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Senate Ag Committee Clears Farm Bill Mark

April 26, 2012
By: Jim Wiesemeyer, Pro Farmer Washington Consultant

The Senate Ag Committee today approved on a 16-5 the Senate Ag Committee Farm Bill Mark, as amended, providing savings of at least $23 billion over 10 years. Senate Minority Leader Mitch McConnell (R-Ky.), a member of the panel, opposed the measure by proxy, but his vote did not count in the final tally since he was not physically present.

The exact level of savings in the bill is yet to be determined as amendments approved during the markup session utilized some of the savings scored for the bill by the Congressional Budget Office (CBO). CBO initially scored the package at $26.4 billion, some $3.4 billion above the projected savings mark for the package. But based on changes made via the Manager's Amendment put the savings level at $24.7 billion. And the action in the committee pared that savings level further, but it is not clear how much.

"We have made our $23 billion (in savings) commitment and are over that," Chairwoman Debbie Stabenow (D-Mich.) said, "but we don't know by how much." (Link to latest Congressional Budget Office/CBO estimates.)

"We examined every program in the farm bill, and we reformed, streamlined, and consolidated to get perhaps the most significant reforms in agricultural policy of any farm bill in recent memory," Stabenow said.

Four southern lawmakers voted against the package -- Sens. Saxby Chambliss (R-Ga.), John Boozman (R-Ark.), Thad Cochran (R-Miss.) and Mitch McConnell (R-Ky.) -- citing concerns about the commodity provisions in the bill. Specifically, their concerns focused on how it is believed that rice and peanuts in particular would be disadvantaged compared to other commodities under the approach approved by the committee.

"The farm bill in front of us attempts to shoehorn all producers into a one-size-fits-all policy," Chambliss said. "Producer choice is a better course to follow and I regret the commodity title does not recognize its power."

Senate Majority Leader Harry Reid (D-Nev.) said the Senate would take up the measure soon. Stabenow said it could be "a few weeks" before the measure reaches the Senate floor.

Among amendments approved:

Changes to ARC - Sen. Max Baucus (D-Mont.): Would strike the 10-year average of prices and replace it with a five-year Olympic average for the individual revenue trigger and would move the eligible acres for individual coverage to 65% from 60% that was in the manager's amendment.

Undersecretary for Trade - Sen. Mike Johans (R-Neb.): Would require a USDA study on the creation of an Under Secretary for Trade and Foreign Agricultural Affairs.

Energy title changes - Sen. Kent Conrad (D-N.D.): Would provide mandatory funding for agricultural energy programs, with the funds to come from savings above the $23 billion mark for the bill. An approved amendment added $800 million in mandatory funding to programs in the energy title, including loan guarantees for biorefineries and subsidies for biofuel feedstocks and rural energy projects.

Sen. Pat Roberts (R-Kan.) said, "This is not the best possible bill, but the best bill possible in the current circumstances."

Sen. Dick Lugar (R-Ind.) said the bill saves $25 billion, but could have done more. Lugar's own bill would have saved $40 billion.

Sen. Saxby Chambliss (R-Ga.) said that "peanuts and rice are left with no safety net whatsoever." He added that the narrow 10% band of revenue protection will not help farmers when prices plummet. Loan rates, he said, are an issue because "if prices reach those levels, farmers will be out of business. I am not likely to support this bill."

Sen. John Boozman (R-Ark.) said there are serious concerns about the commodity title and the impact on southern producers. As currently written, he said, it will have "devastating" impact on southern farmers. He said rice would lose more than 70% of its existing budget baseline, more than its share. "We could have done more to eliminate waste, fraud and abuse in the nutrition title," he said.

Southern lawmakers scoffed at efforts to alter the Ag Risk Coverage (ARC)program to set special trigger prices for rice ($13 per cwt) and peanuts ($530 per ton). Chambliss said that and the farm bill "lacks balance" and he labeled the ARC as a "one-size-fits-all" policy that will cause southern farmers to switch to growing commodities who pushed hard for the new policy - namely corn and soybeans.

