December 14, 2019

House Ag Committee, Day Two

Categories: Doha / Trade /Farm Bill

The House Ag Committee meets again today (webpage schedule) to consider the provisions of H.R. 2419, the 2007 Farm Bill. The hearing begins at 10:00 am Eastern in 1300 Longworth, and live audio and video will be available here.

In a prelude to yesterday’s Committee activity, DTN Political Correspondent Jerry Hagstrom reported yesterday morning (link requires subscription) that, “[House Ag Committee Chairman Collin Peterson (D-Minn.)] told reporters that everything he has tried to put into the five-year bill has now been funded except for his proposed disaster aid program, which would cost $5 billion, and additional conservation programs that would cost $200 million. One of the still-unfunded conservation items is to add 4 million acres to the grasslands reserve program, which he said is a personal priority for House Speaker Pelosi.

“The $4 billion for nutrition programs including food stamps will come from the Ways and Means Committee while the $2.5 billion for renewable energy will come from the House-passed bill that cut oil company tax breaks and royalties, Peterson said. The Agriculture committee will markup the nutrition and energy sections of the bill and the House Rules Committee will ‘marry’ the provisions with the money from the other committees before the bill goes to the floor, he said.”

(Ken Cook explored an interesting hypothetical with respect to the $4 billion funding from the Ways and Means Committee, which is chaired by Rep. Charlie Rangel (D-New York), in an updated posted yesterday at The Mulch, “Charlie Rangel, Farm Bill Fall Guy?” In part, the update rhetorically asked, “Now what if Mr. Rangel actually wants to see what Mr. Peterson’s final bill looks like before he decides how much to provide? Isn’t that reasonable? And what if, once he reviews it, he’s unhappy–and hears from his fellow Ways and Means committee member, Ron Kind, that the bill does not represent acceptable reform–or worse, is in some important respects actually retrograde?”)

In news developments regarding additional Ag Committee activity, Dan Morgan reported in today’s Washington Post that, “Farm bloc lawmakers yesterday offered the U.S. fruit and vegetable industry $1.8 billion in new federal grants over the next five years as part of a farm bill that would leave in place far larger subsidies for grain, cotton and dairy producers.

“The concessions were part of a balancing act by House Democrats to craft a bill that will satisfy politically powerful farm interests while also bearing a Democratic imprint of reform. The House Agriculture Committee was set to vote on the legislation late last night or today.

“The package, unveiled yesterday by Committee Chairman Collin C. Peterson (D-Minn.), also increases funding for land conservation, wetlands protection and nutrition programs — popular with environmental groups and urban lawmakers.

“House Speaker Nancy Pelosi (D-Calif.) called the package ‘a good first step toward needed reform.’”

The article also noted that, “Deputy Agriculture Secretary Charles F. Conner said it ‘moved in the right direction but still has some ways to go.’ He noted that the Democratic proposal increases price guarantees and supports for some crops such as wheat and soybeans at a time when U.S. trading partners are demanding that those crops be sharply reduced to create a level playing field for farmers worldwide.”

Near the conclusion of the item, Mr. Morgan explained that, “Rep. Dennis Cardoza (D-Calif.), who has spearheaded the lobbying for fruit and vegetable interests, praised Pelosi for ‘direct involvement’ in pushing for substantial grants for that sector for the first time. ‘She made clear we had to have serious and significant reforms but maintain a safety net for those areas of the country that were already covered,’ he said.

“The proposal would also expand acreage in a grasslands reserve and provide help for farmers required to meet federal air-quality standards.

“Federal payments to private crop insurers would be reduced by about $1 billion over 10 years to free funds for other priorities,” the article said.

Michael Doyle, writing in today’s Sacramento Bee, expanded on the proposal’s potential impact for fruit and vegetable growers, and stated that, “Californians won and delicate compromises survived on Wednesday as the House Agriculture Committee laboriously wrote a far-reaching farm bill.

