This farm bill is new and improved!, they said. Congress finally came together and achieved something on a bipartisan basis!, they said. This new bill replaces old agricultural payout programs with new ones that, if all goes as planned, could save some big bucks!, they said.
Too bad it took about five seconds for things to stop going as planned.
As I mentioned the other day, corn prices have been dropping (and will sink even lower if the EPA decides to move forward with their proposal to relent on the ever-increasing ethanol requirements of the Renewable Fuel Standard — fingers crossed), and Politico reports on some new economic projections released by the USDA today that, if they prove correct, have the potential to hike up the supposed price tag of the farm bill. Unexpectedly.
New economic projections released by the Agriculture Department Thursday carry a sober warning of what lower corn prices could mean for the cost of the new farm bill over the next few years.
For the 2014-2015 marketing year beginning Sept. 1, the report projects a seasonal average farm price of just $3.65 per bushel of corn–compared to $4.50 for the current year. In 2015-2016, the price drops further to $3.30 per bushel before beginning a slow but steady climb back up to $4.10-$4.20 per bushel by 2023 and 2024.
That’s a much steeper decline than many had expected and well below the corn prices assumed by the Congressional Budget Office in scoring the new farm bill.
Just a year ago, the department was forecasting about $1 more per bushel for corn in the same 2015-2017 period. If the revised projections prove accurate, it will surely impact the cost of new counter-cyclical programs signed into law last week by President Barack Obama.
Read the rest of the Politico article for more details, but the point is that the CBO (as ever) scored the farm bill off of a set of assumptions that could really end up swinging any which way, by a little or by a heck of a lot — and that Congress not only largely created a lot of this mess in the first place with the Renewable Fuel Standard, but is ready and waiting to catch agribusiness with all manner of subsidies when it subsequently falls.
Only the federal government, through their ever-august and well-meaning largesse, could accomplish such an exquisitely tangled and entrenched web of self-inflicted artificial market signals and costly taxpayer losses.