FarmPolicy

August 21, 2019

Farm Bill Funding Still an Issue: Nutrition, Disaster Aid and Conservation Noted

Reuters writer Charles Abbott reported yesterday that, “The chances to enact a new U.S. farm law before an informal April 18 deadline hinge on providing ‘very solid’ funding for anti-hunger programs, the Senate Agriculture Committee chairman said on Thursday.

“Chairman Tom Harkin told reporters he hoped for agreement within two days on how to pay for a $10 billion spending increase for the farm bill. With that in hand, House and Senate negotiators could then write a final version of the law, which is six months overdue.

“‘Nutrition remains a big sticking point with the House,’ Harkin said, referring to public nutrition programs such as food stamps. ‘They are going to want that number very solid. I don’t know if they’re going to accept $9.5 billion or not.’”

Mr. Abbott noted that, “Agriculture Committee leaders agreed tentatively on a $9.5 billion increase for nutrition over 10 years. Chairman Charles Rangel of the House Ways and Means Committee, who is working on farm bill funding, says nutrition deserves ample funding because food prices are rising faster than the inflation rate.

“‘If they get more money for us, we’ll put it in nutrition,’ said Harkin, an Iowa Democrat.”

The Reuters article also indicated that, “Harkin said farm leaders tried to balance spending among programs. Senators from the northern Plains, for example, demand a disaster-relief fund. House members like Rangel, a New York Democrat, put higher value on nutrition assistance.

“‘Chairman Rangel is not seeking more money for nutrition, he is looking to ensure that his promise to fund the nutrition provisions will not be manipulated to pay for extraneous projects in the Senate,’ said spokesman Matthew Beck.”

“Besides more money for nutrition, there is pressure in Congress to boost stewardship programs, encourage development of renewable fuels and to tighten crop subsidy rules,” the article said.

Philip Brasher, writing yesterday at The Des Moines Register’s Cash Crops Blog, explained that, “The biggest sticking points on the farm bill have come to down to how much money to put into farm disaster assistance and to food stamps and other nutrition programs.

“That’s the word today from Senate agriculture chairman Tom Harkin.

“The disaster program is a must for two powerful Democrats: Kent Conrad of North Dakota and the chairman of the Senate Finance Committee, Max Baucus of Montana. Conrad is chairman of the Senate Budget Committee and is a member of both the finance and agriculture committees.”

Mr. Brasher noted that, “At the same time, Senate Republicans are resisting any cuts to the annual fixed payments that go to grain and cotton farmers.

“‘Nutrition remains a big sticking point with the House,’ said Iowa’s Harkin. He’s sympathetic with the concerns, noting that increases in food prices are eroding food stamp benefits.

“Conrad and Baucus want to set aside $4 billion in the bill to create a permanent agricultural disaster program to aid farmers in their drought-prone states.”

With respect to the $4 billion set aside for a permanent agricultural disaster program, a press release issued yesterday by U.S. Representative Ron Kind (D-Wis.) stated that, “Four leading farm bill reform advocates in the U.S. House of Representatives and two leading national conservation groups today formally objected to a proposal last week by farm bill negotiators to eliminate nearly $1 billion from conservation programs to provide more money for a permanent agricultural disaster assistance fund.”

For additional perspective on the disaster aid / conservation funding issue, recall that back on March 18, DTN writer Chris Clayton reported that, “A framework agreement on how to divvy up $10 billion in extra funding for the farm bill may be ‘dead on arrival’ because it would drastically cut proposed funds to create a permanent disaster plan for farmers.

“‘Demonstrating the inner-fighting going on with these talks, Senate Finance Committee Chairman Max Baucus, D-Mont., issued an angry statement Tuesday [March 18] afternoon after learning the House and Senate Agriculture Committees would attempt to cut proposed funding for a permanent disaster program from $5.1 billion to $2.2 billion over a five-year span. Baucus said he opposes ‘slashing’ the disaster package.”

Based on this proposed framework agreement, several environmental groups sent a letter to Congressional leaders on March 21 urging their “strong support of the March 18, 2008, Farm Bill ‘Framework’s’ $4.951 billion increase in new funds above baseline for the Bill’s voluntary, incentives-based conservation programs. While substantially more is truly needed to address the country’s conservation needs, this level of investment is essential. Any less risks irreparable damage to our agricultural lands and other natural resources.”

However, a DTN news article from later in March noted that, “Senate Budget Committee Chairman Kent Conrad, D-N.D., told DTN on Thursday [March 27] he would be satisfied with a $4.05 billion farm disaster program that farm bill negotiators appear likely to add to the new farm bill.

“Last week Conrad was among those who said a plan to provide only $2.24 billion for disaster aid was ‘unacceptable.’

“The new allocation for disaster aid was revealed in a new farm-bill framework agreement that DTN obtained on Thursday. According to the document, the chairmen and ranking members of the House and Senate agriculture committees are considering a new framework agreement under which the money for the new weather-related disaster aid program would rise to $4.05 billion, while the increases for conservation, specialty crops and energy programs would be lower than in the proposal crafted last week [March 18].”

The change in proposed funding from the March 18 framework, which had a reported allocation of $2.2 for disaster funding and a $4.9 increase in new funds for conservation, was then altered by the “new” framework agreement that took the disaster funding allocation number back up to $4 billion.

This was part of the background that surrounded yesterday’s press release by Rep. Kind.

