FarmPolicy

December 20, 2014

Farm Bill Update

Categories: Doha / Trade /Farm Bill

Carolyn Lochhead, writing in Saturday’s San Francisco Chronicle, reported that, “House Speaker Nancy Pelosi signed off Friday on a five-year farm bill that would keep multibillion-dollar subsidies flowing to cotton, corn and a handful of other crops, deeply disappointing Bay Area food and environmental activists who had hoped that Congress might shift federal farm policy this year to combat obesity, air and water pollution and industrial farming.

“Pelosi, a San Francisco Democrat, hailed as reform legislation that would grant subsidies to farmers earning up to $1 million — five times more than the cap sought by the Bush administration — while increasing actual payments to farmers. The bill comes during the most prosperous era American agriculture has seen in decades as crop prices and farm income approach or set record highs.”

The article added that, “If anything, ‘we’ve actually increased the rates at which we support prices’ for subsidized crops, said Daniel Sumner, a leading farm economist and director of the Agricultural Issues Center at UC Davis. ‘We’ve really done nothing of a significant nature to change those programs. … I think that’s a mistake for the country.’”

Meanwhile, Reuters writer Charles Abbott reported on Friday that, “The U.S. House of Representatives should not settle for superficial farm-subsidy reforms, critics said on Friday, calling for cuts in crop supports to pay for rural development and more aid to fruit and vegetable growers.

“Wisconsin Rep. Ron Kind said he would propose a package that goes further than the House Agriculture Committee in revamping subsidies, encouraging healthy eating and preventing abuse of crop supports.”

Mr. Abbott also stated that, “For months, Kind promoted the ‘Farm 21’ plan to replace traditional crop subsidies with federally bankrolled risk management accounts for farmers. On Friday, Kind said he would ask a vote on a more ‘politically practicable’ package that includes some administration ideas.” (For a complete analysis of the Farm 21 plan, see this brief report completed by the Food and Agricultural Policy Research Institute (FAPRI)).

“Along with the lower income limit, it would eliminate a widespread misuse of so-called loan deficiency payments and adopt ‘revenue protection’ as the basis for counter-cyclical payments made when crop revenue is below targets set in law.

“It also would phase down the $5.2 billion guaranteed to farmers annually because they grew grains, cotton and soybeans in the past.

“‘That’s where we find significant savings,’ said Kind. He said he would put up to $2.6 billion into specialty crop assistance over five years, compared to the $1.6 billion offered by the farm bill.”

More specifically with respect to Rep. Kind’s alternative proposal, he and Rep. Jeff Flake (R-AZ), Rep. Earl Blumenauer (D-OR), Rep. Paul Ryan (R-WI), and others will hold a news conference today to unveil the “Fairness in Farm and Food Policy Amendment” to the 2007 Farm Bill that they will bring to the floor.

According to Rep. Kind’s office, “A unique coalition in the House has converged in favor of reform including members of Congress from both sides of the aisle. Earlier this year, the bipartisan group of lawmakers brought the reform debate to the forefront with a legislative package that made significant changes to agriculture policy, FARM 21.

“In response to feedback on FARM 21 from members, constituents, and others, Reps. Kind and Flake developed the Fairness Amendment, which retains important aspects of the farm safety net that producers have come to know, but will reform them to work better and more equitably. Many of the proposals mirror the ideas advocated by the United States Department of Agriculture and others.”

Scott Faber, writing at The Ruminant on Sunday indicated that, “The ‘Fairness in Farm and Food Policy’ amendment will reduce and restructure depression-era subsidies to help more farmers and to help meet America’s urgent health, hunger and environmental priorities.

“In particular, the amendment replaces depression-era price guarantees with a modern revenue-based safety net developed by USDA experts that better protects family farmers from declines in crop prices and crop yields.

“The amendment also denies subsidies to large commercial farmers with average annual adjusted gross income greater than $500,000 and limit annual subsidies to $250,000 per person.

“Finally, the amendment gradually reduces direct payments, which were created to wean farmers off subsidies in 1996 but which have become an entitlement program that will cost more than $26 billion over the next five years.”

