Winners and Losers in Senate Farm Bill

June 21, 2012 05:00 AM
 

via a special arrangement with Informa Economics, Inc.

Reformists win | Crop insurance sector loses | Split verdict for several senators


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


Determining "winners" and "losers" in a major legislative debate is subjective. The following list is based on talks with key players, lobbyists and others regarding how they put the scorecard on the almost finished Senate farm bill.



Winners

Reformists: While Senate Ag Chairwoman Debbie Stabenow (D-Mich.) usually lists elimination of direct payments as one of, if not the major, Senate farm bill reform, the truth is the odds were overwhelming they were going away even before the debate began. Reason: even supporters and farm groups admitted they could not be defended in a time of surging debt and record to near record farm income amid troubles in other business sectors. The major reforms ironically came mostly in floor amendments to the farm bill, including a conservation compliance requirement to crop insurance, and an AGI-related reduction in crop insurance premiums. Another key reform came via the Conservation Reserve Program (CRP), which saw maximum acres in the program being phased down from 32 million to 25 million acres by 2017.

The Senate bill eliminates 100 programs, and that is quite difficult in a town that usually adds, but does not subtract.

The bill also did away with target prices, ACRE and the crop portion of SURE. As one source said, "It seems to me if you eliminate DP, CCP, SURE and ACRE and only replace commodity programs with ARC, that’s quite a bit of change."

Not all observers were so kind on the reformist side. One contact said, "The Senate Ag Committee reported a bill that did not give opponents of the commodity title – usually the lightening rod in any farm bill – much to shoot at. You might say the Committee waved the white flag before any shot could be fired. More than $19 billion in cuts came at the expense of the commodity title out of the $23.6 billion in total estimated cuts."

On the farmer safety-net side, a major reform came in making safety net payments on planted rather than base acres – one source simply described the change as "updated base acres" on more recent plantings. Soybeans clearly came out ahead because of this, while wheat, rice and cotton were the losers. As for the Ag Risk Coverage (ARC) program, the verdict is still out on whether that will be the panacea its supporters say it will be; it also depends on whether or not the coming House farm bill changes some of the Senate language relative to this controversial shallow loss program. The same can be said for the cotton Stacked Income Protection (STAX) program.

Fruit and vegetable growers, including United Fresh Produce Association: They built on their gains following the "down payment" 2008 farm bill, largely because of the work of Stabenow and other senators with those products in their states.

Soybean growers: By moving from base to planted acres, and getting their much-pushed shallow loss program, the sector won on that basis. But others warn this could eventually lead to more planted acres in the years ahead from wheat and rice regions which saw their safety net tempered from the past.

Dairy producers and supply management: Those in the dairy industry supporting supply management got exactly what the industry wanted without any challenge. On the losing side of that, some say dairy may get what it asked for.

Sugar producers (a lower-case win): The Senate rejected 53-46 a proposal to roll back provisions added to the 2008 farm bill that helped to increase domestic sugar prices. While some observers say the amendment was a close vote and thus shows problems ahead for sugar policy, that argument has been made for many years after some other close votes, only to see the domestic sugar industry lobby prevail. We will see if this winning pace continues in the House farm bill debate on the floor – if a sugar policy amendment is allowed.

Several observers put sugar in a "potential loser" category, with one saying, "Indeed, they won but I bet if you look back, most of the previous votes against sugar haven’t been close to 46 – much more like low- to mid-30’s. And remember they had to pass Chambliss to roll back the two months in sugar by voice vote because otherwise it would have been overwhelmingly passed and tough to conference. I do think sugar has problems in the future, probably in the not too distant future of House floor consideration.:

Sen. Saxby Chambliss (R-Ga.): While Chambliss lost in his effort with Sen. Kent Conrad (D-N.D.) to get a target price/counter-cyclical program into the bill, he scored big time in his crop insurance-changing amendment relative to conservation compliance. "His" commodities may have lost but he grabbed a pound of flesh on the way down, and as one source put it, "he did it not simply with emotionally charged rhetorical bombs but he did it in accordance with the rules of the game – he engaged with a sound tactical strategy via the amendment process. He served a major notice that he isn't going down without a fight."

Sen. Dick Durbin (D-Ill.): The senator scored big time with his amendment (along with Sen. Tom Coburn, R-Okla.) that would reduce the taxpayer subsidy for crop insurance premiums for those with an AGI of over $750,000 (would not take effect until after a study regarding its impact).

Market Access Program (MAP) funding: An effort by Sen. Coburn lost badly, 69-30, that would have cut the program, which funds overseas marketing efforts, and prohibited the use of funds for reality television shows, wine tastings, animal spa products, and pet food.

Cattle and hog sector fighting national standards for housing hens: Sen. Dianne Feinstein (D-Calif.) was an early loser when her amendment did not make it on the list to be debated – language to impose national standards for housing hens, a priority of the United Egg Producers. That move was strongly opposed by the cattle and hog sectors because of the precedent it would set for regulating farm practices.


