The House could take up the compromise bill for a vote on Wednesday
By Boyce Thompson, AgWeb Editorial Director, and Jen Russell, AgWeb Managing Editor
House and Senate ag leaders, after reconciling differences over a 5-year farm bill this weekend, hope to gain swift passage of the bill this week.
That would be a huge step forward for the embattled farm bill, which appeared dead in the water last year. The compromise would generate about $23 billion in annual savings over 10 years, a compromise between the House- and Senate-passed versions.
The bill drew support from two critical House Republicans—House Speaker John A. Boehner (R-Ohio), who has voted against the last two farm bills, and Majority Leader Eric Cantor (R-Va.), who said the House would vote on the bill Wednesday.
"The environment we worked in—even though it took us two-and-a-half, three years—we have a really amazing bill here," said House Ag Committee Chairman Rep. Frank Lucas.
"Between the commodity title and disaster assistance and the dairy program, I think we’ve addressed every need in agriculture," added Sen. Debbie Stabenow, chairwoman of the Senate Ag Committee.
No Direct Payments, but Improved Crop Insurance
The bill, if passed, would end nearly 18 years of direct payments to farmers that cost $4 billion annually. That money would be used to create two new crop insurance programs: Agricultural Risk Coverage and Price Loss Coverage.
Agricultural Risk Coverage would provide early, temporary assistance to growers faced with steadily declining prices. Farmers would receive payments once prices fall 14 percentage points below an average for the previous five years. But the insurance only covers 76% to 86% of revenues.
Payments depend on whether farmers elect coverage based on county-level or farm-level yield results. Farmers who elect to target payments to countywide results would be paid 85% on those base acres. Farmers who tailor results to their own farm would only receive payments based on 65% of base acres.
Under Price Loss Coverage, payments would be triggered when prices fell below targets set by the federal government. Though payments would only be triggered later in a market downturn, they would provide growers with a more permanent floor to cover production costs.
The final language drew support from groups representing both soybean and corn growers.
National Corn Growers President Martin Barbre urged swift passage of the bill. "We’re especially pleased the legislation provides an adequate and flexible farm safety net as well as a strong federal crop insurance program," he said.
"Make no mistake, this bill represents a reform to the farm program," said American Soybean Association President Ray Gaesser. "It will make the programs on which we depend more relevant and more defensible, but it will also prevent those programs from distorting planting decisions and potentially impacting the marketplace."
The bill also makes enterprise units permanent, and allows farmers to purchase coverage for both irrigated and dryland crops. Growers will also have the option of purchasing a new Supplemental Coverage Option for additional price support.
However, the bill is silent over the extent to which farmers must be "actively engaged" in an enterprise to receive assistance. The compromise legislation offers an overall federal payment cap, but gives USDA the discretion to tighten payment limits.
"We’ve given (USDA) authority they have not had before, and we expect them to move forward and do that," Stabenow said. "What we’ve done underneath the cap is give flexibility to farmers, depending on which program they use."
The compromise drew the ire of Sen. Chuck Grassley (R-Iowa), who said it had been watered-down to the point where it would have "little effect."
But Lucas explained, "We had to have language that would work for all regions," as well as different sizes of farmers. "The language has real teeth; that’s the bottom line."
The bill also requires that growers who participate in the crop insurance program abide by federal conservation guidelines, a requirement that drew praise from the National Association of Conservation Districts.
Support for Dairy
House and Senate conferees managed to find compromise dairy support provisions that both political parties—and the dairy industry—could live with. The breakthrough happened after House Speaker John Boehner (R-Ohio) reiterated his opposition to "Soviet-style" dairy price supports.
Instead of requiring dairy producers to reduce production if supply targets are met, the compromise grants USDA authority to buy dairy products when dairy margins drop below $4, according to several published sources.
Small farmers—with fewer than 200 cows—will pay cheaper premiums with more highly subsidized margin insurance. During the first two years of the five-year program, premiums for small farmers would be reduced by 25% of established rates for the first 4 million pounds of production.
"It’s been a tough decade for our dairy farmers, and we tried to address that," Lucas said.
Opposition from Livestock
The livestock industry, which sought changes in country-of-origin labeling, remains opposed to the compromise. USDA last year tightened the rules, saying it wasn't enough for companies to say the meat was merely from North America. They have to disclose where the animal was born, raised and slaughtered.
"We're opposed to the bill," said Colin Woodall, a vice president of the National Cattlemen's Beef Association, pinning the blame on Sen. Stabenow. The association took this position even though the bill includes $7 billion in new disaster relief for the livestock industry.
"I’m very, very proud of what we have done for livestock," Stabenow said. "We moved forward to achieve what we could do together, and I’m disappointed that they don’t recognize what a huge win this is for livestock."
Lucas agreed that it truly was a compromise.
"Ultimately, the chairwoman and myself and the ranking members had to make a decision: Do we want a farm bill, or do we want to blow this thing sky-high?" he said. "But, I understand the disappointment of our friends out there. They said up-front, they wanted repeal."
"This isn’t over yet," he added. "It’s just on this day, this couldn’t prevail."
Roughly one-third of the total savings in the bill, about $8 billion, would come from cuts in the Supplemental Nutrition Assistance Program. The compromise is a far cry from the $40 billion in cuts passed by the House. The savings would be achieved through a change in how households can leverage fuel assistance to gain higher food stamp benefits.
A portion of the savings from this change would be used to fund 10 pilot programs to help jobless beneficiaries receive training and find employment. This was a compromise to proposals advanced in the House bill by Rep. Steve Southerland (R-Fla.) that would have required food-stamp recipients to prove that they were seeking work.
A final tally by the Congressional Budget Office shows that conference agreement, including the sequester, cuts $18.7 billion from the commodities title, $6 billion from conservation and $8 billion from nutrition. At the same time, it adds $5.7 billion to crop insurance programs, $1.1 billion to research, $879 million to energy and $663 million to horticulture.
Lucas and Stabenow both expressed confidence that the farm bill will move quickly through the House and Senate. Lucas said he expects a House vote Wednesday morning, and he expects it to pass. Stabenow said she spoke with Senate Majority Leader Harry Reid, who says he will move the bill to a vote as quickly as possible once it gets through the House.
After that, the farm bill’s fate will be in the hands of President Barack Obama.
"We have every indication that the president will sign the final bill," Stabenow said.