Farm Bill Update: Senate Markup Scheduled | House Announces More Hearings

April 18, 2012 04:44 AM

via a special arrangement with Informa Economics, Inc.

Major differences ahead in Senate and House farm bill versions

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The following is an update on the omnibus farm bill developments:

Timeline: The Senate Ag Committee will hold two days of markup sessions next week, beginning April 25. While some southern Republicans on the panel may vote no for the Senate farm bill version if it doesn't include an increase in target prices, the measure is expected to clear the panel – even though it will cut an estimated $23 billion over ten years, a lot of agriculture-related funding will still pour out and if there is anything this Congress likes, it is spending money. Senate Ag Chairwoman Debbie Stabenow (D-Mich.) said she expects to meet with panel members today (April 18) and to release legislation to them a day or two later. Most sections of the bill have been completed by staff, but some issues — including crop insurance for specialty crops and a safety net for cotton growers — remain to be worked out, she said.

The House Ag Committee announced more farm bill hearings, this time at the subcommittee level.

House Ag panel vote today on cutting $33.2 billion from food stamp program means little if anything for the coming farm bill debate. A round of comments from Democratic members against the cuts – which will not become law because the Senate will not even vote on a budget resolution/reconciliation this year, not even at the Budget Committee level. So today's Ag panel vote is largely political. It's going nowhere.

However, House Ag Committee Chairman Frank Lucas (R-Okla.) called the reconciliation process "an exercise" in which his committee must demonstrate it can find substantial savings in existing spending. Food stamps/SNAP, which costs more than $75 billion a year and accounts for around 77 percent of USDA spending, will be the focus of the reconciliation bill. "It is not the farm bill," Lucas said. "A regular farm bill will entail savings, cuts, however you want to define it, in all areas of the farm bill." Lucas said "everything will see reductions" this time around, especially as the shift is made away from direct payments. "If you think I'm going to consume a lot of Maalox before this process is over, absolutely," he said. "I have to work within the environment that I'm given."

Added Lucas, "We will work in a bipartisan fashion to try and to get us a farm bill done this year. It is no small challenge."

However, Lucas must first get a commitment from House Speaker John Boehner (R-Ohio), who has told some groups and others that he will not bring the farm bill to the floor before November elections because he doesn't want GOP members fighting each other. The Senate, however, may get a chance to vote on its omnibus farm bill before elections. Stabenow aid that although there has not been a time set to debate the farm bill on the Senate floor, it is crucial that her committee pass a bipartisan bill that will "send a signal" to Senate Majority Leader Harry Reid (R-Nev.) that it can be approved.

Markup sessions set for April 25, 26 in Senate Ag Committee. As widely expected, next week will bring two days of markup discussion on the Senate version of the farm bill, with the language appearing as early as Friday, but the Senate has been known to delay issuing language of major bills.

A major issue in the Senate farm bill markup is the price trigger for risk management program payments. Sens. Kent Conrad (D-N.D.) and Max Baucus (D-Mont.) are aggressively pushing an on-farm price trigger, but others, perhaps the majority of farm-state lawmakers, prefer a county or crop reporting district trigger, perhaps for good reason because going to an on-farm price trigger costs an estimated $8 billion in additional funding and last fall forced a big percentage drop in the base acres any such risk management program is paid on. One farm bill contact said, "Those who think the Senate proposal is going to be farm-based and not county-based may be counting chickens before they hatch. There is MINIMAL support at best on the committee for a farm-based approach."

Farm bill budget cuts will be a major thorn once farm-state lawmakers get serious about completing the process. The Senate is widely expected to reduce the farm bill baseline by $23 billion over ten years; the House about $10 billion above the Senate mark. "When we get into the farm bill, I assume where we're heading is that Republicans want us to have a $34 billion cut," according to House Ag Committee Ranking Member Collin Peterson (D-Minn.) "That would be a legitimate fight, he said. Peterson said some Republicans will say the budget cuts do not go far enough, and Democrats will complain about cuts in the SNAP program. That debate does not mean much now but will likely be repeated when the committee takes up the farm bill in the coming weeks, Peterson said. "So we're going to have another fight over food stamps with the farm bill … shooting with real bullets," Peterson said.

