In its most recent Farm Bill in 2014, the US eliminated its decoupled direct payments, in part because it was hard to justify making income support payments to farmers at a time when farm incomes were booming due to favourable prices. Instead, it substituted a new set of counter-cyclical payments as part of the US farm safety net. At the same time, it expanded the scope of its federal crop insurance programmes by introducing a new programme to cover ‘shallow losses’ not normally covered by these programmes.
These US developments have led some in Europe to argue that the CAP should move in the same direction. Direct payments should be reduced and the money used instead to support insurance products for farmers or to fund counter-cyclical payments. This blog post does not discuss the merits of these proposals (for discussion, see this report prepared for the European Parliament’s COMAGRI). The US programmes are not widely known.… Read the rest