November 17, 2019

Senate Farm Bill- Payment Limits & Other Issues

Categories: Doha / Trade /Farm Bill

An update posted at the Senate Agriculture Committee webpage indicated that a press conference, in which the Chairman’s mark of the Farm Bill will be unveiled, is going to be held today at 12:30 p.m. EDT in 328A Russell Senate Office Building. The press conference can be viewed live via the Committee webpage.

DTN writer Chris Clayton reported yesterday (link requires subscription) that, “A pair of U.S. senators said Monday they will bypass the Senate Agriculture Committee and take an amendment to the floor that would put a $250,000 per-farm hard cap on commodity payments.

“Payment-reform champions Sen. Charles Grassley, R-Iowa, and Sen. Byron Dorgan, D-N.D., will take another swing at lowering the payment cap for farmers. Dorgan and Grassley have brought up tighter payment limits in the past and even seen a bill pass the Senate only to lose out in a conference vote.”

A press release on this development issued yesterday by Sen. Dorgan stated that, “The way the farm program works today ‘diverts needed resources away from family farmers,’ Dorgan said. ‘It also threatens to injure the farm program by eroding public support for it.’ Dorgan said he and Grassley intend to ask the Senate to include provisions to put real limits on the amount of assistance from the farm program any one person can receive. Their amendment would also require those receiving federal farm program payments to be actively engaged in farming, and require that farm program payments be attributed to a specific person.”

More specifically, Mr. Clayton noted in his DTN article that, “Under the Grassley-Dorgan proposal, an individual would be limited to a cap of $125,000 and a married farm couple would be limited to $250,000. The proposal would get rid of the rule allowing farmers to draw payments from three separate business entities as well. The bill would also tighten the rules that define someone who is ‘actively engaged’ in farming.”

“The Senate Agriculture Committee as of yet has not released all of the details of its farm bill, but the committee is proposing lowering the current $2.5 million adjusted gross income cap to receive farm payments down to potentially $750,000 adjusted gross income. That compares with a $1 million income cap passed by the House last summer,” Mr. Clayton said.

With respect to the executive branch, the DTN article added that, “While the Senate Agriculture Committee and House each look to apply tighter income tests, the Bush administration proposed a $200,000 adjusted-gross-income cap [pages 21-23] to collect farm payments.”

A press release issued yesterday by the Sustainable Agriculture Coalition explained that, “The Dorgan-Grassley proposal pending for Senate floor action would cap direct payments at $40,000, counter-cyclical payments at $60,000, and marketing loan payments at $150,000, for a hard total cap of $250,000. The proposal would also establish a clear, measurable standard to determine whether beneficiaries are actually actively engaged in the business of farming. The bill would also close a variety of other existing loopholes that have entered into the statute and regulations over the years. Similar caps would be included in the amendment should the Senate Agriculture Committee adopt any new form of revenue insurance payments.”

Meanwhile, the “Washington Insider” section of DTN stated yesterday (link requires subscription) that, “Not only does the chairman’s proposal pull back from reforms on payment limits, it provides significant increases in supports for dairy and sugar. Sources say the Senate farm bill proposal would restore the Milk Income Loss Contract payment rate to the 2002 farm bill level of 45 percent and increase the number of pounds of milk eligible for MILC payments, with both changes taking effect October 2008. And, it would replace the current $9.90 per hundredweight support price for manufacturing milk with individual price supports for cheese, butter, and nonfat dry milk, and allow dairy producers to forward contact milk for non-fluid uses.

“For sugar, the proposal likely would raise the government’s loan rate by one cent per pound over the life of the bill, twice the increase in the House-passed bill. The proposal also is expected to contain provisions to increase storage payments and authorize the government to buy excess sugar at the loan rate and sell it to ethanol plants at reduced prices.

“The committee is receiving expressions of concern from a number of agriculture groups about its revenue-based countercyclical program, especially the requirement to reduce direct payments. For example, the sorghum producers expressed ‘grave concerns’ about the budget savings the proposal would generate, at the expense of direct payments. According to National Sorghum Producers figures, sorghum currently receives on average $16.81 per acre and, ‘Therefore, for many sorghum producers, the $15 fixed payment would be a bad option as they already receive a higher fixed payment.’”

Along these lines, Philip Brasher reported yesterday at The Des Moines Register’s Cash Crops Blog that, “The American Farm Bureau Federation is going after that optional revenue-protection plan that corn growers got Sen. Tom Harkin to write into the farm bill.

“In a letter that runs more than four pages, the Farm Bureau argued today that the plan will cost farmers money in lower subsidies and reduce spending for commodity programs in the future.