Trade policy concerns. With each farm bill written, farm-state lawmakers say they do not want to include trade-distorting farm policy that could be challenged by World Trade Organization (WTO) members. Lucas said any new financial safety net also should not provide incentives that unduly influence farmers' decisions about the kind of crops they raise. "If you enhance crop insurance, whether it is an improved way to address weather and yield or you come up with a concept of revenue to address price, of course it is going to affect farmers' decisions" about crops to grow, he said. "I worry when the committee, the House and Congress as a whole has worked its will in this political environment that whatever we come up with will be more difficult, more challenging to defend in future [trade] cases," Lucas said.

He also said revenue insurance programs alone may not provide enough of a financial buffer for steep price declines. Lucas said that is one reason the commodity title will likely include higher target (reference) prices. This is especially important for southern rice producers, most of whom favor a target price approach rather than a move to a crop insurance-like risk management program. Peterson acknowledged that higher target prices are attractive to Southern cotton, rice and peanut growers, so it will be interesting to see if the Senate goes along as some sources say the coming Senate version may not go along with the House-favored approach toward target/reference prices. "I'm for raising the target prices and frankly that's the only way you are going to get the Southerners on board with this bill," Peterson said. "They need to get over it and understand that."

If the House doesn't act on a new farm bill by Nov. elections, an extension will be needed. And any such extension may not be nearly as easy as in the past. Leaders of the two Ag panels said they doubt Congress can pass a farm bill extension beyond this year, thereby upping the pressure on lawmakers to reach a final deal on an omnibus measure before the new Congress in 2013 – a Congress that could see major changes in the Senate (with a possible GOP takeover), the House (fewer Republican members) and the White House (a very close race between President Obama and likely challenger Mitt Romney). "It's the best bill possible, and we have to move," said Sen. Pat Roberts (R-Kan.), ranking member on the Senate Agriculture Committee. Roberts said the Sept. 30 deadline requires Congress to move "expeditiously" to give farmers a predictable safety net and an idea of what it might look like so they can plan accordingly. "We need to understand that this may not be the best bill possible in the eyes of some commodity groups for some reasons, but it's the best bill possible and we have to move," said Roberts. "We simply cannot allow an extension. I don't think an extension will pass the House, and I doubt it will pass the Senate."

"I think it's a very real possibility that the Republicans will not extend the bill unless there are cuts, and that means you're writing a farm bill," Peterson warned.

Waiting until 2013 to pass a new farm bill, the farm-state lawmakers said, would probably only increase pressure to slash spending — perhaps deeper cuts to crop insurance, nutrition programs, and other programs. "I think it doesn't get better next year, in terms of the numbers," Stabenow said. The major issue, Stabenow said, remains how best to preserve or improve crop insurance while eliminating direct payment programs that have been the backbone of the federal farm safety net. US taxpayers currently pay around 62 percent of a farmer's crop insurance buy-up coverage. Peterson said Congress should hold off on changes to crop insurance "till we know what's wrong," and let industry groups design programs on their own first. "I've been telling groups they need insurance that protects their crop," Peterson said. "I've been telling them for five years, design a program that works for you." But Peterson said he believes that ultimately all crops should be protected through insurance programs. Meanwhile, Lucas said, "If we don't shift to crop insurance as the safety net, what is the safety net?"

Another conference issue will be dairy policy, observers note, notably over the Peterson-push for a supply management program for dairy, linked to a gross margin support program.

Another thorny issue: cotton program details. US cotton policy has been successfully challenged by Brazil via the WTO process. And Brazil could do it again. The National Cotton Council (NCC) has proposed a revenue insurance program that it says will cost the government about 30 percent less than the current program and meet WTO requirements, but Brazil has said the new program, called the Stacked Income Protection Plan (STAX), also distorts trade. Roberts said discussions continue in the Senate and with representatives of Brazil, and he believes the committee can "reconfigure" STAX to address the objections. Another meeting with Brazilian representatives is scheduled for next week, Roberts revealed. "We're very eager to hear again from the Brazilians," Roberts said. "That's an ongoing effort to make sure we don't get into trouble."

What to call the new farm bill. USDA Secretary Tom Vilsack even got into the guessing game on what to call the next omnibus farm bill, saying he wants to call it the "food, farm and jobs bill."

But a veteran farm bill observer had this tongue-in-cheek name for the Senate farm bill version: TARIFF, which the observer said stood for Try America's Risk Free Farming.


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






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