FarmPolicy

August 21, 2019

Chairman Harkin: Direct Payments “Still on the Table”

Categories: Doha / Trade /Farm Bill

DTN writer Chris Clayton reported yesterday (link requires subscription) that, “While the Bush administration has demanded more cuts and no tax increases in the farm bill, Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, said the real negotiations are just beginning on the budget baseline and revenue for the farm bill.

“‘The fact is we are going to have to come up with some more money above baseline,’ said Harkin. ‘The administration, I’m sure, at some point will come forward and recommend where we get the money. They haven’t yet. Then we will counter that and we will work it out. I hope they are not totally inflexible on some of the revenue portions we’ve got on the Senate side. That would not be good to have an inflexible position on that.’”

Mr. Clayton noted that, “Senators return to Washington, D.C., next week with staff from the Senate and House already working on details of the farm bill. Informal talks between the Bush administration and lawmakers also are under way. Harkin acknowledged in a call with agricultural reporters that the biggest challenge in farm-bill conference talks would be reaching an agreement with the Bush administration on funding the farm bill.

“‘That is going to be some pretty tough negotiations,’ Harkin said.”

With respect to direct payments, (related graphical illustration of direct payments by commodity is available here, and related background on direct payments and Farm Bill funding can also be viewed here) the article explained that, “Throughout the farm bill debate, Harkin has been willing to cut some of the $5.2 billion sent to farmers every year in direct payments. Harkin could not get support for those plans in the Senate Agriculture Committee, but a tough negotiating stance by the administration could lead to such cuts, which are ‘still on the table,’ Harkin said.

“‘That issue of direct payments becomes even more important,’ Harkin said. ‘Do we need to keep giving direct payments to farmers who have all of these high prices? That’s still there.’”

And the DTN article also pointed out that, “Until now, House Agriculture Committee Chairman Collin Peterson, D-Minn., has taken the early lead in negotiating with the Bush administration on the farm bill, but Peterson is clearly frustrated with the results. In recent interviews, Peterson has said his talks have yielded little, other than the administration has no specific suggestions to find offsets and will offer no new revenue sources.”

In a separate update posted yesterday at the DTN Ag Policy Blog, Mr. Clayton provided this analysis of the Farm Bill reconciliation process: “So we have the two committee chairmen in this negotiating process clearly divided on their positions. Yet, both also are attempting to talk with the administration separately, rather than come to terms and negotiate as one unified voice for congressional Democrats on the farm bill.

“[Secretary of Agriculture] Conner, meanwhile, has been going around letting everyone know that neither financing package approved by the House nor the Senate is acceptable to the administration. And it has been made clear to everyone involved now that Conner speaks for the administration on the farm bill. The administration’s main point: any tax increase is a non-starter.

“All of this public budget debate makes Saturday a little more interesting. Conner, Harkin and Peterson will all have their first forum together on the farm bill on Saturday at the Pheasants Forever Pheasant Fest meeting in St. Paul, Minn. The Pheasant Fest folks are interested in the conservation programs, and it will be worth noting just how close or distant these three are on the conservation title of the farm bill.”

Philip Brasher, writing in today’s Des Moines Register, also reported on recent Farm Bill developments and focused on comments made by Chairman Harkin regarding direct payments; “Some crop subsidies could be cut as lawmakers search for ways to pay for a new farm bill, Sen. Tom Harkin, D-Ia., said Thursday.

“‘As far as I’m concerned, direct payments are still on the table,’ he said, referring to the more than $5 billion in fixed annual payments that grain and cotton farmers receive.

“Iowa farmers and landowners collect about $500 million a year in such payments.

“The House and Senate resisted reducing those subsidies in writing their versions of the farm bill and got money instead from increasing corporate tax revenues, prompting a White House veto threat.”

The Register article noted that, “Some critics of farm programs have argued that the fixed farm payments aren’t justified at a time when prices for corn, soybeans and other commodities are at record levels. Harkin initially favored reducing the payments but couldn’t get support for the idea from fellow senators. The American Farm Bureau Federation recently reiterated its opposition to reducing the subsidies.

