The new payments would be triggered when revenue for a crop falls below a state target level.

By PHILIP BRASHER REGISTER WASHINGTON BUREAU

Washington, D.C. – Farmers could protect themselves against crop failures, as well as low commodity prices, under an optional subsidy plan that key senators agreed to write into a new farm bill.

The new program has been a top priority for many Iowa farmers and the National Corn Growers Association but is opposed by the crop insurance industry. The plan would likely reduce insurance premiums.

The proposed farm bill also would increase spending for bioenergy, fruit and vegetable growers, rural development and a conservation program that rewards farmers for improved farming practices, said chairman of the Senate Agriculture Committee, Tom Harkin, D-Ia.

Harkin said Wednesday that he worked out details of the legislation with the committee’s top Republican, Saxby Chambliss, R-Ga., and one of the panel’s most senior Democrats, Kent Conrad of North Dakota.

The deal is expected to clear the way for the committee to debate the farm bill next week. The House passed its version of the legislation in July.

Harkin said the Senate version would “be good for farmers, good for rural communities and good for the environment.”

The new type of subsidies would be triggered when revenue for a particular crop falls below a statewide target level.

Farmers who support the plan said it would protect their income in case of a widespread drought. They’ll save money by paying less for crop insurance.

“The bottom line is that this is really going to help corn producers going forward,” said Ron Litterer, a Greene farmer who is president of the National Corn Growers Association.

Farmers who choose the “acreage crop revenue” plan would receive a fixed annual payment of $15 an acre, about half of what corn farmers get under existing programs. The program would replace two types of existing subsidies, marketing loan benefits and countercyclical payments.

Iowa farmers pay an average of $17 an acre for crop insurance, said Chad Hart, an economist at Iowa State University.

Crop insurance companies argue that the revenue-based subsidy program would be cumbersome to administer and undermine existing programs. “There are a zillion questions around this program,” said David Graves, who represents the American Association of Crop Insurers.

Farmers in Iowa have been split over the idea. While the Iowa Corn Growers Association supports the revenue plan, the Iowa Farm Bureau Federation believes it goes too far, said Mark Salvador, the group’s national policy adviser.

Harkin’s agreement with Conrad and Chambliss also would allow farmers to resume signing up for the Conservation Security Program, which would be renamed the Conservation Stewardship Program. Acreage could be increased by about 13 million acres a year.

The legislation would provide loan guarantees, grants and subsidies to begin production of fuel ethanol from crop residue and other sources of biomass.

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