Farm Bill Update: Jan. 31, 2013

January 31, 2013 01:17 AM
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via a special arrangement with Informa Economics, Inc.

Timing | Direct Payments | Crop insurance | Budget cuts | Priorities | Impacts

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

The following is a quick update of key issues regarding a new farm bill:

· Timing: The farm bill timeline waits until both the House and Senate Ag panels get budget-saving instructions from their respective leaders and Budget panels. This will likely be part of a forthcoming budget resolution/budget reconciliation process that will largely determine the timeline of the bill. Contacts signal farm bill markup will begin in April or early May, with a goal to finish the bill by the August congressional recess. A lot depends, as in the ill-fated farm bill of 2012, on House GOP leadership scheduling House floor debate. Senate Majority Leader Harry Reid (D-Nev.) has already put the farm bill among his top ten initiatives for 2013.

· Direct payments: As we reported, they are still around for 2013 crops and despite conjecture and remarks from some lawmakers and others to the contrary, they will remain in place for 2013 crops and will be paid out in Oct. 2013. But they will be eliminated for future crops via the new farm bill – whenever it comes. Meanwhile, as part of 2013 farm programs, USDA announced that those participating in ACRE can opt out of the program for 2013 if they so desire. If so, former ACRE program participants would no longer have to subtract 30 percent from their direct payment calculation.

· Crop Insurance: The farm bill put together last year would actually increase funding for this very popular program, but farm policy reformists and opponents have their sights on this program for the years ahead. Some want to eventually put a means test to the program and/or a payment cap. Those initiatives will be heartedly contested by farm-state and ag industry stakeholders, but a debate is coming. Crop insurance is second behind food and nutrition relative to farm bill baseline spending. The huge payouts made for 2011 crops and even larger (record) for 2012 crops will certainly keep this topic up front and center. Another issue ahead is the merging of the farmer safety net relative to the farm bill proposals into the crop insurance arena ('shallow loss”/revenue assurance program initiatives and the cotton STAX program, for examples.

· Budget cuts: As noted previously, the House and Senate Ag panels will be told how much to cut via the farm bill process, and the Senate will likely have a lower number than the House, and thus this will have to be reconciled in a forthcoming conference. Key issues are how much funding cuts come via the food stamp program, where Senate Democratic leaders have already announced they will fight the much greater funding cuts pushed by House GOP leaders. In last year's farm bill marathon, the Senate proposed to cut food stamp funding by $4 billion, versus $16 billion pushed by House GOP leaders. The eventual figure will not be decided by Ag panel members but by House and Democratic congressional leaders, along with White House input. The eventual farm bill budget cuts will likely be $28 billion to $35 billion over ten years.

· Priorities: Budget and deficit-related issues are paramount. Comprehensive immigration reform will get a lot of attention but could be kicked into 2014.

· Impact: Some urban and suburban lawmakers believe farm state lawmakers and farm group lobbyists are overreaching relative to their farm bill proposals – especially by pushing so-called “shallow loss” payments via a safety net program. They say farm bill stakeholders have forgotten that a farmer safety net should be designed for sustained very low prices.

· Policy issues in general: Most policy issues will be led by the coming debate over dealing with the deficit and long-term debt – as noted in the farm bill discussion. As for energy policy, coming hearings on the Renewable Fuel Standard (RFS) will again be held, but there is virtually no chance that the RFS mandate will be eliminated for corn-based ethanol. Meanwhile, a topic that will definitely impact agribusinesses is the coming major debate on comprehensive tax reform. Despite hope to the contrary, that debate will not end this year, but the eventual results could have major implications for the business of agriculture.

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


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