“Working late into the night, lawmakers kept largely intact a multibillion-dollar package that adopts modest reforms while lavishing record funding on the nation’s fruit and vegetable growers.

“The committee’s farm bill allocates some $1.6 billion to specialty crops over the next five years. The money would pay for research, block grants, federal purchases and conservation. It is roughly double what the committee originally proposed earlier this year, and roughly quadruple the amount devoted to specialty crops in the last farm bill completed in 2002.”

Tom Karst provided additional funding details in an update posted yesterday at Fresh Talk, where he included a “specialty crop accounting of the House Ag Committee’s manager’s mark of the farm bill…From the office of Rep. Dennis Cardoza.”

Meanwhile, Associated Press writer Mary Clare Jalonick reported yesterday that, “The House Agriculture Committee voted Wednesday to ban federal subsidies to farmers with incomes averaging more than $1 million a year and stop farmers from collecting payments for multiple farm businesses.

“Only farmers whose incomes exceed $2.5 million a year are now disqualified from such aid.”

The AP article added that, “Some critics continued to press for weaning farmers off subsidies altogether. They said Peterson’s compromise does not address demands from nations in the World Trade Organization for drastic cuts in the U.S. subsidies.

“‘It will do very little to make our agriculture policies more equitable, will not address the real challenges we face at the WTO, and it will not do anything to help our farmers produce for the market rather than for the government paycheck,’ said Rep. Ron Kind, D-Wis.”

With respect to executive branch perspective, the article indicated that, “Agriculture Secretary Mike Johanns also has criticized the committee’s attempts at updating farm policy. The administration has made its own proposals, including a limit on payments to farmers who earn an average of more than $200,000 a year.

“This week, Johanns said the committee’s bill is a ‘missed opportunity’ for major change. On Wednesday, however, Deputy Agriculture Secretary Charles Conner said Peterson appears to be moving in the right direction.”

On the payment limitation issue, a Congressional Quarterly item added yesterday that, “The amendment, offered by committee Chairman Collin C. Peterson, D-Minn., and adopted by voice vote, would bar subsidies for farmers making more than $1 million in adjusted gross income annually. Farmers making between $500,000 and $1 million would be able to collect payments only if 67 percent or more of their income comes from farming investments. Currently, farmers who make up to $2.5 million can collect subsidies.

“Furthermore, farmers would no longer be able to collect cash on more than one property. The limits include conservation program subsidies and are likely to affect very rich farmers and very large farming operations.”

DTN writer Chris Clayton noted yesterday (link requires subscription) that, “The proposal satisfies House Speaker Nancy Pelosi, D-Calif., Peterson said. House leaders ‘realize we have swallowed a lot on those payment limits.’”

On this note, Ken Cook noted yesterday at The Mulch that, “Focusing just on one feature of Chairman Peterson’s proposal–a provision that would deny farm subsidies to individuals with an adjusted gross income of $1 million or more (0.1 percent of all taxpayer)–we can now officially calculate that when it comes to restricting farm subsidies to wealthy individuals, the Bush administration, which proposed a threshold of $200,000 AGI for subsidies, is exactly five times more progressive than the House Democratic leadership.”

Dan Looker, writing yesterday at Agriculture Online, noted that the payment limitation proposal “[p]uts no limit on LDPs or marketing loan gains, which will eliminate the need to use commodity certificates to circumvent current limits. And it continues to allow a farming spouse to collect payments, in effect doubling the limits.

“Representative Jeff Fortenberry (R-NE), who like [Representative Earl Pomeroy (D-ND)] has been an advocate of tough payment limits, asked Peterson how much will be saved with the reforms.

“‘I think the test of meaningful reform is how much money this saves,’ Fortenberry said.
Peterson said the reforms will save an estimated $226.5 million over five years and $522 million over 10 years.”

