Four Ag Panel Leaders Meet to Begin Work on Compromise Farm Bill

December 5, 2012 01:25 AM
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Hope is for congressional leaders to tap farm bill savings in end-of-year fiscal cliff package

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

Although many observers have farm bill fatigue, the end zone appears to be playing out as some predicted many months ago – a late-year “dash” to work on compromises between competing Senate and House farm bills in time for congressional leaders to tap the 10-year budget savings of $23 billion to $35 billion contained in the pending two farm bills.

The four top House and Senate Agriculture panel members met yesterday, and with their guidance, staff will continue their work on finishing a compromise document. That may not take as long as many think because the differences have been known for months and staff have contemplated various options in the ample time the farm bill process has been put on virtual hold.

What is needed is for congressional leaders, if they haven't already, to give the word to the Ag panel leaders to come up with a compromise bill, with an agreed-up budget savings number either directed by congressional leaders or a figure resulting from what a final farm bill will contain.

Most still believe that any final farm bill and its savings will be used  in a fiscal cliff package yet this year, with a designated budget savings and a timeline for the Ag panel and staff to complete the language. Whether that takes place via a budget reconciliation process (if so a budget resolution is needed), or whether it takes the form similar to the failed Super Committee process in the fall of 2011, remains to be seen. Farm policy stakeholders including farm-state lawmakers want to avoid House floor action this year and would prefer a more expedited process previously discussed.

Some extension of the 2008 Farm Bill appears quite likely simply because USDA has consistently told lawmakers and others that it will not be able to implement the new cotton STAX program included in both the Senate and House farm bills. Any extension brings other issues including what to do about the $4.8 billion in direct payments that would be paid for 2013 crops if a new farm bill is not implemented until 2014 crops. Some conjecture that a “down payment” of reduced direct payments could be one possibility, with a portion of the savings going to help fund some lapsed livestock disaster programs and a dairy subsidy program.

Regarding the new farmer safety net in the coming new farm bill, Sen. Pat Roberts (R-Kan.) recently shifted his position against target/reference prices contained in the House but not the Senate farm bill. Roberts said he would consider target prices if they met several conditions, according to the Congressional Quarterly. “I’ve always told Southern producers that if we can work something out, that they cannot be trade distorting and they have to based either on OMB or CBO data as opposed to a number that is just tossed out,” Roberts said, referring to the Office of Management and Budget and the Congressional Budget Office. He also said he wanted to make sure a target price program would be narrow enough that farmers would not be enticed to select the crops they produced based on what the federal government paid. “I don’t want it to bleed into the other crops and have it across the board. In that case, farmers would plant for the government instead of the market,” he said. “I’ve always said that. Now that we’re down to the line, I guess I have to say that again.”

However, some farm bill observers think that a free revenue assurance program contained in both the Senate and House farm bills, which use current prices in part to determine payouts, could lead to some acreage distortions or planting of acres in some fringe areas of the United States – the so-called “moral hazard” problem with the “shallow loss” program goal of the revenue assurance program. If so, this program could eventually be challenged by some WTO member nations, especially Brazil. And statements in the past from US lawmakers and others that US farm programs are WTO complaint have proven to be off the mark.

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






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