FarmPolicy

October 24, 2014

Political Dynamics

Categories: EU /Farm Bill

Today, the House Ag Committee begins to consider the provisions of H.R. 2419, the 2007 Farm Bill. The hearing begins at 1:00 pm Eastern in 1300 Longworth, and live audio and video will be available here.

As the debate begins, recall some general political considerations that were noted in an article from Saturday’s Washington Post. In part, the Post article stated that, “A coalition of Democratic-leaning environmental organizations, anti-poverty groups and church organizations are pushing to redirect some subsidies to conservation, wetlands preservation, rural development and nutrition. But top Democrats are reluctant to push too hard for changes that could put at risk Democratic freshmen from ‘red’ states, which backed President Bush’s reelection in 2004 and where the farm vote is still a factor in close elections.”

Scott Faber, writing on Sunday at The Ruminant, took exception to this observation, and stated that, “Freshmen members of Congress represent lots of farmers – but most of them do not grow corn.

“But, the Washington Post perpetuated some long-held myths by presuming that Congressional leaders are worried that farm and food policy reforms will hurt freshmen legislators representing corn and soybean farmers.

“In fact, many more freshmen members of Congress represent fruit and vegetable producers than represent the producers of subsidized crops.”

Mr. Faber added that, “In fact, as the Ruminant reported, farmers represented by 36 of 55 freshmen members of the House would be better served if Congress cut subsidies to help pay for conservation programs. In addition, farmers in 12 districts would see little or no change.

“Farmers in only seven districts in Minnesota, Iowa, Illinois, and Indiana would receive modestly less federal support if Congress cut ‘direct’ payments to share the cost of clean water — mostly corn and soybean farmers who have seen farm prices double in recent years in response to the ethanol mandate.”

Congressional Quarterly writer Catharine Richert also took a closer look at some of the larger political dynamics at work in the Farm Bill debate in an article from Friday; and stated that, “Now the House is knee-deep in writing a new farm bill, and the outlook isn’t as rosy as it was earlier this year. While House Agriculture Committee members squabble over money and plot to fend off threats from outside the panel to overhaul agricultural policy, [House Speaker Nancy Pelosi (D-California)] and her circle face a bigger dilemma: The outcome of this year’s farm bill could make or break the reelection of vulnerable freshman Democrats.

“There are 42 new freshmen in the House this year — including many with rural constituencies — and nine sit on the farm panel.

“That means leadership will have to weigh the re-election needs of new members such as Tim Walz of Minnesota, whose constituency includes many farmers used to collecting subsidies, against those such as Arizona’s Gabrielle Giffords who would bring millions more back to her district if some farm payments were redirected to conservation programs, according to a new report by Environmental Defense.”

Ms. Richert also pointed out that, “[House Ag Committee Chairman Collin Peterson (D-Minn.)] now is toying with ways to limit subsidies; those changes are likely to come up when the full Agriculture Committee begins debating the bill Tuesday.

“But major changes could threaten the re-election hopes of most freshmen Democrats on the committee, who barely won Republican-leaning districts where victory could come down to farm votes.

“‘There’s no swing voter like a farmer,’ said Brent Gattis, a farm lobbyist for Olsson Frank Weeda and a former Republican aid for the House farm panel. While many farmers fit a conservative profile, their votes typically come down to money, Gattis said.”

And the political considerations from some party leaders may go beyond future Congressional elections.

In a radio program aired yesterday, (“The 2007 Farm Bill”) program host Tom Ashbrook of WBUR-Boston (at about the 5:30 minute mark of the interview) asked Des Moines Register writer Philip Brasher, “[if] in the run-up to a presidential election year…can anybody really change this, or if they go at it hammer and tong do they risk losing…the electoral college votes of these key farm states?”

Mr. Brasher replied by saying, “Well, they will have to play it very carefully because a state like Iowa is going to be very important not just in the Caucuses but also in a close presidential election. Iowa, Minnesota, Wisconsin, those three states in particular have been swing states…in the last two elections you saw [President] Bush spend a tremendous amount of attention to Iowa, Minnesota and Wisconsin in 2000 and in 2004.”

