Some Direct Payments Could Still Be in Play for 2014 Crops

November 21, 2013 02:47 AM

via a special arrangement with Informa Economics, Inc.

'Transition plan' to be discussed near end of farm bill conference

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

Remember when the debate was whether or not USDA's Risk Management Agency (RMA) could have time to implement the proposed major cotton revenue insurance program called STAX? Now the discussion is whether or not there should be a transition to whatever new programs are employed via any new programs for a new farm bill.

Reality has finally come to the implementation process, as now observers are beginning to say it is hard to see how USDA can implement the new commodity programs and crop insurance products for the 2014 crop. Thus the latest chatter about the need to provide some kind of transition subsidies. The easy approach to that would be a farmer-pleasing extension of direct payments – perhaps at a reduced rate.

House Ag Chairman Frank Lucas (R-Okla.), who is also chairman of the lingering farm bill conference panel, told Congressional Quarterly that the conferees hadn't discussed the transition issue yet. "You’ve got to have a plan to discuss how to bridge to the plan first," he said.

The House-passed farm bill (HR 2642) would for two year continue direct payments for cotton growers while USDA develops a new revenue insurance program, called STAX. The cotton payments would be provided in 2014 and 2015 at reduced rates. The Senate bill (S 954) does not provide for the transition assistance.

Unclear is how any extension of direct payments would impact scoring and budget savings from whatever comes from any final new farm bill language.

And then there is the opposition from conservative lawmakers, especially in the Senate, regarding any such direct payment extension.

And now comes this classic refrain from Rep. Lucas, asked about critics who say another extension of the 2008 Farm Bill would be preferable to the House bill's commodity title: "In the environment that we work in now, an extension including the direct payments and the existing programs, which would be more WTO compliant than anything anyone has talked about, might make sense. But when does making sense have anything to do with this place right now?"

Comments: If you ever wonder how much it costs for your elected lawmakers to dilly-dally around and not do their work on time, consider the potentially billions of dollars in costs that would result if direct payments continue. This was an easy-to-alert topic months ago, as I noted at the time. But most farm-state lawmakers and even Congressional Budget Office analysts dismissed it at the time. USDA officials of course said they would be able to implement what Congress legislated. Yeah, that's like saying health care reform can be implemented on time. Impact: more taxpayer money ahead. Some reform, huh?

Regarding cotton, if there ever were a case to extend direct payments, albeit lower, is for cotton because there is no way RMA could implement the STAX program in time for all cotton producers. So when it comes to direct payment extensions, there are nuances.


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






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