The Real Farm Bill Issues Lawmakers and Stakeholders Must Confront

March 21, 2012 03:07 AM

via a special arrangement with Informa Economics, Inc.

Farm bill timing | Revenue trigger formula | Crop insurance

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

Lawmakers, especially from this Congress, are quite adept at pointing to reasons why they can't get something accomplished. This is magnified in the case of trying to get an omnibus farm bill done, especially before Nov. 6 elections. But the timing of that measure is just one of several contentious issues that Ag Committee leaders, stakeholders and others will have to deal with for the omnibus measure ever to cross the finish line – whenever that occurs.

Let's take a look at a few of those topics.

Farm bill timeline. Ag panel leaders (at least three of the top four) were ready to sign off on a farm bill plan last fall that would have been linked to the so-called Super Committee process that failed last year when twelve members of Congress couldn't even come up with $1.2 trillion in deficit reduction over ten years. Sure that version of the farm bill was written a lot behind closed doors, and would not have been subject to amendments, nor a filibuster attempt in the Senate. But the details were there.

Hurdles, or excuses? Now, more than a few months later, several Ag panel members are citing all sorts of hurdles in getting a farm bill done. But all they have to do is hold a markup session, using last fall's farm bill as a foundation, and see if enough votes are there for passage – which is likely the case.

It is first up to the leadership skills of the House and Senate Ag panels to get a markup vehicle cleared. The next step is to get the leadership in both the House and Senate to provide floor time for debate and votes on the omnibus farm bill. But first, the Ag panels must deliver – get a markup bill through the committees. Only then can they blame leadership for not allowing floor time (it's only March 20) to consider the measure before Nov. 6 elections.

Ag budget cuts ahead. With Tuesday's release of the latest GOP House budget proposal, House Ag Committee leaders now know how much they will have to cut over ten years -- $33.2 billion. And, the proposal tasks the Ag Committee to deliver details on those cuts by May 1 -- this year. So the House Ag Committee now has a number, and a date. Let's see if they meet both. The House Ag panel's last farm bill hearing is currently scheduled for April 20. The Senate Ag Committee actually moved up their final hearing so that they could get to the business of writing the bill.

But is the House Ag Committee really bound by the budget instructions? I'm not so sure because am picking up information that the House Ag Committee may not necessarily be bound by the $33.2 billion in cuts over ten years that was part of the latest Republican budget plan in the House. The reasons are complex, but sources signal the House Ag panel will proceed with its work on writing an omnibus farm bill that may not contain that level of cuts.

House Ag Committee Chairman Frank Lucas (R-Okla.), in a statement about the House GOP budget proposal, said, in part, "Rural America, production agriculture and the House Agriculture Committee are willing to do our part in reducing the deficit. The current Farm Bill expires in September and the House Agriculture Committee is continuing its farm bill process with a series of field hearings to receive input from producers on how to craft responsible policy that contributes to deficit reduction. Additional hearings in Washington, D.C. will quickly follow field hearings. I'm proud of the bipartisan tradition at the House Agriculture Committee and have no doubt it will continue over the coming months as we work tirelessly writing a new Farm Bill. I would caution people about reading too much into the numbers or policy proposals in either the President's budget or the Ryan budget. They are only suggestions. During our process, both policy and deficit reduction targets will be developed in conjunction with Ranking Member Peterson and Members of the Committee as we write a fiscally responsible Farm Bill that ensures Americans continue to have a safe, affordable, and stable food supply."

Lame-duck session list growing. As for those saying a farm bill could be debated and voted on in a post-election, lame-duck session of Congress, the list of important topics that are being kicked down the road for that session is growing. Those include expiring 2001 and 2003 Bush tax cuts, a possible increase in the debt limit, a surface transportation bill, Fiscal Year 2013 spending bills, etc.

What if Obama loses? While many election-year watchers are discussing what will happen ahead if President Obama wins reelection, not many are mulling what may occur if he does not. Example: Do you think President Obama will want to deal with Republicans in extending the Bush tax cuts if he loses reelection? You would see a far different Obama if he loses, than if he wins.

So what are the other farm bill hangups?

