A recent report by the Deficit Reduction Commission, challenged to reduce the U.S. deficit by $3.8 trillion over 10 years, includes recommendations to reduce farm spending by $3.0 billion a year. Not counting federally subsidized crop insurance programs, government payments to farmers and landowners have been running at about $12 billion a year during the last four years. Reducing payments by $3.0 billion a year would significantly reduce the government financed market safety net.

Current high commodity prices will stimulate increased agricultural production in the U.S. and the world, especially in countries in the southern hemisphere such as Brazil and Argentina. Markets react to changing supply and demand conditions and current high prices are vulnerable to sizeable downward adjustments. A significant reduction in farm program payments would require the farm sector to rely on other market-based tools to manage financial risk.