Farm Bill Questions and Comments: Part 1

December 10, 2013 12:21 AM
 

via a special arrangement with Informa Economics, Inc.

Readers ask questions, seek answers


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


At this critical juncture of new farm bill negotiations, more is unknown than known. But the following are responses to reader questions on several farm bill topics:


Will we have a new farm bill this calendar year?

Comments: A framework for a new farm bill is possible by the end of this week, but getting an actual farm bill through the legislative process, while not impossible, is a tall order – especially for this Congress, which has shown lawmakers like later rather than sooner. And that is an understatement. If House leaders were to alter their current plans to recess Friday, Dec. 13, then up the odds that a new farm bill could still occur this year. Absent that, it's January or February 2014...if a farm bill agreement is ever finalized by conference committee.


But what about the move to permanent legislation and sky-high milk prices if there is no new farm bill in place by Jan. 1, 2014?

Comments: While USDA Secretary Tom Vilsack continues to hype this possible outcome, he is, hopefully, just using overstatements to help goad a turtle-like Congress into action. Congress is widely expected to pass a short-term extension of key farm programs, notably current dairy policy, to avoid any such development – and to give lawmakers "more time" (more than the years they've already had) to complete a new farm bill. Think early 2014.


So there will be no further extension of the 2008 Farm Bill?

Comments: While that is not likely, other than the short-term limited extension previously mentioned, no leader from either political party, nor no key farm-state lawmaker, want to see a further extension of the 2008 law. But the sorry history of this Congress would say never rule out anything – even the need for another one- or two-year extension, even though as previously noted, the odds of that are unlikely to very unlikely.


If there is a further extension of the 2008 Farm Bill, won't some conservative lawmakers want to make sure direct payments are eliminated? And could that pass?

Comments: Some lawmakers on both sides of the political aisle and in both chambers have already said they would insist on eliminating direct payments. But some farm-state lawmakers quickly respond they could not support any such development, and would thus not vote for any such extension. This is giving oomph to efforts to finalize new farm bill details. Farm-state lawmakers also note that if direct payments are eliminated in any extension of existing farm law, that in itself is a new farm bill, and you may as well settle on other new farm bill details. This is why congressional leaders from both political parties want to finish the multi-year process of getting a new multi-year farm bill.


Let's say the conventional wisdom is wrong, again, and another extension of the 2008 Farm Bill is needed. Are there any other problems with that?

Comments: Some say if there is no new farm bill this go around, there may never be a new farm bill because the politics and budget-cutting era will keep getting worse. Others say that any full extension would bring in far more farmer participation in the Average Crop Revenue Election (ACRE) program, and because that is based on actual plantings, the payout for some 2014 crops could be huge – especially for corn and soybeans.


Is the Title I farmer-safety net hangup really over relative to how any payments will be calculated?

Comments: Yes. And it's been a doozy of a battle, with some groups (some corn, soybean and canola lobbyists) changing their positions several times during the process.


So is it unlikely that actual plantings will be used to calculate any Title I payouts?

Comments: The odds favor some type of base acre approach. Either existing base acres or some other choices. But whether plantings or some base acreage concept is used, the same system will be used for both the ARC and PLC Title I programs. That is called equity.


What about moving to a rolling five-year average of planted acres to determine farm program payments?

Comments: Bad idea. It would lead to farmers in part planting to build base, and would encourage farmers to go after (plant) the higher-value crops. Some WTO members would have a field day filing challenges to any such development. And they would likely win cases against any such US program move.


Are some senators who say the target price levels in the House-passed farm bill are set at levels at or above the cost of production accurate?

Comments: For the most part those senators are wrong – and some should know better. A case can be and has been made by realistic sources, and even some senators, that the House barley target price is set too high based on production costs. But not so for most other farm program crops. Based on my recent story about potential ARC payments being nearly double Direct Payments, these senators who also strongly support ARC might want to take the log out of their own eyes before removing the speck from their neighbor’s….


Will California/Japonica rice have its own and different target price?

Comments: The odds favor a "California rice" target price.


Will the final farm bill target prices be those used for the Price Loss Coverage (PLC) program in the House bill?

Comments: Most likely, provided upcoming Congressional Budget Office (CBO) scoring doesn't cause the need for further refinements – that is, farm bill costs are higher than farm bill proponents thought.


Can a new farm bill, even if it is signed into law in early 2014, be implemented for 2014 crops?

Comments: Yes for Title I programs, but not for some crop insurance-related programs. Title I programs (ARC, PLC) could be implemented in time. But the Supplemental Crop Coverage (SCO) and the cotton STAX program – both crop insurance title programs – would not be implemented until 2015. There may be further delays for some areas where data is not available.


If the cotton STAX program can't be implemented until 2015, will cotton producers be given a reduced direct payment like the language in the House farm bill, but not the Senate?

Comments: Yes. The unknown is the exact level of the direct payment, or whatever they call it, and whether any such payment is for one or two years.


Will conservation compliance be part of crop insurance program participation?

Comments: Yes.


Will there be a means test reduction via the crop insurance program?

Comments: Not likely, as some sources say farm-state lawmakers will likely "give" on conservation compliance, and thus will likely insist on not invoking any other restrictions on crop insurance enrollees.


Will dairy supply management language be part of the new dairy policy?

Comments: Not likely. But if this issue lingers, it could be put to an upcoming vote of all farm bill conferees. And it that were to occur, the votes are unlikely to favor supply management language.


Will the "King Amendment" be included in any new farm bill?

Comments: Not likely. This is the amendment by Rep. Steve King (R-Iowa) that is aimed at stopping California from regulating animal handling on out-of-state farms.


Will language regarding country-of-origin labeling (COOL) be in the final farm bill?

Comments: Likely, yes, but it is murky as to what language. Some are pushing for a "North American label," while others are pushing for repeal language. COOL proponents want no changes. Thus, this is another issue that could and likely will be put to a vote by all farm bill conferees.


Will Sen. Chuck Grassley's (R-Iowa) efforts regarding payment limits and altering the definition of actively engaged be included in any new farm bill?

Comments: This may well be one of if not the last farm bill item decided. Grassley’s total pay limit of $125,000 is probably OK with conferees but the underlying pay limits probably have to change. Actively engaged rules proposed by Grassley probably cannot happen because they would cause an enormous shift in how farmers operate, forcing most if not all farmers into cash rent. Too radical a change. If ever enacted, even lawmakers who thought they supported it would be running to USDA for relief only to find the department’s hands are tied.


 

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


 


 

 

 

 

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