Farm Bill Mired

September 4, 2013 10:14 PM
Farm Bill Mired

Focus shifts to crop insurance

While the one-year extension of the 2008 Farm Bill bought Congress time, that time is nearly up. The provisions start expiring Sept. 30, but the real crunch time for the legislation hits at the end of the year.

Odds remain murky on whether lawmakers can agree on a new farm bill, especially with the big
question mark hanging over nutrition programs. The Senate-passed farm bill includes a $4 billion reduction in nutrition programs, which make up about 80% of farm bill spending during 10 years. However, the House submitted a farm-policy-only farm bill with no nutrition title. A nutrition-only bill will come with a chop of about $40 billion to nutrition programs.

That won’t fly with the U.S. Senate and the White House, so that leaves a final nutrition spending figure to be determined by House and Senate leaders along with the White House. Even House Agriculture Committee Chairman Frank Lucas (R-Okla.) sees that as a distinct possibility. We keep hearing of a compromise of $10 billion to $12 billion in cuts.

Nutrition Aside. The biggest shift will probably deal with crop insurance. Producers and many state lawmakers see this as the farm policy of the future and the best way to manage risk, as evidenced by new records on net acres insured.

The Environmental Working Group (EWG) is pushing efforts to trim the premium subsidy and apply income limits to the program. It intends to reduce the premium subsidy 15 percentage points for those with adjusted gross incomes (AGI) of more than $750,000. The EWG successfully got the provision included in the Senate version of the package.

This was not in the bill when it left the Senate Ag Committee but was approved on the floor.

Unlike the Senate, the House does not have a similar provision. In conference, this will be a point of contention. If it is stripped from the bill, look for it to resurface in the years ahead.

Conservation Compliance? Also, in Title II, Section 2609 of the Senate bill, crop insurance premium subsidies are only available if farmers are in compliance with requirements for wetland conservation and highly erodible land conservation. House lawmakers have balked at the linkage, which will make it a tough sell in the final package.

Current AGI tests and payment limits are not likely to change in the farm bill process this time around, although any new safety net programs will carry "new" limits. Do not expect those limits to be removed from the farm program components. Will there be caps on what farmers can receive through crop insurance? Not likely, especially with it being a key program lawmakers are eyeing for the future.

Toppled Timeline. However, all of the above hinges on Congress coming together and passing a new farm bill. The odds are that the passage of any farm bill will be packaged with some other "must-have" legislation, such as a debt-limit package or a bill to fund the government, near the end of 2013.

Or, the 2008 Farm Bill could be extended. If this were to happen, the extension would likely be longer than one year and potentially through 2014 to get past the next general elections. If the latter happens, look for changes lowering direct payments, as lawmakers like Sen. Jeff Flake (R-Ariz.) won’t stand for the decoupled payments to continue unfettered.

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