FarmPolicy

October 18, 2017

2008 Farm Bill?

Categories: Doha / Trade /EU /Farm Bill

Philip Brasher, writing yesterday at The Des Moines Register’s Cash Crops Blog, rhetorically asked, “2008 Farm Bill? That’s looking like more and more of a possibility. Finishing the bill this year is going to be difficult. The Senate has gone on to other legislation because of a disagreement between Democrats and Republicans over what amendments will be allowed for consideration on the farm bill. The Senate has one more week of work before its Thanksgiving break.”

To listen to an exchange from the Senate floor on Tuesday between Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) regarding the amendment issue, just click here (MP3- seven minutes).

In addition, Mr. Brasher reported yesterday at The Des Moines Register Online that, “Senators started talking about the farm bill this week but have done little else about it.”

The Register item added that, “Senators aren’t likely to get back to the farm bill before next week, a spokeswoman for Sen. Charles Grassley, R-Ia., said Wednesday.

“Grassley is supposed to be the first in line to offer an amendment, a measure that would put a $250,000 cap on the amount of subsidies that any individual farms can receive.”

(Sen. Grassley offered additional comments and perspective on the Farm Bill process, including the hang-up over the maneuvering on the amendment process, in a tele-news conference with Iowa reporters yesterday. To listen to the audio of this news conference, just click here (MP3)).

“Sen. Tom Harkin, the Iowa Democrat who chairs the Senate Agriculture Committee, issued a statement urging his colleagues to settle their differences over how the farm bill will be handled,” Mr. Brasher said.

More specifically, Sen. Harkin’s statement indicated that, “This farm bill has already come so far to get to this point. The Senate Agriculture Committee overcame strict budget limitations to craft a bill that is good for America and is fiscally responsible. The Committee delivered a strong, bipartisan measure that maintains farm income protection and makes critical investments in nutrition, conservation, renewable energy and rural development. Yet today, our work has come to a screeching halt over procedural maneuvering to attach amendments to this bill irrelevant to agriculture policy.”

“With the Administration’s misguided veto threat looming over this bill, we cannot waste one more day – one more minute – debating procedure. I urge all of my colleagues to come together so can we resolve the issues raised by the Administration and bring the advancements in this farm bill to realization,” Sen. Harkin added.

DTN writer Chris Clayton reported yesterday (link requires subscription) that, “[Senate Majority Leader Harry Reid (D-Nev.)] said on the Senate floor Wednesday afternoon that he had ‘productive conversations’ with [Minority Leader Mitch McConnell (R-Ky.)] and expected to settle differences soon on the type of amendments that would be allowed.

“As the farm bill gridlocked, senators opted Wednesday afternoon to take up debate on final passage of the conference report for Labor, Health and Human Services appropriations.”

Mr. Clayton noted that, “Already, Reid has rebuked a proposed amendment by Sen. Pete Domenici, R-N.M., as well as Sen. Ben Nelson, D-Neb., and Sen. John Thune, R-S.D., on attaching an increase in the renewable fuels standard to the farm bill even though Domenici argued it pertained to ethanol, and thus the rural economy.” (To view additional news coverage on this proposed amendment, click here).

Dan Looker, writing yesterday at Agriculture Online, noted that, “National Farmers Union President Tom Buis told Agriculture Online Wednesday that he’s worried too many amendments on subjects not related directly to the farm bill — immigration policy, the war in Iraq — could bog down the bill.

“‘If we go down that road, it will just be an anchor on this farm bill and it probably won’t move this year,’ Buis said.

“He said farmers and their lenders need the certainty of a new farm law, which ag committee leaders in the Senate hoped would be signed by President George W. Bush in December.”

Mr. Looker stated that, “The Bush administration is also threatening a veto of the farm bill if it includes increases for loan rates and target prices that it considers in conflict with its goals for World Trade Organization negotiations. It has also criticized the bill’s cost and lack of enough reforms in payment limits.

“Buis sees that move as counterproductive, too.

“‘It’s pretty risky to go out there and threaten a veto before the bill has even passed the Senate,’ he said.”

A different perspective on the Bush veto threat of the current Senate version of the 2007 Farm Bill has been expressed internationally.

Anne Davies reported this morning at The Age Online (Australia) that, “The latest version of the US Farm Bill, which will increase subsidies to wheat, cotton, soyabean and corn farmers, faces a presidential veto, after Agriculture Secretary Chuck Connors said it was unacceptable to the Administration.”

Ms. Davies stated that, “A veto is possibly the best option for Australian farmers.

“Australian officials had been hoping that the 2007 Farm Bill, which will run for five years, might result in a slight reduction in farm subsidies in key areas where Australia competes, such as wheat and cotton. Instead, the Senate version of the bill would extend and increase those subsidies.”

Later, the article noted that, “Australia had been hoping that the Senate version of the bill would be better than the House of Representatives’ version, which has already passed. It increases subsidies as well as proposing laws requiring beef to be labelled with its country of origin.

