As the 2007 Farm Bill debate unfolds, some policy observers have noted the importance of trade compliance and have argued that federal financial support to farmers should be less trade distorting. Components of these arguments often include a focus on conservation payments or direct payments, two forms of federal support that are generally considered to have less of an impact on the market than subsidies based on current production and market prices.
Interestingly, due to projected increases in market prices and resulting budget allocations, direct payments are one of the few sources of potential funding for new or expanded conservation initiatives. As a result of this budget situation, ideas for increasing both conservation programs and direct payments are more limited.
News items relating to conservation payments and direct payments have surfaced recently that shed more light on the debate.