There are many names, how the U.S. agriculture "complement"

May 30, 2013 08:21:58 Source: Xinhua Daily Telegraph Edition 5

supporting agricultural production is a basic national policy of the United States. The U.S. Congress will enact a farm bill every five years or so, detailing the subsidy policy for agricultural production. Government subsidies are divided into direct subsidies and indirect subsidies, direct subsidies are based on the type and area of crops planted by farmers to give a small amount of cash subsidies, indirect subsidies are to provide agricultural insurance subsidies and low-interest agricultural loans.

direct subsidy

direct agricultural subsidies in the United States are paid by the Farm Service Agency within the Federal Government's Department of Agriculture. John Whitaker, director of the Iowa Office of the Farm Service Bureau, told reporters that there are two main direct subsidies, one is direct and counter-cyclical payment projects, and the other is soil and water conservation projects.

The direct and counter-cyclical payments program is a U.S. program to encourage farmers to grow grain, providing cash subsidies to farmers who grow food crops such as soybeans and corn, divided into direct payments and counter-cyclical payments. Direct payments are very limited, such as the current corn subsidy of $0.28 per bushel and the soybean subsidy of $0.44 per bushel, and the U.S. federal government paid a total of $4.18 billion in direct subsidies in 2011. The U.S. Congress is currently drafting a farm bill for the next five years, and the new farm bill is likely to eliminate direct subsidies.

Counter-cyclical payments will only be initiated after market prices are below about half of the average level of the past five years to ensure that in the event of an unexpected drop in food prices, farmers can still receive 50 per cent of their expected income in order to continue production and life.

The Soil and Water Conservation Project is a project set up in the United States to protect the rural environment. If farmers own land in environmentally sensitive areas, such as wetlands or animal habitats, the government hopes to sign a 10-year lease with farmers to suspend agricultural production in the area, while also providing some funds to improve the local environment. Farmers can voluntarily decide whether to participate in this project, and the rent is agreed upon by both parties. In 2011, the federal government spent $1.86 billion on soil and water conservation projects.

Indirect subsidies

indirect government subsidies include low-interest agricultural loans and agricultural insurance subsidy programs.

The core principle of low-interest agricultural loans is to help entrepreneurial farmers or disadvantaged farmers engage in agricultural production. This group often has difficulty obtaining commercial loans. The low-interest agricultural loans provided by the government are mainly used to fill the gap of commercial banks in this market.

Low-interest agricultural loans are also the responsibility of the Farm Service Bureau, in the form of direct loan projects and loan guarantee projects. Direct loans are funded by congressional appropriations and generally have lower interest rates than commercial loans, which fluctuate with market conditions. Funding and services for the loan guarantee program are provided by the commercial banking system, with interest rates agreed between the borrower and the commercial banking institution, and the Farm Services Bureau guarantees the loan.

For sudden major natural disasters, the Farm Service Bureau also provides low-interest emergency loans, and the applicant must be damaged by more than 30% of the profits of previous years.

According to a study by the Economic Research Institute of the United States Department of Agriculture, farm service bureaus provide only 2.5 per cent of the market share of agricultural credit, while commercial banks account for 43.9 per cent of the market share of agricultural credit in the United States and agricultural cooperatives account for 41.4 per cent.

Bill Nossi, Secretary of Agriculture of Iowa in the Midwest of the United States, told reporters that agricultural insurance is the most important measure to ensure agricultural production and the core of the government's agricultural support policy. Scott Lovett, who runs a 3500-acre farm in Iowa, also points out that direct government subsidies now account for less than 5% of income, compared with agricultural insurance.

U.S. agricultural insurance is the responsibility of the Department of Agriculture's Risk Management Bureau. Farmers participate voluntarily. The federal government provides premium subsidies for insured farmers, but the insurance business is undertaken by private commercial insurance companies. In 2011, the federal crop insurance program offered farmers 2.07 million policies at a cost of $6.8 billion.

The U.S. federal government's subsidies for agricultural insurance are divided into two main parts: premium subsidies and business expense subsidies.

In terms of premium subsidies, the proportion of subsidies is inversely related to the proportion of output insured. Specifically, catastrophe insurance premiums that result in less than 50 per cent of output are subsidized by the federal government at 100 per cent, and the proportion of federal subsidies has gradually declined since then as the coverage of output insurance chosen by farmers has increased.

In terms of business expense subsidies, the Federal Crop Insurance Corporation of the United States provides a certain percentage of management and operating expense subsidies to private insurance companies that undertake federal crop insurance programs. In addition, the United States also provides three aspects of policy support for private agricultural insurance companies: one is to provide reinsurance to private insurance companies through the Federal Crop Insurance Company; the other is that the federal government, state governments and other local governments exempt agricultural insurance from all taxes; the third is The federal government has passed laws to encourage state governments to provide premium subsidies to further reduce the burden on farmers and increase the attractiveness of agricultural insurance.

Other measures

in addition to the above-mentioned federal government support policies, Nuoxi told reporters that the federal government is responsible for the construction and maintenance of interstate highways in rural areas, while state and local governments are responsible for other highways. To make it easier for farmers to transport their produce, roads are built in rural Iowa about every mile apart.

He also said that agricultural land is subject to real estate tax based on agricultural output, which is lower than commercial or residential real estate in urban areas. If a farm owner leases the land to a start-up farmer, he will receive a tax credit of about $25 per acre.

It is worth mentioning that the US federal and state governments allocate a large amount of funds to public universities every year for agricultural research and technology promotion. Taking Iowa as an example, the College of Agriculture of Iowa State University has carried out a large number of research on crop and animal disease control, soil and water conservation best practices, and seed research and development, and has also gone to the countryside to promote research results from time to time.

(Reporter Wang Zongkai Jiang Xufeng)

xinhua news agency, washington, may 29

http://news.xinhuanet.com/mrdx/2013-05/30/c_132418355.htm

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