Farm programs: One size does not fit all. You've likely heard that and are tired of all the points various farm-state lawmakers and some commodity group lobbyists bring up on this matter, including:

  • Eliminating direct payments impacts rice and cotton producers, and to a degree, wheat, more than other program crops (true).

  • Keeping target (reference) prices and raising them is more important for rice producers in the Mid South and Delta (true).

  • Per-farm vs county-triggered price levels for revenue assurance program. States like Montana and North Dakota and perhaps others want a revenue assurance plan geared to on-farm prices and not county-trigger prices. While that may be true, it comes at a huge cost – billions of dollars and must be paid for in farm bill cuts elsewhere. Some northern-tier state senators want the budget offset to come from lowering the percentage of planted (or base) acres any revenue assurance payments are based on – perhaps to 60 percent, from a previous 85 percent level pushed last fall. Here is where Ag Committee leaders must lead. That is, why should farmers in states like Illinois, Iowa, Indiana, etc., have to pay in substantial revisions to a proposed revenue assurance program to deal with problems in other states? One solution could be to have a dual trigger-price mechanism: one based on county prices, and one based on the on-farm price. But those who choose the on-farm price should pay for that privilege and have their program adjusted accordingly – that could happen in a number of ways. Entitlement programs (subsidies) do not have to be the same for all.

  • Crop insurance doesn't fit some crops (rice) like other crops (true). That is why a farmer's choice safety net is the right approach: give farmers an option to either go target (reference) prices or to a subsidized revenue assurance program. The debate will still be on how much current target prices should be increased, and the method used to determine those levels. That is a good discussion to have.

  • Keep farm programs simple.  Lawmakers and commodity groups can't have it both ways: an effective farmer safety net is not a simple process. It's complex in many ways – in some cases as complex as the tax code! As for Farm Service Agency (FSA) officials and some state FSA officials saying they may not have time and enough workers to implement a more complex farm bill, that certainly doesn't square with the recent push by some FSA officials to move portions of the crop insurance program over to FSA. The question at some FSA offices is the need for more work, not less.

Long-term outlook for subsidized crop insurance. For a program that pays up to 62 percent subsidies for buy-up policies, it is clear this program will be the focus of budget-cutting groups and lawmakers in the future – including an eventual push for crop insurance payment caps. In budget-cutting debates, you go where the money is, and the government now spends more on crop insurance subsidies and indemnities than current farm program outlays.

The Environmental Working Group (EWG) needs a new farm program issue, and they clearly have one with crop insurance. EWG was not the major reason for the coming end of direct payments, even though they have urged this for years. Direct payments could no longer be justified in today's commodity price environment, and with the huge US budget deficits and debt. Nearly every government program should have a timeline, and direct payments reached its end. "We want farmers to buy crop insurance," said EWG's Craig Cox. "The issue is how much should taxpayers pay for it." Anyone who thinks EWG gives up on issues it cares about simply has no idea of the group's history. "We are in the third inning of a nine-inning game, and we're continuing to make the case with members of the Senate and House Agriculture committees that we need to continue to help farmers when they need help and not help them when they don't need help," said Scott Faber, government affairs vice president for EWG. The group has proposed that the federal government provide all farmers with free insurance to cover yield losses of more than 30 percent. Premium aid for revenue-protection plans and other crop insurance products would be eliminated, although farmers could buy such policies on their own.

Based on EWG's history, they will try to play the transparency approach – getting as much information as they can via freedom of information or other means to detail per-farmer crop insurance payments, subsidies, etc. And not just farmer payments. They will likely want to get payments made to crop insurance companies and agents. Whether or not they will be successful in that database remains to be seen. But the group does not give up easily, if at all. EWG doesn't just look at the current farm bill debate, it has the vision to plot tactics and strategies for future bills – not limited to the omnibus farm bill. Too many farm state lawmakers and some farm groups focus on the here-and-now approach. That's why they will likely lose battles ahead if they don't get more visionary.

Bottom line: Any lawmaker who says it's hard to fit farm programs to all regions of the country is saying the obvious. They should do the best they can, make decisions, and see if they have the votes – not only in committee, but also in the House and Senate. That is what their job responsibilities are, or should be. But all too often in Washington nowadays, accountability is absent. Until, perhaps, Nov. 6.






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






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