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RSS By: Chip Flory, Pro Farmer

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CBO score challenges farm bill savings

Mar 08, 2013

Pro Farmer Extra

- From the Editors of Pro Farmer newsletter -

March 8, 2013

Pro Farmer Associate Editor Meghan Pedersen and Washington consultant Jim Wiesemeyer offer up their perspectives on the latest farm bill happenings this week.

CBO updates farm bill scores

House Speaker John Boehner (R-Ohio) told members of the Ohio Farm Bureau that he expects both the House and Senate to pass a farm bill this year. But the eventual farm bill will likely be quite different than either the Senate or the House Ag Panel 2012 versions. Reason: The Congressional Budget Office’s (CBO) February baseline update yielded far less favorable scores for last year’s proposals.

While both plans would still save money relative to continuing current policies, CBO says “the reductions would be significantly smaller than we estimated in 2012,” due to later enactment and “updated baseline projections for commodity prices, land conservation and nutrition spending.”

CBO indicates the Senate farm bill would bring total direct spending for affected USDA programs to $963 billion for 2014 -2023, or $13.1 billion in savings compared to continuing the current program. This compares to CBO’s prior estimate of $23.1 billion in savings for 2013-2022.

CBO now estimates the House farm bill spends $950 billion from 2014-2023, which represents savings of $26.6 billion relative to continuing current programs. CBO previously scored it as saving $35.1 billion for 2013-2022.
Sources indicate lawmakers may use this February baseline from CBO to score farm bill proposals rather than the more traditional March CBO baseline because the Obama administration has failed to release its Fiscal Year 2014 budget proposals that were due by law Feb. 4.

Major farm bill changes ahead

These lower savings numbers will likely necessitate key changes to 2012 farm bill proposals and possibly a quicker farm bill end zone. For one, the combined revenue-assurance and Supplemental Coverage Option (SCO) is now too expensive, especially in the Senate version. This means the shallow-loss payments program may be nixed or significantly altered in favor of focusing on crop insurance, along with SCO, as the premier Title I farmer safety net. Reference (target) prices are likely to remain in the farm bill as the CBO’s score of the House farm bill showed little change since 2012 in these costs.

Higher costs for dairy

The updated scores also showed a surge in the cost of a gross margin dairy program with “optional” supply-management language. This means the program pushed by Representative Collin Peterson (D-Minn.), the alternative approach suggested by Reps. Robert Goodlatte (R-Va.) and David Scott (D-Ga.), and the Senate-passed dairy language will all require major changes to fit coming budget constraints.

As one observer notes, “The CBO numbers on dairy show that all three proposals cost money, rather than saving money, over 10 years... The idea that supply management is needed to stay within budget constraints has been exposed for what it is — a farce.”

SNAP costs on the rise

Another major problem for the Senate farm bill is that CBO’s update shows the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) will cost money rather than saving $4 billion, as previously estimated. The updated baseline also reflects reduced food stamp savings for the House farm bill, but contacts signal lawmakers have already found a way to bring the program savings figure back to the previous $16-billion target.

Combine CBO’s new farm bill scoring with near-record farm income, a 62% federal subsidy on crop insurance buy-up premiums, and the government’s $16.4-trillion national debt and it is clear major changes to previously proposed safety net, dairy policy and food stamp funding are coming.

Follow Pro Farmer Editor Chip Flory on Twitter: @ChipFlory

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