Sen. Chuck Grassley (R-Iowa) said, "There is nothing wrong with (farm operations) getting bigger," but taxpayers should not subsidize that. He said the $50,000 payment cap (on ACR payouts/double for spouse) is "crucial" to assure that Congress can defend the bill on the floor. He added that closing the loophole of "actively engaged" is key, as non-farmers shouldn't get payments like doctors, lawyers etc.

Grassley said he would not offer an amendment on banning packers from owning livestock, but said at some point, Congress needs to address this year.

Grassley said he still has reservations about the Title I (commodity title) revenue program and its interaction with crop insurance.

Stabenow repeatedly assured members of the panel that this is only "step one" of the process and she pledges to work with members on their concerns about portions of the bill.

Sen. John Thune (R-S.D.) said the crop insurance program is preserved and is improved on by provisions in the bill. He labeled the county and individual farm options under ARC as a "reasonable compromise." He stated he would have preferred the trigger be set at the crop reporting district.

Sen. Kirsten Gillibrand (D-N.Y.) raised concern about nutrition program changes that would reduce benefits to New York families by $45 per month. She also lamented the impact on small dairies via dairy policy provisions in the Senate farm bill plan. "I don't want to have to buy my milk from China," she said.

Sen. John Hoeven (R-N.D.) said the farm-level option in the commodity program is absolutely essential.

Some details from the manager's mark:

We now know the title of the new farm bill and that it hits all the political buzzwords heading into the Nov. 6 elections: "Agriculture Reform, Food, and Jobs Act of 2012."

The adjusted gross income limit was reduced to $750,000 from the prior $900,000 level in the original mark. Under current law, subsidy recipients can have up to $1 million in farm earnings and $500,000 in off-farm income.

Cotton STAX: Cotton traded off elimination of the eligible acres for STAX in return for giving up the 65 cent price.

Changes in the Ag Risk Coverage language:

There are also changes in the Ag Risk Coverage language regarding ARC guarantee and benchmark revenue. Individual coverage would use the average national marketing year average price for the most recent 10 crop years; county coverage would use the average national marketing year average price for the most recent five crop years, excluding each of the crop years with the highest and lowest prices.

The ARC payment rate for individual coverage in the case of eligible acres that were planted to the covered commodity is 65% (from 60% previously) of these acres; the payment rate in the case of county coverage is 80% (from 75%) of the eligible acres planted to the covered commodity.

Special Rule for Rice and Peanuts

If the national marketing year average price under clause (i)(II) for any of the applicable crop years is lower than the price for the covered commodity listed below, the Secretary shall use the following price for that crop year:

  • Long grain rice: $13.00 per hundredweight
  • Medium grain rice: $13.00 per hundredweight
  • Peanuts: $530.00 per ton

 

The payment rate:

  1. In the case of individual coverage: In the case of eligible acres that were planted to the covered commodity, 65% (from 60% previously) of the eligible acres of the covered commodity; and
  2. In the case of county coverage: Eligible acres planted to the covered commodity, 80% (from 75%) of the eligible acres of the covered commodity of the producer.

 

Duties of the Ag Secretary

These include differentiating by type or class the national average price of the following commodities, as well as assigning a yield for each acre planted or prevented from being planted.

  • sunflower seeds
  • barley, using malting barley values
  • wheat

 

Dairy Policy Study/Report

The Ag Secretary shall direct the Office of the Chief Economist to conduct a study of the impacts of the program. The study shall consider:

  1. the economic impact of the program throughout the dairy product value chain, including the impact on producers, processors, domestic customers, export customers, actual market growth and potential market growth, farms of different sizes, and different regions and States; and
  2. the impact of the program on the competitiveness of the United States dairy industry in international markets.
  3. Report.-Not later than December 1, 2016, the Office of the Chief Economist shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report that describes the results of the study.

 

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RELATED TOPICS: Inside Washington Today

 
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