Losers

Crop insurance sector: The Senate bill is a case of how a sector can lose by still gaining more funding. While the initial Congressional Budget Office (CBO) score of the bill indicated another $5 billion in crop insurance spending over 10 years, approved floor amendments (AGI test, and conservation compliance) showed that with crop insurance moving into the direction of a farmer safety net, reformists were quick to seek changes, and they were successful, despite farm-state senators and the crop insurance sector incorrectly predicting those amendments would fail. Observers believe this is the first of more changes in the years ahead for the subsidized crop insurance sector. One observer noted, "Besides protecting livestock from any regulation under the farm bill, unharmed crop insurance is the only thing a Republican could point to in this bill as something to justify their vote for the bill but, in the end, even that was lost." One crop insurance specialist said, "Why the crop insurance sector, which operates under permanent law, was so enthusiastically out-front in wanting to move a farm bill in the Senate still mystifies most observers in this town. It was like a lamb to slaughter."

Southern-based crops...rice, peanuts and cotton: By any account, the rice safety net has been weakened, perhaps significantly – at least for southern-based rice producers. Peanut growers are unhappy with the results of the bill. And, the latest cotton STAX doesn't stack up to some cotton producers, who gave up target prices, counter-cyclical payments, direct payments, and base acres for a program largely designed to ward off Brazil challenges via WTO. Besides, the cotton STAX program would not be in effect for the 2013 crop, leaving that crop without a safety net.

Sen. Chuck Grassley (R-Iowa) was yielded to on all of his pet issues concerning the commodity title -- $50,000 pay limits, lower than the 1970 farm bill’s; actively engaged rules that are likely to come back and haunt his own Iowa constituents; and a $75,000 pay limit on marketing loans. As one analyst put it, "If anyone wondered whether there were some gratuitous shots taken at southern crops, look no further than the adoption of this last amendment which likely saved little or no money but because it would likely kick in to help cotton if and when it kicks in again at all, it was an attractive target to shoot at. That there is not even a cotton program in place for the 2013 crop year is another amazing hole in the Senate’s farm bill that got glossed over. If you would have walked by Senate Ag Committee offices last night, you might have heard the Band’s 'The Night They Drove Ol’ Dixie Down.'"

Southern bloc: One veteran congressional observer said, "Not only did the Southerners end up losers, but the votes the last couple of days proved they are no longer a very strong entity to be 'dealt with'. There was a day not that long ago that they would have been strong enough to defeat payment limits on marketing loans, AGI limits, etc. Anyway, I think the Southerners are not very powerful anymore."


Winners and Losers

Sen. Stabenow: While many thought a Senate farm bill would not be completed (including House GOP leaders), Stabenow's persistence prevailed – with big help coming from Majority Leader Harry Reid (D-Nev.). The losing portion saw Stabenow incorrectly predicting the Senate would reject efforts to modify crop insurance.

Sen. Pat Roberts (R-Kan.): Although southern-based senators and crop producers from that region won't agree, Roberts scored a victory in being the most visible senator against including target prices/counter-cyclical payments in the Senate bill. On the losing side, Roberts is very closely tied with the crop insurance sector, and as previously mentioned, that sector scored some hits during the floor debate.

Sen. Chuck Grassley (R-Iowa): Win one, lose one and pull another long-favored issue from consideration is the verdict on the feisty senator. His win came on restoring a pay cap on marketing loan gains ($75,000), even though it was mostly a symbolic win because should marketing loan gains be needed, the ag sector would be in a world of hurt. His loss came via his support of Stabenow and Roberts in their fight against linking conservation compliance with crop insurance. What will be curious is whether new actively engaged rules pushed by Grassley will come back to haunt Iowa farmers as some predict. Meanwhile, Grassley yanked a prior amendment involving banning packers from owning livestock because he knew it would be defeated.

Sen. Tom Coburn (R-Okla.): A winner on his teaming up with Sen. Durbin on the pay cap amendment that shocked farm group lobbyists (even Durbin noted this "odd couple"), but a loser on some other pushed amendments. Most observers, however, give Coburn a "winner" label for his reformist attitude and his perseverance.

Sen. Kent Conrad (D-N.D.): The always capable senator scored by getting an on-farm payment calculation option via the Ag Risk Coverage program. He also helped defend the current sugar program in floor debate. He lost when several crop insurance amendments were approved – crop insurance is very important to North Dakota producers. And, he withdrew offering an amendment with Sen. Chambliss regarding target prices and counter-cyclical payments, choosing instead to fight that battle in an eventual conference with the House, saying he had some budget offsets, so we could hear a lot more from Conrad in the months ahead.

Congressional Budget Office (CBO): CBO staffers likely worked many overtime hours reaching budget scores on the initial farm bill provisions, and then a lengthy series of amendments. On the losing side, CBO has likely still underestimated the cost of the Supplemental Coverage Option (SCO). Also, CBO did not score the cotton STAX has costing anything for FY 2013 or FY 2014. That implies no cotton safety net for the 2013 crop.

Food stamp interests: While efforts to further increase food stamp (SNAP) funding or modify the program were defeated, so were efforts to decrease funding.


Bottom line: The process on the Senate floor is in the winner category. While it took days to get the agreement on unanimous consent on amendments to be considered for the farm bill, it showed that a host of amendments can be considered for a bill despite a rushed Ag Committee process that saw few of these issues addressed there, and none in subcommittee.


 

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


 


 

 

 

 

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