The United States Congress has passed the Farm Bill which removes direct payments for American farmers even if they don't produce a crop.
It's expected to save the US Government $US5 billion a year.
But the US Farm Bill offers more generous crop insurance for grain growers, as compensation if the price drops, or if a disaster like flood, frost or drought strikes.
GrainProducers of Australia chairman Andrew Weidemann says multi-peril insurance is desperately needed for Australian farmers, and the Federal Government could underwrite it for $1 billion.
"A number of producers are investing, every year, millions of dollars on the basis that it's going to rain!
"I can't see that method continuing without higher reduction in farmers, greater risk being taken and overall debt increasing.
"So we need to be looking at these type of schemes, where they're working well in America and Canada."
An agricultural economist, Professor Vincent Smith, doesn't believe the US Farm Bill will save the Government the intended $23 billion over 10 years, because it offers generous subsidies when the price for grain falls.
As director of the Agricultural Research Program of the American Enterprise Institute, a free market think tank, Professor Smith says the revenue protection programs have set the wheat price and corn prices too high.
"The Congressional Budget office has assumed the record high prices for corn and wheat will continue.
"As is likely to be the case, we're going to see a further downward pressure on corn prices.
"Many expect the outlay for corn to be $US 4-5 billion just for one commodity - corn."
But the US Farm Bureau has welcomed the passing of the Farm Bill in Congress.
John Anderson, chief economist with farm lobby group, the US Farm Bureau, is more optimistic that the price for grain won't stay low.
"The Congressional Budget office says this program is going to save $23 billion over the next 10 years.
"Anybody who says it's not going to save, it's going to cost, is making some pretty strong assumptions about what's going to happen with prices over the next 10 years."
Source - http://www.abc.net.au/
US Farm Bill removes direct farm paymentsThe United States Congress has passed the Farm Bill which removes direct payments for American farmers even if they don't produce a crop. It's expected to save the US Government $US5 billion a year. But the US Farm Bill offers more generous crop insurance for grain growers, as compensation if the price drops, or if a disaster like flood, frost or drought strikes. GrainProducers of Australia say multi-peril insurance is desperately needed for Australian farmers, and the Federal Government could underwrite it for $1 billion.
