Direct payment programs are out, expanded insurance programs are in.
A 600-plus page, five-year farm bill is well on its way to passing after more than two years of negotiation was capped by a joint House-Senate conference committee's agreement on measures to reconcile the two chambers' differing bills Monday.
The compromise measure, officially titled the Federal Agriculture Reform and Risk Management Act, passed the House on Wednesday and now moves to the senate. If the Senate assents to the compromise agreement, the reconciled farm bill will move on to the President for signing.
While much of the discussion of the measure has centered around changes to the Supplemental Nutrition Assistance Program (SNAP), popularly known as food stamps, the measure makes significant changes to programs more in line with its popular title, namely farming.
The bill will put an end to the controversial direct payment program, in which farmers receive subsidies whether they grow crops or not. The direct payment program subsidies have grown to account for approximately $5 billion in government spending in recent years.
Left in place, and in some cases expanded, are insurance programs meant to help shield farmers from unexpected crop losses and market fluctuations.
A similar approach was taken with livestock and dairy production.
Rep. Glenn Thompson, who represents Warren County and was chosen as part of the joint House-Senate conference committee, said the change represented a shift to a more "free-market" approach.
"We did eliminate a number of subsidies," Thompson said. "In exchange, we implemented more of a free-market approach. Actually, a risk-management approach of margin insurance."
Thompson, who sits on the House Committee on Agriculture, discussed the shift and how it would impact dairy production in particular.
"It is the number on segment of agriculture in Pennsylvania and it's one that, I think, is probably one of those at highest risk," he said. "Between 2001 and 2009 in the nation, we lost one-third of our dairy farms. They became fallow ground. They became housing developments, parking lots. That's a fast way to insecurity."
Thompson attributed the losses to market fluctuations.
"A big part of that was the volatility in the payments that farmers received for fluid milk. That's measured as a hundred weight, a hundred pounds of fluid milk," Thompson noted. "Subsidies is how we were trying to manage this. It was just broken. Because of volatility, sometimes prices would be high enough to cover costs. Sometimes it would be low. So my goal with dairy was to take that volatility out of milk. So that they (dairy producers) can have some certainty to make a decent living after working so hard, like they do, seven days-a-week."
Approaching that issue through insurance wasn't a universally popular move, according to Thompson.
"We had some controversy with that," he recalled. "There were some in Washington that wanted to attach supply management to the policy. Basically, the government would dictate to farmers how much milk they could produce and, essentially, when they had to slaughter their cows, because you can't turn a cow off. It's got to be milked every day if you have it. So we did prevent supply management and we did successfully, with what we passed out of the House and I think next week the Senate is going to concur with this, some really positive changes to dairy."
The bill also provides expanded programs aimed at providing incentives for individuals to enter agriculture, including expanded farm ownership loans and changes to requirements to qualify for loans for operational costs and first-time farmers and ranchers.
By way of further cost-saving, the bill introduces new income limitations for payment of agricultural benefits, including lower yearly income caps for those receiving such benefits.
In general, Thompson noted passing the farm bill is an important step, especially for rural Pennsylvania.
"I got involved in this, probably, the same way I got involved with the forestry committee," he said. "The chairman knew it was important to my congressional district and Pennsylvania. I have a lot of things that I'm very proud that are now, when the Senate passes it and the President signs it, that will be enacted as legislation.
"It's a food bill and jobs bills, especially in Pennsylvania where one-in-seven jobs, those are jobs directly or indirectly contributable to farming. It's the number on industry in PA. So I'm very excited for what this means for the economy, for jobs, and, quite frankly, to have access to high-quality, affordable and safe food. Not just in Pennsylvania, but throughout the United States."