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Deep Cuts in Food-Stamp Spending Said Averted in Farm Bill

January 27, 2014

Deep cuts in U.S. food-stamp spending sought by House Republicans were averted in a tentative agreement on a much-delayed agriculture bill, according to a congressional aide familiar with the matter.

The proposed farm legislation crafted by U.S. lawmakers, billed as saving $24 billion through food-stamp cuts and the end of a direct-payment program for farmers, may advance to the Senate after a vote in the House of Representatives that could take place as soon as Jan. 29.

By approving a plan that largely keeps food stamps intact and preserves most farm subsidies, an urban-rural coalition has been maintained amid a tough political environment that saw an earlier plan rejected in the House. If it passes, the agreement would be another bipartisan achievement by a Congress faulted for a lack of legislative success.

Leaders of the House and Senate agriculture committee are being asked to sign off on the plan today, after weekend talks. The House plans to act before leaving town this week for party strategy meetings. The House Rules Committee is scheduled to meet at 5 p.m. Washington time and may consider the farm plan, according to the aide.

Some of the savings may go to compensate counties with large swaths of untaxed federal land, a $450 million item House Speaker John Boehner assured lawmakers earlier this month would be in the bill.

 

Bunge, Ace

 

The bill to reauthorize U.S. Department of Agriculture programs governs farm subsidies, which encourages planting of soybeans, cotton and other crops that lower materials costs for commodity processors including Bunge Ltd. The bill subsidizes crop-insurers such as Ace Ltd. and funds purchases at Kroger Co. and other grocers through food stamps, its biggest expense.

The farm-bill accord would be a third bipartisan deal by the current Congress, which passed a budget last month and cleared a $1.1 trillion spending bill on Jan. 16. The five-year farm legislation would end an aid program that makes direct payments to farmers and cost about $50 billion over 10 years, and reduces food stamps. Much of the subsidy spending was restored in other programs.

The agreement reached on food stamps would cut spending by $8 billion over 10 years, or about one-fifth of the $40 billion sought by House Republicans. Negotiators agreed to tighten a provision that let states give residents as little as $1 a year in heating assistance to qualify them for an average of $1,080 in additional nutrition aid.

 

Target, Supervalu

 

Republicans successfully sought to lift the "heat and eat" threshold to $20, while Democrats proposed $10. The higher level creates almost $9 billion in savings, some of would be plowed back into a $200 million pilot program that lets 10 states toughen work requirements and boosts spending for food banks by about $200 million for 10 years, said the congressional aide who requested anonymity to discuss internal talks.

Food stamps used at retailers such as Target Corp. and Supervalu Inc. cost a record $76.1 billion in fiscal 2013, or about 12 percent of the $650 billion a year Americans spend on groceries. About 47.4 million Americans used the program in October, the most recent month available, the U.S. Department of Agriculture said Jan. 10.

Almost half of all food-stamp redemptions are in big-box supercenters such as Wal-Mart Stores Inc., while most of the rest are in chains such as Safeway Inc., according to data collected by Bloomberg.

 

Lottery Ban

 

The farm bill would also forbid food stamps for lottery winners, an idea supported in both chambers, and restrict aid for college students. Not included was a Republican plan to tighten state eligibility requirements, a projected savings of $11.6 billion, or a $19 billion reduction by reducing waivers states can give childless adults who would otherwise face work requirements or time limits under the Supplemental Nutrition Assistance Program, the technical name for food stamps.

Contested proposals over meat labeling and state laws governing farming practices are still being negotiated, while a plan to involve the government in managing dairy supplies will be modified to gain support from House Speaker John Boehner.

Companies including Tyson Foods Inc. have called for country-of-origin labeling, a part of farm bills since 2002, to be weakened after complaints about the labeling from Mexico and Canada before the World Trade Organization the U.S. has lost. Last year the USDA tightened the rules, eliminating the ability for companies to merely say the beef was from North America and requiring separate disclosures to say where beef, lamb, pork, chicken and goat were born, raised and slaughtered.

 

Subsidies, Insurance

 

On commodity subsidies, the bill combines a House push to raise so-called target prices under which the government will subsidize farmers with the Senate approach that emphasizes more insurance aid.

As the cost to farm has increased and crop acreage has shifted from wheat and cotton to soybeans and corn in the past 20 years, price and acreage calculations for aid have been seen as archaic, though tying subsidies too closely to market conditions increases the chance of trade retaliation through the World Trade Organization.

Payment limits under commodity programs would be capped at $125,000 per individual or $250,000 per couple, with the definition of a "family farmer" left up to the USDA for definition purposes.

 

Conservation Plans

 

Crop insurance, which paid out a record $17 billion after the 2012 drought, would include requirements that farmers follow conservation plans on their land to qualify for federal subsidies. So-called conservation compliance is included, while limits on subsidies for wealthier farmers receiving assistance on paying premiums, supported by the Senate, isn’t in the bill.

Congressional passage would put in place a new law to succeed the previous bill passed in 2008. An extension of that law expired Sept. 30, potentially forcing the USDA to re- implement farm programs governed by language the from 1949 law that underlies policy and potentially doubling dairy prices.

Agriculture Secretary Tom Vilsack has said the department is focusing on implementing a new law rather than re-creating an old one because he’s confident Congress will pass the legislation. The department won’t change paths unless he’s convinced otherwise, the secretary said earlier this month.

 

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