Also appearing on yesterday’s “On Point” program with Tom Ashbrook was Senate Ag Committee Chairman Tom Harkin (D-Iowa). At about the 13-minute mark, Sen. Harkin spoke about the Conservation Security Program and elaborated on ideas of paying farmers for “how” they produce output as opposed to subsidizing “what” or “how much” they grow.

In 2003, the European Union reformed the way they support their agricultural sector and moved toward paying their producers based on decoupled principles associated with environmental stewardship. For more on this issue, see “The European Union’s Common Agricultural Policy: Its 2003 Reform and Relevance to U.S. Farm Policy,” by Tassos Haniotis, which was posted recently, along with a series of other papers, at the Woods Institute for the Environment (Stanford University) webpage.

The paper stated on page 15 that, “It is interesting to compare in this context the concept and application of the Production Flexibility Contract of the 1996 Farm Bill to the Single Farm Payment concept of the 2003 CAP reform. Despite differences in their application, the design of both concepts is very similar.

“A fixed level of support, determined on past payments, allows farmers to freely take their production decisions by decoupling them from the level of or type of their production, provided they respect a series of conditions (a feature not just of EU support, but also of US support).

“The only, albeit very significant, difference was in the driving force of both policy reforms. In the EU, it was the need to legitimise farm support by allowing farmers to look for market signals under a fixed budgetary constraint. In the US it was the need to maximise budgetary outlays that were being threatened as a result of positive market development.”

In large part, exports drove the market developments that impacted U.S. commodity prices in the mid-1990s; however, today’s commodity prices are being lifted by the expansion of biofuels production and use. The Asian financial crisis and resulting drop in commodity prices that lead to federal ad hoc disaster assistance in the late 1990s, and contributed to some of the rational for provisions in the 2002 Farm Bill, have left many producers skeptical about the sustainability of high commodity prices in the 2007 Farm Bill debate. As a result, many producers are reluctant to “go back” to a policy framework like the 1996 Farm Bill that many felt left them exposed to substantial downward price risks.

The potential for increased market volatility is also a concern among some midwestern producers. Anecdotally, the Associated Press noted in an article from yesterday the relatively high market level of some program crops, as well as how quickly market prices can move; “Forecasts for cooler, wetter weather in the Midwest this week — the conditions needed for a healthy crop of corn — triggered a sharp pullback in agriculture prices Monday on the Chicago Board of Trade…Traders sent corn and soybean futures tumbling to the low end of their daily trading limits on the Chicago Board of Trade, and wheat tailed them lower.”

The AP article added that, “December corn closed at $3.485 a bushel, while November soybeans ended at $8.9875 a bushel. September wheat settled down 19 cents at $6.0175 a bushel.”

Ian Swanson and Jim Snyder also flushed out some more details of the political nature of the Farm Bill debate in an article posted this morning at The Hill Online.

There, the authors reported that, “[House Ag Committee Chairman Collin Peterson (D-Minn.)] appears to favor leaving the 2002 farm bill mostly intact, a position supported by most farm lobbies. House Speaker Nancy Pelosi (D-Calif.), however, has pressured Peterson to craft a bill that limits farm subsidies for wealthy farmers, with the savings used for other priorities, such as nutrition.

“One lobbyist said it would be impossible to support the bill until Peterson provides more details on the payment limits he is considering.

“Traditionally, rice and cotton growers have fought lowering reductions. But some agriculture lobbyists say the dynamics have shifted such that these growers may reluctantly swallow the reforms to head off steeper cuts — depending on what else is in the bill.

“‘It’s been clear it’s important to the Speaker that there is enough reform—what’s enough is up for discussion — so she can make the case to the Democratic caucus that this is a reform bill,’ said Bob Stallman, president of the American Farm Bureau Federation.”

The Hill article then stated that, “This puts both Pelosi and Peterson in a tough position, lobbyists say. The two are caught between those who want a farm bill similar to 2002 legislation, which has been popular with farmers, including some vulnerable Democrats, and changes long pushed by key party constituencies.”

Mr.’s Swanson and Snyder also indicated the more than typical partisan nature of the 2007 Farm Bill debate; “House Ag Committee Ranking Member Robert Goodlatte (R-Virginia)] offered sympathy for the chairman, whom he described as being in a ‘terrible bind’—caught between satisfying leadership and his farming constituents.