“But given the high commodity prices, ‘the issue of direct payments becomes even more important,’ Harkin said.”

More specifically, the Farm Bureau noted last Friday that, “Although neither the House nor Senate versions of the farm bill call for cuts in direct payments, Farm Bureau continues to express strong opposition to this.

“‘Some opponents of farm policy look at current high prices for most agricultural commodities and assume this is a ‘good time’ to lower government supports. It is critical to remember farm bills are written for the long-term rather than the short-term. While we certainly hope the good prices we are now enjoying for most commodities continue, there is certainly no assurance this will be the case,’ wrote [AFBF President Bob Stallman].”

Recall also that Reuters writer Christopher Doering reported on Wednesday that, “Responding to a different question on the survey [A poll of 686 U.S. farmers attending the American Farm Bureau Federation’s annual meeting in New Orleans], 76 percent of participants said they wanted to keep the ‘direct’ annual payments. The payments total $5.2 billion a year and are based on past production of subsidized crops.

“Many farmers have said they need subsidy payments to combat rising fuel costs and tougher competition from foreign growers who receive generous aid and have lower labor costs.”

Mr. Brasher also indicated in his Register article that, “Harkin, who is chairman of the Senate agriculture committee, ruled out additional cuts in payments to crop insurance companies and agents, an area that Conner has suggested for further reductions.”

Dow Jones writer Bill Tomson reported yesterday that, “Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, said Thursday he is hoping to see a willingness to negotiate from the White House, as Congress and the Bush administration appear to be at an impasse over the use of tax measures to fund farm bill programs.

“‘I hope that they’re not totally inflexible on some of the revenue portions we’ve got on the Senate side,’ Harkin told reporters. ‘That would not be good to have an inflexible position on that.’

“But Harkin may be looking for a willingness to negotiate where there is none. Acting U.S. Department of Agriculture Secretary Chuck Conner told Dow Jones Newswires in an interview earlier this week that no measures raising tax revenues will be tolerated.”

Mr. Tomson added that, “Harkin, while not agreeing to cut the tax measures in the Senate farm bill, did say he would be willing to consider cutting farm subsidies.

“Subsidies tied to farm acres, called ‘direct’ payments, ‘are still on the table’ for possible reduction, he said.

“Both the Senate and House farm bills contain $26 billion in ‘direct’ payments for farmers over five years, equaling $5.2 billion per year. These payment came under fire during Senate and House deliberations but survived in both bills.

“Sen. Dick Lugar, R-Ind., harshly criticized the payments, which he said are unwarranted and go to some of the wealthiest farms.”

Also yesterday, Matt Kaye reported at Hoosier Ag Today (HAT) that, “House Agriculture Committee chair Collin Peterson suggests it is proving tougher than expected to work out a Farm Bill deal with the White House, and claims some of his GOP colleagues won’t help. Peterson told HAT he’s met five times now with USDA Acting Secretary Chuck Conner and that finding a way to pay for the Farm Bill remains a problem. Peterson says the administration is ‘fixated’ on getting tougher payment limits. He calls it ‘the price’ they’re asking to even discuss new tax revenue in both bills, ‘I think that if we did more on payment limits…that might make them more inclined to, from what I can tell, make them more inclined to consider some of these things.’

“Meantime, Peterson suggests the politics is dicey, despite a continued veto threat, ‘It’s weird…you’ve got Republicans that don’t want to talk to the White House they just want to put a bill together and send it down there.’ A house Ag GOP spokesperson denies any party effort to ‘sit out’ administration talks.”

The “Washington Insider” section of DTN (link requires subscription) noted yesterday that, “A meeting this week between Bush administration officials and representatives of commodity and farm organizations was designed by the White House to demonstrate in no uncertain terms that the president is serious about wanting a substantive reform of federal farm policies. The meeting also allowed senior White House adviser Barry Jackson to assure one and all that unless significant changes are made in the proposed farm bill before it reaches the president’s desk, a veto would be forthcoming.