Interestingly, Michael Doyle, writing in Saturday’s Sacramento Bee, noted that, “With House Speaker Nancy Pelosi already on board, Rep. Collin Peterson, D-Minn., and the committee he chairs wrote a farm bill durable enough to survive potential challenges on the House floor. Tellingly, it passed the 46-member House Agriculture Committee on a unanimous voice vote.

“It was cannily written. It includes, for instance, an easy-to-explain provision banning farm subsidies to cotton, rice, wheat and corn growers with gross annual incomes greater than $1 million. Pelosi proclaimed this millionaires’ provision as a ‘critical first step toward reform,’ which is one of its selling points.

“The more complicated truth, though, is that the bill also raises by tens of thousands of dollars the amount of subsidies that any one farmer can receive.”

With respect to future Senate action, the Bee article stated that, “Senate staffers likely will start working quietly over the August recess in preparation for Senate committee action in September. Then, facing an Oct. 1 deadline, the House and Senate will negotiate a final version.”

Mr. Doyle then added that, “‘I think the Senate will have to defer to a lot of what we’ve done,’ said Rep. Dennis Cardoza, D-Merced, who chairs the House horticulture and organic agriculture subcommittee.”

***

In more news regarding Speaker Pelosi’s role in the 2007 Farm Bill debate, Congressional Quarterly writer Alan K. Ota reported on Friday that, “The conservative wing of her caucus will have a lot to say about whether Speaker Nancy Pelosi can add to the House majority’s list of accomplishments before the August recess.

“Pelosi will need the support of the 48 center-to-right members of the Blue Dog Coalition if she is to provide her caucus with something to take home other than opposition to the administration’s Iraq policy. And one way to show the Blue Dogs that their priorities matter would be to schedule floor debate next week on the farm policy overhaul (HR 2419) approved Thursday by the Agriculture Committee.

“‘Working on the farm bill with the Blue Dogs will help the Speaker to pull them together. It could build momentum for other things,’ said former Rep. Charles W. Stenholm, D-Texas (1979-2005), one of the founders of the group.”

On Saturday, Ken Cook noted at The Mulch that, “Indeed, critics of the bill from the progressive community who have had the privilege to speak to Rep. Pelosi’s staff about the legislation have been told in no uncertain terms that she will not tolerate any significant changes via amendment on the House floor. To further frustrate reform efforts, the farm bill is being rushed to the floor this Thursday, July 26. Amendments like the reform package to be brought forth by Democrat Ron Kind of Wisconsin must be delivered to the Rules Committee by 6 p.m. Tuesday, and if approved, will be allowed limited debate and a vote on the House floor.

“But Speaker Pelosi’s staff have made it clear that she firmly supports the bill as it is, and will make sure enough Democrats vote with her and the subsidy lobby to kill any reform that displeases Chairman Peterson.”

Mr. Cook also noted that, “Under the Pelosi farm bill, on top of record income corn farmers will earn from the market, taxpayers will be obligated to continue providing an automatic $2 billion per year in ‘direct payments’ to corn farmers. These are subsidies paid regardless of price or income conditions.

“Pure and simple, it’s a windfall subsidy of $10 billion from taxpayers to corn farmers over the next five years.

“To put that in perspective, the Pelosi farm bill adds $4 billion over five years ($800 million per year) to the food stamp program. That increase, designed in part to retain the ‘buying power’ of the $1 per meal food stamp ‘benefit’, could easily have been found by reducing the corn windfall subsidy. Corn farmers still would have had $6 billion in subsidies left over–on top of record earnings in the marketplace, of course. We might have doubled the food stamp increase to $8 billion and still had $2 billion to waste–and in this market, for taxpayers, it is waste–on a corn windfall.”

David Rogers
, writing in today’s Wall Street Journal reported that, “More Armani than Carhartt, Speaker Nancy Pelosi brings her style of coalition politics to the House farm-bill debate this week as she tries to balance the need for change in federal agricultural programs with the Democrats’ dream of reviving the party’s historic urban-rural alliances.”

The article went on to explain that, “The five-year farm bill now before the House is a greater challenge, since the choices can be painful and make it harder to hold different factions in her caucus…In the case of the farm bill, freshmen Democrats elected from rural districts last year need some assurance that loan and subsidy programs important to their farmers will survive. But to move a bill forward with urban support also demands cuts from some programs and new payment limits — which can upset powerful commodity groups — to placate those demanding more reform.

