Consider Farm Bill at Finish Line as Peterson Won't Block Dairy Deal

January 17, 2014 12:00 AM

via a special arrangement with Informa Economics, Inc.

Congress will garner enough votes later this month, early Feb. to end lengthy process

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

The five-year farm bill covering five crop years is all but over than the voting, as Rep. Collin Peterson (D-Minn.) said that although he has not yet seen all the details of compromise dairy subsidy provisions proposed by House Ag Chairman and farm bill conference leader Frank Lucas (R-Okla.), "If it's what I'm hearing, I won't be happy but I'm not going to hold the bill up."

Peterson is the Ag committee's ranking Democrat and the major lawmaker who unsuccessfully pushed supply management language be included in the dairy provisions – over the successful objection of House Speaker John Boehner (R-Ohio), who flexed his leadership muscles on the matter. Peterson said the compromise would maintain the margin insurance program but remove the supply management provisions that Boehner is against.

The dairy language drafted by Lucas sends "the right market signals, but I am not sure it's strong enough," said Peterson.

As for the farm bill, conferees want to complete writing the package next week, during the recess, and get it on the floor the week of Jan. 27, Peterson said. Always-optimistic Senate Agriculture Committee Chairman Debbie Stabenow (D-Mich.) agreed with the timeline and said a deal is near.

Other technical matters need to be properly addressed, including some lingering crop subsidy provisions that should fall into place now that the dairy policy battle is virtually settled.

Negotiators are close to a compromise on the cap of government payments per person to reconcile the different versions in the House and Senate bills, he said.

Sen. John Hoeven (R-N.D.) said the dairy compromise being circulated by Lucas is gaining support. "I think we have a reasonable compromise on dairy," as well as one on defining who is actively engaged in farming to qualify for government payments, he said.

Dairy producers will "get assistance on a counter-cyclical basis based on price, but only for a certain amount, so it helps your smaller producers" when "they have lower production," Hoeven said. Sources previously detailed that under the current proposal, the USDA Secretary would be given the annual authority to adjust the premium paid by plus or minus five percent, in an effort to make the plan actuarially sound. Also, the gross margin insurance indemnification would be a blended payment when a producer exceeds historical (base) production – the producer would get a full indemnification payment on historical production, but a lower payment on production exceeding the historical base output.

The compromise does not bring back the Milk Income Loss Contract (MILC) program, a product price support program that was eliminated in the House and Senate farm bills.

"We are very close," to completing a House-Senate bill, Hoeven said. "I think we will have agreement this week" in time to put it on the floor the last week in January, Hoeven said.

Other issues include what to do about country-of-origin labeling (COOL), but that topic, too, will eventually be decided by either farm bill principals or a possible meeting of the 41 conferees, something some lawmakers want to avoid.

Comments: In my over 36 years of covering the business of agriculture, this bill goes down as the most perplexing, frustrating and time-consuming topic. It began with hearings in 2010 -- you read that correctly. It then faced an aborted attempt to hitch a ride on the failed Super (Stuper) Committee in 2011. It faltered in 2012 due to House GOP leadership not bringing a measure to the floor because the votes simply were not enough. And in 2013 recall the initial failed vote in the House due to bewildering farm bill strategy by Majority House Leader Eric Cantor (R-Va.), then lingering farm bill issues like dairy pushed the saga into this year -- the fifth calendar year of a five-year farm bill. How about that for dysfunctional.

The farm bill process also included some of the worst lobbying among some groups many farm bill veterans tell me they have ever witnessed.

And some of the rookie farm bill press hopefully learned a few lessons -- but the hype and drama played up by some of the newer ag-media is likely the direction ahead for this industry. Better to tune out than in.

As for how Congress mishandled the process -- the dairy issue should not have waited until near the end to be resolved. That was a time-consuming mistake. And for anyone to think a Speaker would not win that battle is beyond me. Peterson played his cards as long as he could, but they included no aces.

Now whenever the details of what is in the nearly $1 trillion bill are released, it will be interesting as usual to see what commodity prices and participation levels that the Congressional Budget Office (CBO) used for scoring in what could be some big safety net payouts in the years ahead. And wait until some World Trade Organization (WTO) members assess whether or not coming optional "base reallocation" and a "generic cotton base" along with some hefty payouts will distort production and acreage. If so, expect WTO challenges. But many farmers, commodity groups and farm-state lawmakers disdain any such suggestion. They say a new farm bill could be in place before any WTO challenge runs its course. But just ask a U.S. cotton producer if a successful WTO challenge doesn't change things. The Brazil case against U.S. cotton policy started in 2002 and is still not over. You read that correctly -- 2002. Heck, that means WTO members would take even longer to write a farm bill than U.S. lawmakers. But we already knew that because of the Doha process -- or lack of it.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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