“In addition to tax increases and budget gimmicks that the administration is known to oppose, Jackson also said the White House wants the next farm bill to reform the current marketing loan program and put in place a means test that would render ineligible for program payments anyone whose income exceeds a stipulated income level. (The administration has proposed an average adjusted gross income of $200,000 as the cut-off point.)

“Some have speculated that earlier farm bill veto threats were nothing more than a bluff intended to give the administration additional leverage when the measure moves to a House-Senate conference. Jackson’s presentation may have convinced the doubters that the threat is more promise than bluff.”

With respect to a potential veto of the Farm Bill, Steve Miller reported yesterday at The Rapid City Journal Online (South Dakota) that, “South Dakota has a lot to lose if President Bush vetoes the new farm bill pending in Congress, Sen. Tim Johnson, D-S.D., said Wednesday.”

Mr. Miller added that, “If Bush vetoes the bill, it would mean the loss of several measures important to South Dakota, including mandatory country-of-origin labeling, a permanent ag disaster fund, a ban on meatpacker ownership of livestock, and the interstate shipment of state-inspected meat, Johnson said Wednesday after a meeting with ag group leaders in Rapid City.”

The article indicated that, “Johnson said he hopes a conference committee can make some changes to the final bill, including tighter limits on farm payments, which will make the bill more palatable to the president.

“‘This is one thing we might give to the president to avoid a veto,’ Johnson said. ‘It will be up to the president on how hard a line he wants to play. If he says it’s my way or the highway, we’re in for some trouble.’”

Mr. Miller also explained that, “The Senate and House farm bills set adjusted gross-income ceilings to qualify for farm payments. Currently, there is no income limit.

“But an amendment to lower the caps on payments to $250,000 per farm couple failed in the Senate. Johnson, Sen. John Thune, R-S.D., and Rep. Stephanie Herseth Sandlin, D-S.D., all support lower payment caps.”

An item posted on Wednesday at Keloland.com (South Dakota television), stated that, “Senator John Thune [R-SD] says his focus in this year’s Congressional session will be to get the 2007 Farm Bill passed. He says it’s especially important to address it now, before election year politics overshadow the work that needs to be done.

“Senator Thune’s interest in the Farm Bill goes back to his South Dakota roots, but he says it’s something every lawmaker should be interested in, including President Bush.

“‘I think it would be a big mistake for him not to sign a farm bill that we put on his desk, because it’s that important to agriculture across this country,’ Thune said.”

Sue Roesler, writing yesterday at the Farm & Ranch Guide Online, highlighted recent activity and opinion on the Farm Bill from Senator Kent Conrad (D-ND).

In part, Ms. Roesler stated that, “Conrad said the threat of a presidential veto was very real, and he wanted to get final advice on how to proceed from his board to make sure the region’s agriculture needs were well-represented in conference.

“Major issues in the conference committee include financing and additional resources, payment limitations and reform, conservation, and alternative counter-cyclical payments, he added.

“Conrad said he and Rep. Collin Peterson, D-Minn., chairman of the House Ag Committee, would like to get the bill passed with the president’s signature, but would also try to override a veto if it came down to that.

“If there is a veto, that would lead to a two-year extension of the current baseline bill. That could prove dangerous because of the current high grain prices, and the commodity base would go down.” (For more detail on prices and budget baseline allocations, see “The Impact of Renewable Energy on the U.S. Farm Policy Debate.”)

Doha

Reuters writer Doug Palmer reported yesterday that, “A new world trade pact is possible this year, but it is still too early to schedule a trade ministers’ meeting to seal the deal, U.S. Trade Representative Susan Schwab said on Thursday.

“‘A lot of progress is being made in Geneva. We aren’t there yet in terms of a breakthrough,’ Schwab told reporters after a speech to the U.S. Chamber of Commerce.

“But there could be a breakthrough ‘in the first quarter’ based on a set of revised texts on agriculture and industrial goods that will be released in Geneva by late January or early February, Schwab said.

“‘We’re in a critical few months. We intend to conclude a good agreement if a good agreement is to be had,’ Schwab said.”

Keith Good

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