“The Farm Bureau also is unhappy that farmers who enroll in the optional plan won’t be allowed to forfeit their crops to the government if they don’t like the market price. Those farmers wouldn’t be eligible for ‘non-recourse loans.’

“Iowa’s other senator, Republican Charles Grassley, is no fan of the revenue plan because it would take business away from crop insurers. However, he hasn’t taken a firm position. He said today that he’s listening to views of constituents.

“The revenue option would peg subsidies to state-level crop revenue, not just commodity prices. Backers of the plan say it would provide better protection when crops fail.

“There is another issue with the revenue option: Should payments under the revenue plan be subject to limits on how much money individual farms can collect?”

In a separate issue that could be part of the Farm Bill debate, an item posted yesterday at The Des Moines Register Online, reported that, “Legislation that would grant legal immigration status to thousands of migrant farmworkers will likely be added to the Senate’s farm bill, said Senate Majority Leader Harry Reid.

“An estimated 800,000 workers, plus their spouses and minor children, could qualify for the program, which opponents have derided as amnesty.

“Reid, D-Nevada, pledged in June to try to add the legislation, known as AgJOBS, to the farm bill. Asked Monday if immigration measure would be part of the farm bill, Reid said, ‘I guess I do, the latter. Yes, I do think that we should have the AgJOBS part of the farm bill.’”

And Peter Shinn reported yesterday at Brownfield that, “Senate Ag Committee Chairman Tom Harkin and ranking Republican Saxby Chambliss hold a press conference in Washington D.C. Tuesday to publicly unveil the Chairman’s Mark of the 2007 Farm Bill. The Senators are expected to demonstrate bi-partisan support for the measure, which has already drawn criticism from some quarters for its failure to include language sponsored by Iowa Republican Chuck Grassley and North Dakota Democrat Byron Dorgan that would dramatically tighten farm program payment limits.

“One stand alone bill that will get included, however, is legislation from South Dakota Republican John Thune aimed at spurring production of cellulosic ethanol feedstocks. According to a Thune press release, the measure would spend some $200 million in federal cost-sharing dollars to establish energy-dedicated crops and pay competitive rent until those crops are sold. Thune’s addition to the farm bill would also provide per-ton payments to producers of biomass, like corn cobs, perennial grasses, and wood chips.

“The Thune press release suggested such incentives could stimulate production of as much as 100 billion gallons of cellulosic ethanol per year. Thune told Brownfield it could literally spread cellulosic ethanol production from coast-to-coast.”

The Brownfield item also included this audio link (MP3) to an interview with Sen. Thune (about 8 minutes).

In other Farm Bill news coverage, Congressional Quarterly writer Catharine Richert reported yesterday that, “Tom Buis is having a good year.

“Buis is president of the National Farmers Union [NFU], an organization close to nabbing two big wins in this year’s farm bill reauthorization: implementation of a long-delayed food labeling program and creation of a $5 billion trust fund for farmers who lose crops to natural disasters.

“The accomplishments are not a total surprise. The farmers union has long been a presence on Capitol Hill, capitalizing on ties to populist farm-state lawmakers.

“But this year’s successes are a product of both savvy lobbying and good fortune. After Democrats won control of Congress last November, several of the group’s longtime champions, such as Sen. Kent Conrad of North Dakota and Rep. Collin C. Peterson of Minnesota, assumed key positions to write the farm bill.

“The farmers union’s growing political clout underscores its transformation from an ideological, largely outside-the-Beltway operation to a Washington-based lobbying shop that has learned to compromise with other farm groups and with lawmakers.”

The CQ item added that, “NFU works with the other side of the aisle, too, but the group has a distinctly Democratic flavor, said Charles W. Stenholm, D-Texas (1979-2005), former ranking member of the House Agriculture Committee. In the 2005-06 election cycle, NFU’s political action committee made 94 percent of its $50,250 in campaign contributions to Democrats, according to CQ MoneyLine.

“‘NFU has always been a Democratic organization,’ Stenholm said. ‘And when we Democrats took over, their stock went up.’”

In farm policy opinion, The Washington Post editorial board indicated today that, “These are good times for American farmers. Net farm income in 2007 will be more than $87 billion, a record, according to the Agriculture Department’s latest projections. And in 2006, the average farm household already earned $80,000, about 20 percent more than the average non-farm family. The boom is driven not only by federal subsidies for corn-based ethanol but also by strong demand for U.S. farm products overseas. The prices of corn, cotton, soybeans, wheat and rice are on the rise, as are farmers’ land values.

