The Senate version of the bill, passed 64-35, makes significant reforms to farm programs.
Farm country breathed a sigh of relief this afternoon as the Senate passed its version of the 2012 farm bill, 64-35, saving taxpayers more than $23 billion.
Reform is the hot word in Washington today, and that is just what Sen. Debbie Stabenow (D-Mich.) set out for when the Senate Ag Committee began drafting the bill several months ago.
"This farm bill is the most significant reform to farm programs in decades—it cuts spending, ends subsidies, improves accountability and strengthens healthy food systems," Stabenow said.
The hotbed of discussion in farm country has been risk management and the elimination of direct payments; however, crop insurance took the hit today, including passed amendments requiring a conservation compliance, and a reduction in crop insurance premiums.
"While the initial Congressional Budget Office (CBO) score of the bill indicated another $5 billion in crop insurance spending over 10 years, approved floor amendments (AGI test, and conservation compliance) showed that with crop insurance moving into the direction of a farmer safety net, reformists were quick to seek changes, and they were successful, despite farm-state senators and the crop insurance sector incorrectly predicting those amendments would fail," he says.
Many in Washington are wondering why the crop insurance sector, which is mandated by perminant federal law, was such a front-runner in moving the bill through the Senate.
Reform for the Dairy Industry
The Senate's passage of proposed dairy reforms mirrors what the National Milk Producers Federation
(NMPF) proposed in its "Foundation for the Future" dairy reform plan that has been under development for two years.
Specifically, it includes dairy margin insurance, which protects a farmer's margin between milk and feed prices. The program includes both basic margin protection of $4 and supplemental insurance up to an $8 margin. The basic insurance is free, although anyone signing up for the program also then agrees to participate in a "market stabilization" program that requires the producer to cut back production or forfeit 2% to 8% of his milk check when the margin protection program is activated. The farmer must sign up for the basic insurance in order to purchase additional supplemental insurance.
The dairy reforms in the Senate bill also eliminate dairy prices supports, which have been a cornerstone of dairy policy since the 1940s. It also eliminates direct payments, called Milk Income Loss Contract (MILC) payments, which are triggered during periods of low milk prices.
Although NMPF and most cooperatives championed these reforms, many dairy processors and free-market dairy producers oppose the plan due to the inclusion of the market stabilization program, which they dub "supply management." Speaker of the House John Boehner (R-Ohio) also opposes the market stabilization program, and has publicly stated it will not be included in the final version of the farm bill.
The dairy provisions of the Senate bill do not contain any changes to Federal Milk Marketing Orders.
Crop Risk Management
In terms of risk management, Wiesemeyer says the story lies in payment on planted acres instead of base acres, as it has been for decades. He says soybeans benefit the most from this type of shallow loss scenario.
"As for the Ag Risk Coverage (ARC) program, the verdict is still out on whether that will be the panacea its supporters say it will be; it also depends on whether or not the coming House farm bill changes some of the Senate language relative to this controversial shallow loss program," Wiesemeyer said.
Specialty crop growers are happy with the bill, saying it will strengthen their industry in both the short and long term. "For specialty crop producers across the country, the farm bill represents an opportunity to create a healthier life for Americans across the country," said Tom Nassif, president and CEO of Western Growers and co-chair of the Specialty Crop Farm Bill Alliance. "Farm bill funding helps fuel innovations in farming that will help our producers grow and harvest an abundant supply of specialty crops utilizing fewer natural resources for Americans."
The House Ag Committee is scheduled to begin mark-up of its version of the bill by July 11. Final language of the 2012 farm bill will follow House amendments, debate and passage.
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Written by Anna-Lisa Giannini and Jim Dickrell