Shallow-Loss: A New, Costly Giveaway To Farmers?
In a just-released report(http://www.aei.org/article/economics/fiscal-policy/field-of-schemes-the-taxpayer-and-economic-welfare-costs-of-shallow-loss-farming-programs),
"[S]hallow-loss programs are potentially expensive for taxpayers and especially costly in an environment in which grain and oilseed prices are declining from recent levels, as seems likely to be the case"
Among their key findings:
* Costly: Depending on structure and crop prices, these programs could cost the taxpayer as much as, or more, than the direct payments program they would replace:
* A new entitlement: Payments would be automatically triggered by revenue shortfalls and would be linked to average revenues over the past five years. Payment triggers would be linked to prices and yields increases, creating a new partially disguised entitlement program that locks farmers into near-record incomes at the taxpayer's expense.
* CBO's questionable assumptions: The
* Never-ending, misallocated subsidies: Shallow-loss programs will perpetuate the federal farm program tradition of giving the majority of subsidies to farms that do not need them: shallow-loss subsidies, like direct payments and crop insurance subsidies, would be tied to the amount of crops produced by farm households. Consequently, the largest and wealthiest farmers who enjoy built-in buffers in the form of substantial equity in their farm operations would receive the lion's share of shallow-loss subsidy payments. On average, farmers have enough available cash to weather short term drops in revenue (debt-to-asset ratios average less than 9 percent in the entire American agricultural sector).
EVENT: Agricultural economists
Find more information about AEI's American Boondoggle: Fixing the 2012 Farm Bill project at www.aei.org/americanboondoggle
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