Mr. Looker also pointed out that, “The committee also approved an amendment by Representative K. Micheal Conaway (R-TX) to eliminate USDA payments to landowners that are less than $25. It costs USDA $15 to make the payments…[T]he committee didn’t have an exact estimate of the savings from Conaway’s amendment, but Deputy Secretary of Agriculture Chuck Conner told the committee that in 2004 the USDA distributed some 27,000 checks of less than $10.”

Des Moines Register writer Philip Brasher noted yesterday at the Cash Crops Blog that the payment limitation proposal “[w]ould allow a farmer who is married to collect up to $120,000 in fixed payments each year, up from the current $80,000 limit.

“The rules would save taxpayers an estimated $50 million a year, primarily through new direct-attribution rules that are part of the package. Tom Buis, the president of the National Farmers Union and a former Democratic congressional aide, is on board with the rules. He says they are a major change.”

On a separate front, Mr. Brasher reported that, “Also approved Wednesday was a revenue-based countercyclical payment option sought by the National Corn Growers Association and others. The way the bill is written the payments would be based on changes in nationwide revenue for each commodity.

“However, Peterson says lawmakers could go to a state or even county base in calculating revenue, depending on the cost. He told me that he wants to do it on a county basis. So do corn growers.

“The breakthrough for advocates of the revenue plan came when congressional budget analysts showed that it would actually save the government money. The reason: Farmers would have only one chance to select the revenue option. They wouldn’t be allowed to switch.”

DTN writer Chris Clayton flushed out more details on the revenue-based plan in an update from yesterday (link requires subscription).

There, Mr. Clayton stated that, “Farmers will be able to choose between using the current counter-cyclical program or a new revenue-assurance counter-cyclical program for the life of the next farm bill, under a proposal adopted Wednesday by the House Agriculture Committee.

“Following a push by several groups that touted revenue-assurance plans, House Agriculture Committee Chairman Collin Peterson, D-Minn., added the program based on a plan crafted earlier this year by USDA officials.”

The DTN article added that, “Under the revenue-assurance package, farmers would be given the option to choose if they want to switch to the new program, but once a producer commits, he or she would then be locked into that counter-cyclical program for the life of the bill.

“‘We not going to let people jump in and out,’ Peterson said.

“The program is being added with the option to choose to see how it would work over the next five years and what program better benefits farmers, Peterson said.

“‘We’re going to find out over the next five years if this is a better way to go,’ he said.”

At the conclusion of his article, Mr. Clayton reported that, “In developing the measure, Peterson credited work done by USDA and the National Corn Growers Association

“The national payment rate is a formula establishing the difference between the target per-acre revenue for the commodity and the national actual revenue per acre, according to the proposal. That payment rate would then be divided by the national payment yield. Then, that number would factor in the base acres of the farm and payment yield.

“For instance, the target revenue in the plan for corn is $344.12 per acre and the national payment yield for corn would be 114.4 bushels per acre.

“The target revenue for soybeans would be $231.87 per acre and the national payment yield would be 34.1 bushels an acre.

“Wheat growers would have a target revenue of $149.92 per acre and a national payment yield of 36.1 bushels an acre.

“For the current counter-cyclical program, the committee proposes keeping the current per-bushel target price at $2.63 for corn while raising the target price for soybeans 30 cents to $6.10 a bushel and raising the wheat target price 23 cents to $4.15 a bushel.”

And with respect to biofuels, Dow Jones writer Bill Tomson reported this morning that, “The U.S. House version of the 2007 farm bill will contain a provision to allow farmers to plant cellulose ethanol crops such as switchgrass on some environmentally sensitive land that the government pays to keep fallow, lawmakers said Wednesday.

“Corn is the primary feedstock now for U.S. Ethanol production, but the Bush administration and industry representatives have said new crops will be needed for ethanol production as demand for the fuel is expected to expand in coming years.

