By Jean-Paul MacDonald
Farms.com
US Southern growers could face major financial losses due to potential changes in the farm subsidy system. An analysis by Republicans on the Senate Agriculture Committee suggests growers in the region could lose around $1.4 billion over the next decade.
The possible loss would occur if Congress decides to align subsidy payments more closely with the crops farmers produce.
Base acres are a fundamental element of agricultural payments. These are areas that qualify for crop subsidies, and a farmer's farm payment is partially based on the number of base acres he or she owns. These acres were first distributed to farmers by the United States Department of Agriculture (USDA) based on their historical output of farm program crops. Adjustments were made in 2002, 2008, and 2014.
In the agricultural bill for 2023, the National Corn Growers Association is in favor of upgrading base acres. Updates in the past have often been voluntary when producers anticipated benefits. The association believes the update will strengthen the producer safety net and address the accessibility of farm support programs.
A mandatory update might be more beneficial for the Midwest and Plains regions, which are the main areas for corn, soybeans, and wheat. Any changes to the base acres, whether voluntary or mandatory, would have farm-specific effects.
In recent years, more land was planted to crops that are part of the farm program than was enrolled in the base acre program. This shows farmers' preferences for maintaining base acre allocations to crops historically grown on the land and changes in planting patterns in response to market conditions.
The report also suggests that 16 states would gain $1.1 billion while 34 states might lose $3 billion, translating to a $2 billion drop countrywide over a ten-year period. There might be a $1.4 billion net loss for the 11 southern states. The passage of a new agricultural bill might be hampered by changes to the subsidies scheme.
Due to a scarcity of basis acres, producers who started growing covered commodities after the last base acre allotment may not be eligible for some agricultural subsidy programs.