“A Democratic political memo last month predicted that rural America will be a major battleground next year, as the Iraq war continues to pull down President Bush’s poll numbers.”

Mr. Rogers added that, “To navigate these hurdles, Ms. Pelosi has allied with House Agriculture Committee Chairman Collin Peterson, pressing him to be more open in his bill to changes in federal farm programs, but also promising to support him against amendments on the House floor.

“Mr. Peterson, from a huge Minnesota district of wheat, sugar beet and poultry farms, is very much part of the agriculture-subsidy establishment. Nevertheless, the package his committee approved last week would tighten subsidy limits and require more transparency, making it harder to hide payments to multiple entities. Fruit and vegetable growers, often ignored in past farm bills, get more aid; cotton and crop-insurance interests face cuts. Small ranchers won rules requiring country-of-origin meat labeling, and all farmers would be able to try out new ‘revenue protection’ programs to safeguard against low crop yields as well as poor markets.

“‘Peterson made some surprising moves’ in the bill, an administration official said.

“The chairman credits Ms. Pelosi for giving him the support needed to make change. ‘She has been our greatest ally, trusting us, backing us,’ Mr. Peterson said. ‘She was sending us a message that we needed reform. We know that.’”

In addition, the Journal article reported that, “Many activists argue the bill still falls short. Despite high corn prices, those growers would get billions in annual subsidies — at a time Ms. Pelosi has asked tax writers to come up with $4 billion in new revenue to meet House budget targets.

“‘I am personally a longtime fan of Nancy Pelosi,’ says Environmental Working Group President Ken Cook. ‘But at every turn all the decisions were given to the subsidy lobby. This is an unwelcome surprise that she has put her fingers on the scale so heavily.’”

In other Farm Bill developments, DTN’s Chris Clayton reported yesterday (link requires subscription) that, “Advocates for tighter payment limits on commodity programs continued lashing out Monday at the farm bill passed by the House Agriculture Committee.

“Simply put, an eligibility cap of $1 million adjusted gross income and a potential $20,000 increase in direct payments just don’t add up to meaningful reform, reform advocates said.

“‘In many respects, this bill moving through is going to be providing more of the same,’ said Ken Cook, president of Environmental Working Group.

“Cook criticized farm organizations and lawmakers for attempting to sell the measure as reform because the bill would allegedly eliminate all millionaires from farm payments.”

Mr. Clayton also indicated that, “Chuck Hassebrook, executive director of the Center for Rural Affairs, said he wants House Speaker Nancy Pelosi, D-Calif., to slow down and analyze the Agriculture Committee’s work instead of allowing the bill to get a floor debate later this week.

“The change in direct payments, Hassebrook said, allows a large farmer to increase the cap in direct payments from $40,000 to $60,000, or potentially as high as $120,000 with a husband and wife both involved in farming. That just gives more money to larger producers to outbid smaller farmers for rental land, he said.

“‘Rural people want farm programs that support family farming,’ Hassebrook said.”

For more on the payment limitation issue, see, “If We’re Eliminating Farm Subsidies To ‘Millionaires’ How Is It That Speaker Pelosi Could Qualify?” which was posted yesterday at The Mulch.

(In related news regarding farm payments, Washington Post writer Sarah Cohen reported yesterday that, “The U.S. Department of Agriculture distributed $1.1 billion over seven years to the estates or companies of deceased farmers and routinely failed to conduct reviews required to ensure that the payments were properly made, according to a government report.”)

For executive branch perspective on the 2007 Farm Bill developments, Bloomberg writer Alan Bjerga reported yesterday that, “President George W. Bush’s new-found opposition to the kind of farm spending he once embraced may not be enough to stop it — or to prevent new global trade conflicts as a result.

“The Bush administration is signaling it’s prepared to veto the $300 billion farm bill that will probably come before the U.S. House of Representatives this week. Bush already signed similar legislation in 2002, when his Republicans controlled the House, and will face pressure to do so again with next year’s elections approaching.”