“Earlier this year, Agriculture Minister Peter McGauran went to Washington to urge reforms on Congress — apparently without success.”

Meanwhile, Anne C. Mulkern reported yesterday at The Denver Post Online that, “President Bush’s threat to veto legislation funding farming, conservation and nutrition programs ‘is immoral,’ Sen. Ken Salazar said Tuesday.

“‘It’s immoral because Washington has for too long turned its back on rural America,’ Salazar said. ‘This bill is paid for unlike the other fiscally reckless initiatives of the president.’

“The legislation is ‘paid for’ because it doesn’t increase the deficit, said Salazar spokeswoman Stephanie Valencia.”

In contrast, the Denver Post article added that, “Republican Sen. Wayne Allard of Colorado called it ‘refreshing’ that Bush ‘has decided to take a tough stand on some of these spending bills.’

“‘There’s waste in all of these,’ Allard said. ‘We can go back and cut spending and we ought to do that.’

“Asked whether he had to juggle his fiscal concerns with the desires of farmers, Allard said, ‘We’re not a huge farm state. Agriculture’s an important part of our economy. There’s a certain sector of the ag community in Colorado that would like to do away with the subsidies and not have to worry about the federal government.’”

In more detailed reporting regarding the nuts-and-bolts of the Senate Farm Bill legislation, Reuters writer Charles Abbott reported yesterday that, “A hallmark of the Senate farm bill — the first-ever program to protect grower revenue — would be slower to pay farmers than the traditional farm program, affecting billions of dollars, said congressional analysts.”

Mr. Abbott stated that, “The Congressional Budget Office said ‘the schedule for ACRP (average crop revenue program) payments would be slower than traditional payments.’ CBO estimated $4 billion in payments would be made during fiscal 2008-12, the life of the farm bill, although benefits worth $14 billion would accrue during crop years 2008-12. ACT would be available beginning in 2010.

“ACR payments would be made ‘beginning October 1 after the end of the applicable marketing year,’ 12 months after harvest, according to an Agriculture Committee explanation of ACR. Traditional supports allow ‘advance’ payments during the marketing year.

“As part of its veto threat, the White House said ‘it is alarming that the Senate farm bill shifts the timing of farm payments in a fashion that does not allow a proper accounting of $9.8 billion in actual government outlays.’”

In a closer look at some of the economic considerations of the pending Senate legislation, the Food and Agricultural Policy Research Institute (FAPRI) just posted a report that discusses the changes in loan rates and target prices, the cotton user payment, the Average Crop Revenue program, and shifts in the timing of payments. The report does not cover other provisions of Title I or the rest of the bill.

The FAPRI report, entitled, “Impacts of Selected Title I Provisions of the Senate Committee Farm Bill,” provides a summary of key results on pages 2 and 3 of the paper.

There, the report noted that, “Under the Selected Title I, No ACR [Average Crop Revenue] scenario, most changes from baseline values are modest.”

“Net farm program expenditures decline by approximately $0.8 billion over the FY 2008‐ FY 2012 period [Table 1, page 3 of the report]. Higher loan rates and target prices for several commodities increase government spending, as does the new cotton user payment program. However, outlays actually decline slightly over the five‐year period because of changes in the timing of payments. Eliminating authority for advanced direct payments and CCP’s has the effect of shifting payments out of the FY 2008‐FY 2012 budget window.

“Impacts on commodity markets are modest. Wheat production increases slightly in response to higher support prices and cotton prices increase marginally because of a slight increase in domestic cotton use. However, average prices for grains and oilseeds are well above the levels that would trigger marketing loan benefits and countercyclical payments, so average commodity market and payment impacts are small. Other than the cotton user payment program, the other provisions examined would only affect markets and payments when prices are well below average projected levels.

“Average net farm income over the 2008‐2012 period is essentially unchanged.”

The FAPRI report added that, “The Selected Title I, with ACR scenario introduces a new policy option that makes more profound changes in farm programs. Because the ACR program is optional, we assume it is only chosen by producers who expect to benefit more than under traditional programs.

“Over the FY 2008‐FY 2012 period, net CCC outlays decline by $3.34 billion relative to the baseline and by $2.50 billion relative to the scenario without the ACR option. The reduction in outlays is entirely explained by the timing of payments under the ACR program. Although producers can begin participation in 2010/11, no payments are made under the program until FY 2012. For the 2011/12 crop, producers in the traditional program would, for example, receive direct payments in FY 2011 and FY 2012, but producers in the ACR program would not receive fixed payments until FY 2013.

“As in the other scenario, expected impacts on commodity markets are minimal. If the program were mandatory, it would shift payments away from cotton, rice, and peanut producers, and this would be expected to result in acreage shifts. However, since the program is voluntary, we expect cotton, rice and peanut producers to stay with the traditional program and for market effects to be small.

