Washington’s debt crisis brings American agriculture to a crossroads this fall and no other sector of the economy may have more to gain or lose from the debate in Congress over deficit reduction.

With record exports predicted for 2011, farmers begin with a proven self-interest in stable world markets, but their very success makes them all the more vulnerable now to deep cuts from the federal subsidies so synonymous with agriculture for decades.

Corn and wheat prices are double what they were in the early 1990s, and for the first time in most growers’ lives, cotton futures are selling at more than $1 per pound. Forget the recession: Net farm income is predicted to jump 31 percent, or $24.5 billion in 2011. And from the opening bell of this Congress, a bull’s-eye has been painted on the back of agriculture’s direct cash subsidies, still costing taxpayers almost $5 billion annually — much of it going to households earning more than $100,000.

Cotton interests got an early taste of this anger in a June floor fight in the House, and the August debt crisis greatly accelerated the process, making it impossible to wait for a new farm bill next year and throwing the agriculture debate into a more partisan, ideological arena.

“It’s settling in on people that this is different than in the past,” said former Rep. Charles Stenholm of Texas, a veteran of many farm bill battles. “This isn’t a discussion just in the hands of the Agriculture committees but outside.”

Beginning with the House Republican budget last April, deficit talks over the summer focused on 10-year cuts of about $30 billion. And the White House upped the ante further Monday by proposing what is actually a 22 percent cut in farm supports, including an end to all direct payments and a surprising 11 percent, $8 billion cut from crop insurance.

Change is certain then, and the real question for agriculture is how to manage this transition and still preserve some safety net.

New products in revenue insurance are being explored in what would be a historic shift from loan price supports or the current cash income supplements. The National Cotton Council broke ranks early last month, when it stunned its Southern rice and peanut allies by coming out with its own revenue insurance plan — dubbed STAX — that implicitly gives up on direct payments. Corn announced its own alternative last week, but each of these options relies on premium subsidies, and if Congress cuts too deep, too fast, it will undermine this change.

Rocked back on their heels, House and Senate agriculture committee leaders met privately last Thursday on how to respond. But in truth, neither they nor their new rival — the 12-member joint deficit committee created in August — can succeed without the other.

Indeed, the joint committee may rue the day it was labeled “super” since it’s ill equipped to write agriculture policy and ultimately will need farm-state votes to pass its recommendations in November and December. At the same time, if the Agriculture committees dig in too much, they risk undermining not just themselves but the whole effort to address the debt crisis — important to agriculture’s world markets.

It’s a political dance that will play out between the new select committee and other entrenched authorizing panels, who also will be asked to come forth with savings from defense, for example, or the federal retirement system. But nothing matches the clash of cultures in farm policy — nor has the same political reach.

Consider the fact that the Republican presidential field is being led by a former Texas agriculture commissioner, Rick Perry, whose state is the leading recipient of federal farm subsidies. Or the fact that Iowa, second only to Texas in subsidies, according to data collected by the Environmental Working Group, a Washington-based nonprofit, will host its caucuses within weeks of the year-end deficit debate.

“Moscow on the Mississippi” was how one member of the deficit panel, Sen. Pat Toomey (R-Pa.), famously described farm subsidies a few years back. And anxious commodity groups are now reduced to playing on the old loyalties of Ways and Means Committee Chairman Dave Camp, who long ago sat on the House Agriculture Committee alongside a future speaker, Rep. John Boehner.

Indeed, the cotton, rice, sugar subcommittee of the early 1990s is a trip down memory lane featuring Camp, now on the deficit committee; Boehner, who put him there; and Rep. Collin Peterson (D-Minn.), who shepherded through the last farm bill in 2008. Not missing a beat, rice interests showed up at a Camp fundraiser last week, attempting to renew old ties even as Peterson took a hard line against any cuts of much more than $15.6 billion, about half of what’s been discussed thus far.

That $15.6 billion target is a rough approximation of the price agriculture would pay if the joint committee fails entirely and an automatic sequester to achieve $1.2 trillion is ordered under the Budget Control Act.

“My position is we should not agree to anything bigger than the sequestration,” Peterson told POLITICO. “…Why would we put our neck on the block? This is ideology. This is other agendas.”

Senate Budget Committee Chairman Kent Conrad (D-N.D.), a major power broker in agriculture circles now drafting his own revenue insurance alternative, agrees. “Somewhere in the sequester range, we can make it all work,” Conrad said in an interview. “But you can’t make it work if you go this high.”

Others might accept a $20 billion target, but Senate Finance Committee Chairman Max Baucus (D-Mont.), the deficit committee member with the strongest ties to agriculture, told POLITICO it is “self-defeating” to go much higher. “You’re not going to get that high number. It will not pass,” he said flatly.

“Because of the health of the farm economy, in a world of tough choices, we think these policies are justified,” answered White House Budget Director Jack Lew in an interview. But Kansas Sen. Pat Roberts, the ranking Republican on the Senate Agriculture, Nutrition, and Forestry Committee brushed this aside, saying the administration’s proposals are “dead on arrival.”

Roberts’s renewed prominence this fall is striking since it was he who first engineered direct payments as House Agriculture Committee chairman in 1996.

Republicans boasted then that they were “transition payments” on the path to ending federal subsidies entirely. But when the Asian currency crisis hit in 1998, export demand fell, undercutting farm prices. And at a time of even budget surpluses, Congress began doubling up on the payments as a quick way to aid distressed farmers.

Today’s circumstances are the opposite: high prices, high deficits. “The argument for direct payments is their economic neutrality. They are unrelated to plantings and price and thus do not distort markets,” said Keith Collins, a veteran economist for the Agriculture Department and now an adviser to the crop insurance industry. “But their downside is the same as their upside: They are unrelated to price and production, and thus income. They get made even in boom times. In this budget environment, they are going to be eliminated or cut.”

The brave new world of revenue insurance is nonetheless a leap — and reflects shifts in agriculture itself.

Cotton’s greater openness follows changes in its own ranks as West Texas growers have gained more clout in the Cotton Council and brought with them a history of promoting crop insurance. Briefings have been held to build support for the idea — dubbed the Stacked Income Protection Plan, or STAX. It would build on coverage today to allow farmers to buy a supplemental policy covering up to 95 percent against revenue losses — measured against the local county’s experience.

But that would leave old Mid-South allies like rice standing alone, since rice growers — with built-in investments in irrigation — prefer direct payments to cover these capital costs and care less about crop insurance.

For the insurance industry, that extra band of protection — from standard 85 percent coverage to 95 percent — is highly expensive, and the premiums will rise almost exponentially. This is where the cotton plan and others like it are very dependent on subsidies, but the administration is wary of the cost and whether the added protection will backfire, encouraging farmers to make foolish gambles, planting crops they shouldn’t plant.

“We have plans for a transition that are going to be very bold,” said Roberts. Then again bold was also what promoters called his “Freedom to Farm” bill in 1996 creating direct payments.

“We’re under pressure to cut, cut, cut,” said Stenholm, now teaching in Texas. “We can’t turn the clock back. The direct subsidization of agriculture is a thing of the past.”