“It would seem an opportune moment finally to phase out the costly and irrational system of federal subsidies that props up the farm sector — all in the name of a ‘safety net’ for beleaguered yeomen, of course.”

The Post added that, “An alternative exists, in the form of a bill being prepared by Sens. Richard G. Lugar (R-Ind.) and Frank R. Lautenberg (D-N.J.). Their proposal would replace the existing array of subsidies for favored commodities with government-funded crop insurance that would cover all farms and ranches, whether they grow strawberries or soybeans. Farmers would get paid if, but only if, their incomes in a given year dropped at least 15 percent below the previous five years’ average in their respective counties. This is still an incredibly sweet deal; what other American industry can count on federally funded protection from the vicissitudes of capitalism? But it would save $20 billion over five years, money that Mr. Lugar and Mr. Lautenberg propose to spend on deficit reduction, nutrition and a soil conservation program that pays farmers to restore wetlands and wildlife habitats.”

And The Wall Street Journal editorial board opined in today’s paper that, “Perhaps you’ve heard that this is the Congress for ‘the little guy,’ the ‘forgotten’ middle class, the working stiff. If that was the plan, it isn’t working. On present trends, the 110th Congress will go down as one of the biggest blowouts in corporate welfare history.”

The Journal then went on to offer some specific examples to support this thesis, among them: “Big agribusiness. The House has already passed a five-year farm bill with a cost of $286 billion. The USDA calculates that two-thirds of these subsidies are directed to the richest 10% of farmers. The huge cooperatives that grow rice, cotton, corn, wheat and soybeans will get $7.5 billion a year. These handouts will come despite record crop prices, and farm land selling at an average of 18% above a year ago. The USDA estimates that farm net income will reach $87 billion this year, nearly 50% higher than in 2006.

“Ethanol. On top of the 51 cent per gallon tax credit for this inefficient fuel, the Senate energy bill requires a doubling of ethanol production from corn, $500 million in new direct payments to ethanol producers, and $2 billion more for loan guarantees for new ethanol refineries.

“Big Sugar. The farm bill requires the USDA to buy up domestic sugar equal to the amount that is imported from Mexico under Nafta, which is a disguised form of trade protection. This sweet deal is like requiring the Transportation Department to purchase a Ford and GM car for every Nissan and Toyota imported into the U.S. The taxpayer cost: $1.4 billion.”

In a more general background and discussion, C-SPAN’s “Washington Journal” program devoted an hour of coverage to the Farm Bill issue in yesterday’s segment. A variety of perspectives were represented and reporter Jerry Hagstrom provided background explanations and context. To watch the program, just click here.


Reuters writer Jonathan Lynn reported this morning that, “Talks on a deal to free up world trade are making progress, developing country leaders said on Monday, but the chairman of key industry negotiations said more needed to be done to reach an agreement by the year’s end.

“Brazilian President Luiz Inacio Lula da Silva said the Doha round of trade talks, launched six years ago to boost the global economy and help poor countries export more, could end in a deal by the end of the year despite remaining obstacles.

“‘Nothing is decided but I think we are close to that,’ Lula, who met the leaders of India and South Africa in Pretoria last week and spoke with U.S. President George W. Bush by telephone, said on his weekly radio program.

“India’s Trade Minister Kamal Nath also sounded a positive note, saying the World Trade Organization (WTO) talks had progressed over the past two months.”

The article stated that, “‘In one word, it is now doable, which of course is different from saying it will be done,’ [WTO Director General Pascal Lamy] said in a speech at Georgetown University’s law school. ‘Both in scope and in depth, there is a substantial package on the table.’”

“The Silence of the Bees”

In news regarding production agriculture and recent events associated with colony collapse disorder and bees, the PBS program “Nature” will be featuring this issue in a documentary program that will be aired this Sunday, Oct. 28.

For an excellent audio backgrounder on this issue, its implications, potential causes and world-wide reach, FarmPolicy recommends this radio segment (MP3) with May Berenbaum, Professor and Head of the Department of Entomology at the University of Illinois, which aired yesterday on WILL- AM 580 radio (University of Illinois public radio).

As this preview to the “Nature” program explains, “Honeybees are responsible for one of every three bites of food we eat. Each year, they pollinate $14 billion worth of crops and seeds in the U.S. alone. Their total decimation would be catastrophic from the local to the global level — failed businesses, skyrocketing food prices, unsustainable labor costs, and depleted supplies of fruits, nuts, vegetables, plants, and more.”

Keith Good

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