Congress Unlikely to Finish Farm Bill This Year

December 5, 2013 03:19 AM
Congress Unlikely to Finish Farm Bill This Year

But Rep. Mike Conaway is optimistic a compromise deal can be reached for vote in January.

It’s looking more and more like conferees meeting to hash out competing versions of a farm bill will lose their race against time and fail to complete their work this year. Nevertheless, they might agree to a bipartisan blueprint for a deal that could be put to a vote in January.

That’s the view of Rep. Mike Conaway (R-Texas), chair of the House Agriculture Subcommittee on General Farm Commodities and Risk Management, who spoke at the Farm Journal Forum 2013 conference this morning. Conaway is a member of the farm bill conference committee.

Click here to read Pro Farmer's analysis: Conaway Optimistic About Farm Bill Completion

Joking that he’d thrown out his "other speech" about the chambers being at "loggerheads," Conaway said that House and Senate leaders have made substantial progress toward compromise in recent days. "But there’s still a whole lot of work before we can put this thing to bed."

Conaway said that the House leadership is committed to getting a bill passed and "hasn’t been drawing a bunch of hard lines. We’re willing to talk about [the Senate’s] shallow-loss approach. We aren’t firing off letters trying to kill the Senate bill....There will be quid pro quo."

Conaway said that the House will show flexibility on food stamps. The House bill would chop $39 billion from the Supplemental Nutrition Assistance Program (SNAP) over 10 years; the Senate bill would cut only $3.9 billion over the same period. At the same time, Conaway voiced support for requirements that recipients make an attempt to find work. He called that "sound policy."

The congressman gave few details about the provisions likely to emerge from conference committee. But he said conferees are likely to find compromise on regulatory issues and the dairy program.

The chambers took different approaches to the commodity title. The Senate plan is geared toward revenues while the House approach is more about production costs. Both would pay farmers based on what they actually plant, not the "base acre" formula used for direct payments. This has created fear that all government aid will be decoupled from planted acres to avoid World Trade Organization complaints.

The Senate bill continues current price-support policy by making payments based on 85% of historical plantings. The House bill takes a new approach, paying on 85% of planted acres, ostensibly to better-align payments with producer risk.

Both bills in effect authorize farmer payments to cover "shallow losses" not covered by crop insurance. The Senate bill covers losses once a 12% revenue loss is realized. The House bill uses a 15% trigger. (To gain the support of rice and peanut farmers, who opposed the Senate’s 2012 farm bill; the latest version increases target prices for those commodities.)

In the Senate bill, farmers can select payment at either the county or farm level and also take advantage of price supports. The House bill only provides revenue protection at the county level, and the program is not available in conjunction with price supports.

With direct payments gone, both bills increase spending levels for the $9 billion crop insurance program. The Senate-passed version, however, provides means testing. It reduces crop insurance premium subsidies (which averaged 62% in 2012, according to the Government Accounting Office) by 15% for producers with average adjusted gross income greater than $750,000.

Another related issue is whether producers who receive federal farm insurance benefits should be required to comply with government conservation standards. The Senate bill contains such a provision, which is opposed by Rep. Frank Lucas (R-Okla.), chairman of the House Agriculture Committee.

Conaway said there’s also room for agreement in the dairy program. The current program, he said, doesn’t work. "When prices are really low, dairymen provide more milk. When prices are really high, dairymen provide more milk. The current version ... isn’t doing what needs to be done when prices collapse."

Both farm bills combine dairy subsidies with a new program that pays participating dairy producers when margins fall below $4 per hundredweight. The Senate bill also subjects participating producers to a separate program that reduces incentives to produce milk when margins are low.

Because the new program has no eligibility constraints, its costs are expected to be up to three times higher than continuing 2008 farm bill dairy laws. The Senate program, according to the Food Policy Research Center, would reduce the cost of 2013 farm bill dairy programs by 5% to 30%, compared to standalone margin insurance

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