“But some farm lobbyists and committee Democrats suspect crocodile tears.

“With House Democrats crafting their first major farm bill since losing the majority in 1994, Republicans seem to be charting a course that puts pressure on freshman Democrats to vote on a bill that cuts farm subsidies.

“‘They’re right now telegraphing that if the farm bill moves forward, Democrats will have to provide the votes for it,’ said Rep. Earl Pomeroy (D-N.D.).

“As Pomeroy sees it, the message from committee Republicans today is to go slow; tomorrow, if a bill doesn’t move forward, they’ll blame Democrats for not getting things done.”

And Congressional Quarterly writer Catharine Richert noted in an article from yesterday that, “Scarce funding combined with the threat of payment limitations has caused unprecedented divisions on the typically bipartisan committee.”

A news release issued yesterday by the “Ag Republican Press” stated that, “Tonight, the Agriculture Committee Republicans were unanimous in their objection to proceeding to markup the farm bill in a bipartisan fashion until the money promised to the Committee is produced. Additionally, the Republican Members of the Committee expressed their intention to meet with the Chairman once they have had the opportunity to review the bill with its comprehensive manager’s amendment language and have received the Congressional Budget Office (CBO) scores.

“‘In the short-term, we’re being asked to support a bill that we’ve yet to see in final form without the final CBO scores. In the long-term, we’re being asked to take a bill to the floor that lacks sufficient funding to withstand a barrage of potentially devastating amendments. We continue to urge the Chairman to pull in the reins and proceed when the funding is made available,’ said Ranking Member Bob Goodlatte.

“Despite months of urging to slow down and wait for sufficient funds to materialize, the Committee is scheduled to begin consideration of the farm bill tomorrow afternoon.

“‘Agriculture Committee Republicans want to write a forward looking farm bill and we want to work with our Democratic colleagues to get the job done. But if getting the job done means setting American agriculture on a chopping block and inviting everyone in to take a slice, that is not a position we can stand behind,’ said Ranking Member Bob Goodlatte.”

The administration is also making its voice heard as the Ag Committee sets to work.

Philip Brasher, writing yesterday at the Cash Crops Blog, reported that, “Agriculture Secretary Mike Johanns is stepping up his attacks on the House farm bill. On Monday, he released three pages of talking points, assailing among other things the ‘five budget gimmicks,’ totaling about $3 billion, he says are being used to fit the farm bill within its spending limit.

“Later this month, Johanns plans to speak at the National Press Club, an aide says.

“The real question is whether the administration will go so far as to threaten to veto the farm bill. The bully pulpit will only be so effective, especially in the waning months of an unpopular presidency.

“As would be expected, Johanns says it’s too early to talk about a veto.

“‘There’s a point at which I expect to sit down with the president a number of times and talk about what the proposals are and how they compare and make a recommendation,’ he said.

“But Johanns is clearly laying down some markers for the bill: More money for fruits and vegetables. Less for cotton and grain producers. New limits on subsidies to wealthy farms. More money for conservation, food stamps and rural hospitals. Those won’t be tough ideas to sell to the public.”

Also yesterday, the Grocery Manufacturers of America issued a press release stating that, “In a letter to Senate and House leaders, Cal Dooley, president and CEO of the Grocery Manufacturers Association (GMA), today joined leading business groups in calling on Congress to reform federal farm policy.

“‘It is time for Congress to reform our outdated farm policy to better serve the needs of rural America and the entire U.S. economy,’ said Dooley. ‘That is why GMA and this broad coalition of business leaders, who represent tens of millions of U.S. workers, are calling on Congress to approve a farm bill that reduces subsidies and fosters an environment more conducive to eliminating trade barriers to U.S. products.’”

The news release added that, “The letter was signed by GMA, the U.S. Chamber of Commerce, the Business Roundtable, the National Association of Manufacturers, the National Retail Federation, the Information Technology Industry Council and the Retail Industry Leaders Association. It outlined three major farm-reform policy goals:

“A reduction in excessive subsidies The elimination of substantial domestic and international agricultural market distortions The protection of basic U.S. farm policies from unwarranted World Trade Organization (WTO) attacks.”

Keith Good

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