FAPRI: Much Direct Payment Savings Would Be Offset
Washington--Cutting direct payments to farmers appears to save $4.9 billion per year in the federal budget. However, cutting that USDA program could boost farmer participation in ACRE, a program that offsets losses in farm income, according to a new report from the University of Missouri’s Food and Agricultural Policy Research Institute. The report, released Wednesday, compares payment cuts to expected expenditures in the 2012 MU FAPRI baseline. The think tank maintains computer models of the farm sector.
“Much of the budget savings from cutting direct payments could be offset by sharp increases in ACRE program expenditures,” said FAPRI’s Pat Westhoff. “Cutting direct payments would have important effects on federal budgets, farm income and farmland value. Impacts on crop production and prices would be small.”
Westhoff said that cuts in direct payments would lower farm income and prices of farmland. Depending on ACRE enrollment, net farm income could drop $1.9 billion to $3.2 billion per year. Farmland values decline an average of 1.8 to 2.7 percent compared to baseline.