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Government To Pay More Than Expected in Farm Support Checks
The government will write $25.6 billion in farm-support checks for the 2015, 2016, and 2017 crops, and 55% of the money will go to corn and soybean growers, says the Congressional Budget Office. The payments are far larger than expected when the 2014 farm law was written and reflect the prolonged slump in commodity prices.
“We’re going to have a fair amount of ARC spending,” says Pat Westhoff of the think tank FAPRI at the University of Missouri, referring to the Agricultural Risk Coverage program. Corn and soybean growers enrolled predominantly in ARC. The price guarantees in ARC are based on a rolling five-year average of prices, which were record-high in 2012 and strong in 2013, but they swooned in 2014 and 2015. CBO says the season-average corn prices will not recover to $3.90 a bushel until 2020, and the average farmgate price for soybeans will not top $9 a bushel until 2019.
“The price guarantee is going to start coming down fairly quickly,” says Westhoff. CBO says crop subsidy costs will drop sharply after fiscal 2018, which opens in fall 2017.
Payments to corn farmers of nearly $4.2 billion during the 2017-2018 marketing year would dwindle to $1.2 billion two years later.
For wheat growers, CBO says big payments – averaging $1.25 billion a year – will come in 2017, 2018, and 2019, when the season-average price would be well below the average $5 a bushel fetched by the 2015 crop. Like corn and soybeans, payments would fall off quickly. Wheat growers mostly enrolled in ARC, but a sizable minority selected the Price Loss Coverage program, so their payments
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