National Cotton Council Chairman Jimmy Dodson, a south Texas cotton producer, said The Federal Agriculture Reform and Risk Management Act (FARRM) not only contains significant reforms but “provides American farmers with the certainty for making the long-term investments necessary for maintaining productivity and economic viability. This legislation will provide a balanced safety net for all commodities and regions while facilitating market-driven cropping and marketing decisions."
Some of the reforms in FARRM include: nearly $40 billion savings in mandatory funds; more than 100 programs repealed or consolidated; streamlined and reformed commodity policy while also giving producers a choice in how best to manage risk; and consolidation of conservation programs and improving program delivery to producers.
While considering FARRM, Dodson said U.S. representatives should be cognizant of this fact — total government spending on farm safety net programs, including all commodity programs and crop insurance, dropped by two-thirds from fiscal years 2000 to 2012, according to USDA and Congressional Budget Office data. The reduction occurred as spending on commodity programs — including direct, counter-cyclical, loan deficiency and other payments that once represented the lion’s share of safety net spending — has been phased down in favor of crop insurance, which is partially self-funded through farmer premiums/deductibles. Crop insurance pays indemnities to producers only in the event of a loss in production and/or revenue. Producers are not made whole as insurance only covers a portion of actual losses.
In 2000, nearly $28 billion was spent on commodity programs and less than $3 billion on crop insurance. Over the course of 12 years, the overall amount of spending slowly but consistently fell and commodity spending and crop insurance spending equalized. In 2012, total farm safety net spending was $10 billion, and was split equally between the two.