Payments to farmers under the new farm bill could soar as high as $8-10 billion for this year’s crop, according to some economists quoted in an article by Reuters. That would be more than double the forecast by the Congressional Budget Office and more than 10 times the U.S. Department of Agriculture's working estimate.
Under the new bill, farmers can receive payments if their revenues fall below benchmarks tied to five-year price and production averages. Many farmers brought in a bumper corn crop this year but those big yields may not be enough to compensate for the sharp drop in corn prices. Consequently, total revenues for some farmers could be low enough to trigger payments.
The farm bill was meant to reduce costs to taxpayers by replacing direct cash payments made to farmers regardless of need, which had been costing about $5 billion a year, with this new approach. But estimates for the new revenue protection programs were made before crop prices dropped due to oversupply from a big harvest.
