Farm Bill Issues Update: Same Issues, No Decisions

November 20, 2013 03:06 AM

via a special arrangement with Informa Economics, Inc.

Same issues with some new twists


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

Farm-state lawmakers, their staffs, and some commodity group lobbyists continue to debate (argue) about most of the same issues that have surfaced repeatedly over the past three years in trying to birth a new farm bill. Just think: EPA actually released its RFS proposal before farm bill conclusions were reached. Now that's a real criticism. Let's go through some of the current-top issues, with this warning: they all could go away quickly if the two leaders of the conference panel -- House Ag and farm bill conference Chairman Frank Lucas and Senate Ag Chairwoman Stabenow -- can reach decisions. Period.

New farm bill issues linger. Another day, and the same issues. Regarding the Title I farmer safety net issues, corn and soybean grower lobbyists continue to insist on a change to the House version regarding what acres payments are made on relative to target price payouts. They've even offered a last-minute proposal (link) that House negotiators have rejected, and others in the ag industry say is fraught with unintended consequences, concluding as one observer put it as "a plan not well thought out." The corn/soybean/canola plan would base PLC payments to the previous five-year average of planted acres instead of the current-year acreage – unknown is whether or not that would included considered planted acres and/or prevent planted acres. "We believe this novel approach addresses both the needs and the concerns of farmers growing all program crops in all regions of the country," the groups wrote. Apparently their assessment was not shared by House negotiators. Corn and soybean grower lobbyists continue to note what analysis does not confirm – that the House could or would distort plantings.

Some lawmakers say 2008 Farm Bill extension better than House PLC. One of those lawmakers I Sen. Mike Johanns (R-Neb.) who hails from corn country Nebraska and thus is not as sensitive to southern state grower interests. Johanns, a former USDA secretary who isn't on the conference committee, detailed his concerns in a letter to Senate Ag Chairwoman Debbie Stabenow (D-Mich.), House Agriculture Chairman Frank Lucas (R-Okla.) and their ranking members. Link to Johanns' letter.

Sen. Pat Roberts (R-Kan.), a conferee, continues to hammer on the potential WTO problems with pending farm bill ideas, notably from the House. "We have big problems on food stamps and planted acres that will lead to a WTO challenge. Then you have target prices. Not to mention the dairy program and a lot of other things," said Roberts in remarks to the Congressional Quarterly. But USDA Chief Economist Joe Glauber estimates a remote two percent chance of either policy causing the US to exceed its annual Aggregate Measure of Support (AMS) limit, according to a letter to farm bill leaders that was written Sept. 23 by the Southwest Council of Agribusiness (link).

Sen. Chuck Grassley (R-Iowa) said that the House PLC "would take us backwards to the time when farmers planted for the government instead of the marketplace." Grassley, too, is concerned about the possibility of a WTO challenge. "I want to get a farm bill done but I want to make sure it’s a farm bill we can defend," he said. Grassley did not of course mention the mandated RFS and how that has impacted corn and soybean markets and growers. Some corn groups continue to cite the need to be market-oriented, but fail to note the incentives generated by the Renewable Fuel Standard mandate. Others note Grassley's continued push for around a $1tax incentive/subsidy relative to biodiesel. You know, market-oriented.

Are plunging commodity prices impacting the farm bill conference? Lucas thinks so. He said on Tuesday that farmers are changing their minds about the House bill's commodity title because of this year's tumble in corn prices. "Everybody has their differences on how robust the safety net should be. I will tell you that dynamic has changed in recent weeks," Lucas said. While the verdict is still out on whether corn growers would garner any payments for their 2014 crop relative to the PLC program, they would nonetheless garner a hefty payout via the Senate's proposed shall loss payment program, or as the corn grower group now prefers to call it, the Ag Risk Coverage (ARC) program. Shallow loss would provide payments when revenue falls below the previous five-year average. A maximum ARC payment would occur if the price peg is around $4 using average yields. This hefty payout for corn growers (not to mention similar if not higher payouts for soybean growers relative to the pending Senate ARC) is exposing the equity problems in the safety net program relative to the Senate approach, which put 90 percent of its safety net funding in the ARC/shallow loss payment area. USDA Nov. 8 forecast the season average on-farm price for corn in 2013/14 at $4.50 per bushel based on the midpoint of their published price range. That is down from their forecast price of $4.80 per bushel in September.

As for whether or not there would be any extension, short- or long-term of the 2008 Farm Bill, no one wants to talk about that at this juncture. Others note the 2002 Farm Bill had to be extended six times starting in December 2007. According to the Congressional Research Service, the first extension was for three months. The five remaining extensions ranged from a week to a month. But any extension in this Congress will not be so easy to garner, as some conservative senators have indicated that any move to extend the 2008 Farm Bill will be met with opposition if direct payments are not eliminated. That led House Ag Committee ranking member Collin Peterson (D-Minn.) to say he would not support any such extension.

Bottom line: All of the above issues should have been dealt with quite some time ago. As my previous column indicated, the time for decisions is no later than this week. If not, then congressional leaders in the House and Senate will or should take over the process. And of course we all know how those "leaders" lead....


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






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