“Over the 2008‐2012 period, average calendar year net farm income declines by an average of $0.22 billion per year. This average is deceptive because the result is entirely due to the shift in timing of payments. Participants in the ACR receive no ACR payments in 2010, reducing net farm income in that one year by $2.00 billion relative to the baseline. In later years, both government payments and net farm income exceed baseline levels.”

In farm policy opinion, the editorial board at The Boston Globe noted yesterday that, “Democratic House Speaker Nancy Pelosi let that chamber pass a farm bill that preserved commodity subsidies for fear that a reform bill might jeopardize the reelection of first-term Democrats in the seven states that now enjoy more than half of all farm bill spending. That kind of calculation is just the sort of special-interest politicking that is making voters nationwide question what was gained by giving the Democrats power. If the Senate follows this example and approves a bill without the Lugar-Lautenberg provisions, it will richly deserve a veto from Bush. It would be folly for Democrats to make him the reformer on this issue.”

In other related media coverage of U.S. farm policy issues, the Council on Foreign Relations (CFR) posted a transcript of an interview with Wisconsin Congressman Ron Kind (D) yesterday. The heading above the interview transcript was labeled, “Kind: Let American Farmers Compete in the Marketplace.”

In part, the CFR transcript noted that, “[Question] So the president has threatened a veto through his agriculture secretary. Do you see that potentially opening up the farm bill again?

“[Answer] At some point, reality has to set in with Congress and with the leadership of Congress. If they want to see a farm bill concluded and signed by the president, they have to get more realistic on the reforms that I and others have been advocating, including the president and his administration. I think they’re common step measures based on one simple sentence: ‘Let’s give help to family farmers, when they need it, let’s not when they don’t.’ It’s tough to justify another $26 billion in direct subsidy payments going to grain producers when we are receiving great prices in the market. Now, my congressional district ranks 34th in the nation for agriculture subsidies and I haven’t received one negative word from any farmer in my district about the reform that I have been advocating. They are the ones that are always telling me in the past, ‘Ron, if we just get a decent price in the marketplace, we wouldn’t have to rely on these government subsidy programs.’ Well, that ship has come in, and we’ll see how real that sentiment is.”

Doha

An update posted yesterday at the WTO webpage stated that, “Ambassador Crawford Falconer, chairperson of the agriculture negotiations, circulated three working documents on 6 November 2007 reflecting the latest progress in the talks. These papers on export competition are one result of intensive negotiations that began in September, on the revised draft ‘modalities’ paper, which the chairperson circulated in July and August.”

With respect to this action, the Bridges Weekly Trade Digest reported yesterday that, “Unlike the negotiations on farm subsidies and market access, the export competition talks are widely seen as near resolution. This is not least because governments had less to do: they already agreed to eliminate export subsidies by 2013 at the Hong Kong Ministerial Conference nearly two years ago. They have spent the time since debating how to discipline food aid practices, export credits, and the functioning of exporting state trading enterprises to ensure that they do not have an ‘equivalent effect’.”

EU- Common Agricultural Policy

Stephen Castle reported yesterday at the International Herald Tribune Online that, “Queen Elizabeth II of England and the owners of East Germany’s Communist-era collective farms are among those who stand to lose out from new plans to curb EU farm subsidies to Europe’s largest landowners.

“The proposal, to be submitted later this month, marks a renewed effort to reform one part of the bloc’s system of agricultural subsidies whose beneficiaries include some of the richest people in Britain and on the Continent.

“Under the plans, payments would be scaled back once they reached a certain level, most probably €100,000, or $146,000, thereby hitting the biggest landowners.

“With records of farm payments public in many EU countries, the fact that some of Europe’s wealthiest people benefit from subsidies has become a growing embarrassment. Agriculture is a favored pursuit of British royalty and nobility, including Prince Charles, who runs a farm near Highgrove.”

The IHT article added that, “Jack Thurston, co-founder of farmsubsidy.org, which campaigns for greater transparency over payments, said his calculations showed the commission proposal would affect only 1.7 percent of spending on direct farm aid.

“‘It is a less ambitious proposals than the previous one,’ he said, ‘though clearly it has a certain level of sophistication because of the sliding scale. This would diminish the incentive for people to artificially divide their farms.’

“Thurston added that the reform would be symbolic rather than real ‘since the kind of figures being talked about are so modest.’

“His analysis of the impact of the proposals suggests the commission’s latest plans would hit Germany hardest because of the number of very large farms in the former Eastern Germany where agriculture was collectivized under Communist rule.”

For additional background on the CAP from Jack Thurston, see this FarmPolicy update from May 27. The update contains a brief conversation (MP3) I had with Jack regarding some of the broader issues impacting the CAP. The conversation took place as part of a journalism study tour in Europe that was orchestrated by The German Marshall Fund of the United States. Complete FarmPolicy.com coverage of the study tour, including pictures and audio, can be viewed by clicking here.

Keith Good

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