June 17 (Bloomberg) -- Tucked deep in the 1,198-page U.S. House agriculture policy legislation is an initiative to guarantee prices for sushi rice. So too is insurance for alfalfa and a marketing plan for Christmas trees.
Catfish farmers also get a morsel in the proposal being taken up this week: profit-margin insurance. The products represent a tiny fraction of the $440 billion U.S. farm economy. Yet each is slated to receive special treatment -- either through subsidized insurance, promotional programs or protections against imports -- in the bill that carries an estimated 10-year price tag of $939 billion.
"We’re in a golden age of agriculture," with producer profits projected at a record $128.2 billion this year, Vince Smith, a professor of agricultural economics at Montana State University, said at a briefing on Capitol Hill last week. The House bill "is about as bad a bill as I could think of writing as an economist," he said.
The farm bill, which benefits crop-buyers such as Archer- Daniels-Midland Co., grocers including Supervalu Inc. and insurers including Wells Fargo & Co. and Ace Ltd, has been working through Congress for almost two years. The Senate last week passed a version that would spend $955 billion over 10 years; the House this week is considering a version approved by its agriculture committee. The current, five-year authorization of U.S. Department of Agriculture programs passed in 2008 and was extended last year until Sept. 30.
Both the Senate and House versions would reduce payments to growers of corn, wheat and other crops by eliminating a $5 bill?ion-a-year program of direct subsidies while expanding subsidized crop insurance. Their different price tags mainly result from variations in food-stamp spending. The Senate plan would reduce payments by $4 billion over a decade, about one- fifth the House amount.
The House Rules Committee meet today to set guidelines for amendments and debate on the bill, potentially complicating or smoothing the path to passage. President Barack Obama may veto the House bill were it to become law, the White House said in a statement today.
"The bill would reduce access to food assistance for struggling families and their children, does not contain sufficient commodity and crop insurance reforms, and does not provide funding for renewable energy, which is an important source of jobs and economic growth in rural communities across the country."
Approval in the House may not be assured, said Tim Phillips, president of Americans for Prosperity, a budget watchdog group supported by billionaire energy executives Charles and David Koch.
The group is planning to lobby in 15 congressional districts to change the votes of supporters, including House Speaker John Boehner, the Ohio Republican who endorsed the bill last week. The organization, along with Club for Growth, is planning to include the farm-bill vote on its congressional scorecard that will rate members of Congress on various issues
"This bill is so bad, it’s so bloated, some things are beyond redemption," Phillips said today at a news conference.
Assembling a bill popular enough to pass Congress becomes a complex process of tradeoffs among different groups. Growers of cotton, peanuts and other crops common in Southern states dissatisfied with a bill before the Senate last year got programs tailored to their needs in this year’s version, increasing its vote margin in that chamber and potentially adding votes in the House.
Good politics may make for bad, expensive policy, Smith said.
Crop insurance and price-support plans hold the most risk for bigger federal spending, Smith said. Along with revenue guarantees for peanuts and cotton, the bill includes the catfish provision as well as the consideration of catastrophic-loss plans for poultry and swine and regular policies for alfalfa and sugarcane.
Temperate japonica rice used in sushi would be added as a crop eligible for price supports. The new program is justified because direct payments to rice farmers would be eliminated in the bill, said Charley Mathews Jr., who raises 600 acres of the rice variety near Marysville, California, about 40 miles north of Sacramento.
Programs that may look like largesse in Washington have practical purposes at the farm level, he said. Federal rice payments are based on futures traded in Chicago for varieties grown in the Mississippi River Delta region, a very different market from California’s where most sushi rice is grown, he said.
Without adequate federal backing, "I don’t get financing from my bank" for rice that’s the only crop suitable for his soil, said Mathews, 46. "I get one chance to plant each year, which isn’t like a factory making widgets. I need to manage my risk."
For catfish, higher feed costs have made the industry’s profitability a concern, said Ben Pentecost, president of the Catfish Farmers of America, an Indianola, Mississippi-based trade group. "Catfish farmers, like other livestock producers, face significant input costs," Pentecost said in an e-mail. The proposed program will help catfish farmers reduce their risks, he said.
Other provisions in the farm bill allow commodities to create so-called checkoff programs in which producers of a commodity are levied a fee to promote a product in campaigns such as "Beef: It’s What’s for Dinner." In such programs, government expenses are minimal because the industry self- finances.
The question, Josh Sewell, a senior policy analyst with Taxpayers for Common Sense in Washington, a group that advocates less federal spending, is whether the government has better things to do.
"If a private industry wants to put together a program, we have freedom of association in this country, they can come up with a program and do it. I don’t know if the government has to give its attention to ‘The other white meat,’’’ he said, referring to a pork-industry promotion campaign.
Promotion programs in the House bill include Christmas trees and natural stone. In the case of stone, a checkoff has been a goal of the industry since 2012, according to the Marble Institute of America, which outlines its strategy for government support on its website.
"If the goal is more consumer advocacy of our great product, you should utilize the tools you have available," said Jim Hieb, chief executive officer of the Marble Institute, a Cleveland-based trade association that spearheaded the drive for the stone checkoff. "We’re very transparent about it."
Lobbying expenses by agriculture interests increased to $138 million last year from $112 million in 2007, the year before the last farm bill passed, according to the Center for Responsive Politics, a Washington-based research group that tracks spending on lobbying. Agriculture-industry employees spent $91 million on the 2012 elections, up from $70 million in 2008.
"It’s such a big bill there’s something for everyone," said Sewell, of Taxpayers for Common Sense. "I don’t understand why we have this paternalistic attitude toward ag."
The Senate bill is S. 954. The House bill is H.R. 1947.
--With assistance from Derek Wallbank in Washington. Editors: Steve Geimann, Elizabeth Wasserman
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