Mr. Bjerga noted that, “Despite the president’s threats, a veto ‘is very, very unlikely to happen,’ says Dan Glickman, a former Democratic congressman who was agriculture secretary under President Bill Clinton. ‘There are a lot of potentially vulnerable Republican members in the House right now. The numbers don’t look great for their party anyway, and this is part of their base.’

“While most farm-bill spending goes toward food-aid programs for the needy, the crop subsidies are by far the most contentious part. The administration says the legislation will leave the U.S. vulnerable to challenges at the World Trade Organization by Canada, Brazil and other countries that say the subsidies give American farmers an unfair advantage.”

The Bloomberg article also reported that, “‘When you’re at the end of your presidency, it’s easier to threaten a veto, but I think in the end there will be more political consensus than disagreement,’ says Mary Kay Thatcher, top lobbyist for the American Farm Bureau Federation, the largest U.S. farmer group. ‘Farmers like this bill, and farmers are important voters.’”

In recent editorial opinion regarding farm policy, the editorial board at The Washington Post noted today that, “When the Democrats took over Congress in November, they promised to legislate differently from their predecessors. Given the slimness of their victory and the voters’ pronounced anger at Washington, they had a mandate to dispense with the worst manifestations of craven interest politics and to push for basic reforms in ethics and procedure. Now Speaker Nancy Pelosi (Calif.) and the rest of the new House leadership are in danger of failing a major test of their commitment to change.

“At issue is the massive system of farm subsidies — federal giveaways that cost all Americans but benefit few — that is set for reapproval on the House floor later this week.”

The Post noted that, “The system also has eroded America’s influence abroad. The vital Doha round of trade talks continues to sink in part because of disagreement over American and European agricultural payments. In short, farm subsidies are a disgrace that any reform-minded politician, particularly any reform-minded politician with a big D next to her or his name, should be eager to address.”

Concluding, the item stated that, “So what is the speaker’s take on this rotten bill? It ‘represents a critical first step toward reform,’ Ms. Pelosi said last week. That’s the wrong answer. The House leadership should be pushing for significant reform of the crop subsidy system. It can start by supporting an amendment from Rep. Ron Kind (D-Wis.) that would lower the income cap and scale back some of the most egregious payouts. Mr. Kind’s amendment is still too modest, but proposals like it, not the legislation on the table right now, are the critical first steps toward reform.”

Likewise, the editorial board at The Minneapolis Star Tribune stated on Saturday that, “But the bill’s payment caps are inadequate. They are inferior to a fine bipartisan plan in the Senate, offered by Republican Charles Grassley of Iowa and Democrat Byron Dorgan of North Dakota, and weaker than a means-testing proposal offered by the Bush administration and Agriculture Secretary Mike Johanns.

“Responsible members of the House should vote for a tougher payment cap that is likely to be offered on the House floor this week — remarkably, it could actually help rural America.”

The Star Tribune added that, “Capping payments would slow the process of consolidation and, in addition, free up funds for other, more constructive uses, including soil and water conservation and biofuels research. As a dividend, these programs spread their money more evenly to small farmers, helping support a larger rural population, according to studies by the U.S. Department of Agriculture.

“Adding tougher payment caps on the House floor would risk shattering the delicate compromises that have enabled Peterson’s committee to produce a farm bill on time and in orderly fashion. But that risk is worth taking if it would produce a fairer, more efficient use of the public’s money in rural America.”

With respect to the Farm Bill and the Doha round of WTO trade talks, Reuters writer Missy Ryan reported on Saturday that, “Lawmakers may have made the United States more vulnerable to new world trade suits this week when they voted to increase some subsidy rates and give new support to the cotton industry, analysts said on Friday.”

Ms. Ryan indicated that, “It’s unclear what the final law will look like, but Gary Blumenthal, a former agriculture official and analyst at World Perspectives, sees Congress banking on more record crop prices as they chart a course for U.S. agriculture.

“That’s all very well if prices remain high, Blumenthal and other observers say, but the United States is in danger of exceeding WTO subsidy limits if commodity markets slump and price-triggered crop supports surge.

“‘The raising of support rates would appear to encourage future dispute settlement challenges but that assumes that more money is spent and that’s all dependent’ on prices, he said.”

Keith Good

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