the details in their statements last week.
"It is vital that decisions to cut farm program spending be made with a recognition of the cyclical nature of our farm economy and its ties to a global economy that can be even more volatile," American Farm Bureau Federation President Bob Stallman said.
Some state Farm Bureaus and the National Farmers Union have called for spending less on direct payments to free up money for other programs, such as expanded crop insurance, but delegates to the Farm Bureau's national convention in January were unable to reach a consensus.
"If there's any sure thing in agriculture, it is that high prices are always followed by low prices. Too many times, policymakers have declared a new era in farm commodity prices only to watch prices plummet soon after," National Farmers Union President Roger Johnson warned.
But the National Corn Growers Association sounded a more supportive note.
"These cuts are significant, but so is our nation's out-of-control budget deficit. What is important is that farmers are not singled out — the cuts proposed for agriculture are proportional to those proposed for other areas of the federal budget," said its president, Bart Schott.
Copyright 2011 The Associated Press.