“Rep. Jerry Moran, R-Kan., who submitted the legislation Wednesday for consideration by the House Agriculture Committee as an amendment to the 2007 farm bill, predicted it will be key to boost production of cellulose feedstocks.”

With respect to timing, Congressional Quarterly writer Catharine Richert noted yesterday that, “Committee members hope the changes will deter attacks on the House floor from lawmakers who view farm subsidies as wasteful and trade distorting. The bill could come up for a vote on the floor as early as next week, Speaker Nancy Pelosi, D-Calif., said Wednesday.”

And, Congressional Quarterly writer Alan K. Ota reported yesterday that, “Democrats do not want to be blamed for inaction when the current farm bill expires Sept. 30, and the House panel is moving faster than its Senate counterpart.

“‘The Senate is not doing anything,’ Peterson said. ‘The only way for us to get this done is for us to pass a bill in the House that has broad support. When we finish the bill, I’m going to be calling (Senate Majority Leader) Harry Reid to tell him, ‘We’ve got a good bill. And we need to work together to get this done.’”

WTO Issues

Reuters writer Orla Ryan reported yesterday that, “The faltering Doha round of global trade talks can still succeed, but it remains to be seen whether a deal can be clinched soon or take several years, U.S. Trade Representative Susan Schwab said on Wednesday.

“‘I believe the Doha round can be successful, the question is one of time,’ she told reporters in Ghana during a trade forum” (transcript of Amb. Schwab’s comments at the AGOA (African Growth and Opportunity Act) Forum available here).

Reuters writer William Schomberg reported today that, “Brazil signalled tough talks ahead to save a global trade deal on Wednesday, saying last-ditch compromise proposals leaned too heavily in favour of rich countries.

“Brazilian Foreign Minister Celso Amorim also criticised the United States for saying it would not discuss the kind of cuts to U.S. farm subsidies that many poor countries are seeking.”

And a Reuters news item from yesterday (via DTN, link requires subscription) noted that, “Slashing U.S. farm subsidies to as low as $13 billion a year is ‘unacceptable’ and a cut proposed in a new framework for the Doha trade talks would rob farmers of a buffer to weather changes in crop prices, a Bush administration official said on Wednesday.”

Also on the latest WTO proposed framework, Sen. Tom Harkin (D-Iowa) stated earlier this week that, “Although the majority of the key figures proposed by Mr. Falconer that would establish the level of reductions required in domestic support, agricultural tariffs, and export subsidies appear in the draft text as ranges, those ranges represent greater reductions in U.S. domestic support and lesser gains in market access than were envisioned in the U.S. proposal tabled in October 2005. If a final Doha round agreement were to reflect these ranges, it would face a difficult road in being approved by the U.S. Congress.”

And, Bartholomew Sullivan reported in yesterdays Commercial Appeal (Memphis, Tennessee) that, “The chairman of the agricultural trade negotiations at the World Trade Organization in Geneva has circulated a draft proposal on cotton subsidization that the Memphis-based National Cotton Council considers unacceptable (NCC press release available here).

“The council urged the Bush Administration to oppose ‘the cotton-specific language’ in the proposal or risk its support for extending trade-promotion authority in the future.”

Larry Elliott, writing yesterday at The Guardian, stated that, “In what WTO insiders admit is the last hope of salvaging the Doha round, the Geneva-based organisation admitted that countries would not get everything they wanted from draft texts in the most contentious areas of agricultural and industrial trade. European farmers would have to accept cuts in tariffs of up to 73% on some products, while the United States would need to reduce farm subsidies by between 66% and 73%, according to the negotiating documents.”

Mr. Elliott also indicated that, “The WTO hopes that members will use the texts as the basis for negotiations, to secure an outline deal possibly before the start of the US presidential campaign in the new year or failing that by the middle of 2009. One WTO source said, that the outlook would be bleak if the members rejected the new texts. ‘If they do that the Doha round is dead’, he said.”

Keith Good

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