His press release added that, “U.S. Reps. Ron Kind (D-WI), Paul Ryan (R-WI), Earl Blumenauer (D-OR), and Jeff Flake (R-AZ) today joined with the Environmental Working Group and Environmental Defense Fund to highlight the importance of conservation programs and encourage the adoption of commonsense reforms that would achieve enough savings to preserve conservation initiatives and other farm bill priorities.

“‘Conservation programs should not suffer because of misplaced spending priorities,’ said Rep. Ron Kind (D-WI). ‘Increasing conservation funding is vital to address a tremendous unmet need and help more farmers be better stewards of the land. Negotiators should not put these programs on the chopping block in favor of additional subsidies for millionaire farmers who don’t need them. All the negotiators need to do is take a look at some commonsense reforms to the commodity programs to find more than enough savings to fund a vital increase in conservation, as well as other priorities.’”

To listen to a FarmPolicy.com audio podcast (MP3) which highlights some of the background details on the disaster program and conservation funding controversy, and which also includes excerpts from yesterday’s press briefing on conservation funding from Rep. Kind and others, just click here (MP3-4:38).

In addition, Carolyn Lochhead reported in today’s San Francisco Chronicle that, “Democratic lawmakers are struggling to finance billions of dollars in automatic payments to grain and soybean farmers during a record commodity boom – and add another multibillion-dollar ‘permanent disaster’ program for Great Plains farmers plowing highly erodible land – while at the same time providing promised money for nutrition, conservation and California fruit and vegetable growers in a $286 billion farm bill.

“Lawmakers face an April 18 deadline to pass a new five-year farm bill when a temporary extension of the current law expires. But what began last year as a plan by House Speaker Nancy Pelosi, D-San Francisco, to preserve crop subsidies by adding money for everyone else is cracking under the weight of a White House veto threat, rising food inflation, increasing pressure on fragile farmland and a slowing economy that make crop subsidies harder to justify each day.”

The Chronicle article indicated that, “Her [Speaker Pelosi] problems have only increased since summer as the commodity boom has accelerated, fueled by ethanol subsidies and growing demand from India and China. Corn prices have nearly tripled in two years, and wheat prices are so high that U.S. bakers called for an export embargo.

“The price surge has put pressure on fragile cropland and intensified the split between lawmakers who want more conservation funding and those who insist high prices won’t last forever, and that wheat farmers in the Dakotas and Montana need federal money for frequent crop failures.”

Ms. Lochhead added that, “These frictions erupted Thursday when Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, a strong conservation and nutrition advocate, blasted efforts to trim conservation to pay for the new disaster program at a time when record grain prices are pulling millions of acres of marginal farmland back into production, threatening wildlife and water and soil quality.

“‘We know what’s happening to the soil,’ Harkin said. ‘We know what’s happening to the Gulf of Mexico,’ where fertilizer runoff from the Mississippi River has created a ‘dead zone’ the size of New Jersey. Food and fuel prices are rising, he said, while soil is being tilled ‘like a strip mine.’”

Peter Shinn of Brownfield also reported yesterday on the Farm Bill funding debate.

In part, Mr. Shinn indicated that, “According to [Senate Ag Committee Chairman Tom Harkin (D-Iowa)], [House Ways and Means Committee Chairman Charlie Rangel of Harlem] wants more funding for food stamps, perhaps at the expense of the proposed permanent ag disaster aid program.

“‘Now we’ve got a new disaster program for $4 billion that’s going to a few states,’ Harkin said. ‘So Rangel’s looking at that and saying, ‘Why should it go there? Why shouldn’t it go to nutrition?’’

“Harkin, who’s never been a big fan of funding a permanent ag disaster aid program in advance, said Rangel may have a point. But South Dakota Democratic Representative Stephanie Herseth-Sandlin, who is on the House Ag Committee, told Brownfield Thursday she disagrees with that view.

“Herseth-Sandlin noted nutrition funding already makes up two-thirds or more of total farm bill spending. And she said even more food stamp spending shouldn’t come at the expense of farm safety net programs.

“‘When commodity prices are this high, it’s been hard to make the case to do as much as we would like there to ensure the safety net,’ Herseth-Sandlin pointed out. ‘When it’s so difficult to get ad hoc assistance… it will be even more difficult in the future,’ she added. ‘That’s why this permanent disaster program is so important.’”

Dan Looker, writing yesterday at Agriculure.com, provided additional analysis of the Farm Bill funding dilemma: “Senator Max Baucus, Chairman of the Finance Committee, reportedly wants more than $4 billion in new spending to pay for a permanent disaster program over the next 10 years. That would benefit wheat farmers in his state and other regions of the Great Plains.

“Representative Charles Rangel, a New Yorker who heads the House Ways and Means Committee, is reported to be upset that a $9.5 billion increase in funding for food stamps is being considered, not the $11.5 billion passed in the House Farm Bill last summer.”

More specifically, Mr. Looker’s article included this cogent summary of the disaster aid / conservation funding trade off that drew attention on Capitol Hill yesterday (see FarmPolicy.com podcast (MP3) above); the article stated that, “Members of the House and Senate Agriculture Committee’s have already made some tough concessions in order to agree on how they would spend an extra $10 billion over the next 10 years in a farm bill estimated to cost about $600 billion over a decade.

“In order to come up with money for permanent disaster and rebalancing some commodity program payments, the leaders of both ag committees agreed to cut $70 million from programs for specialty crops, $100 million for renewable energy and to zero out $120 million that had been set aside for rural development.

“One of the biggest cuts was from $5 billion for conservation that the leaders had agreed to earlier, down to $4 billion.

“For Harkin, that’s an especially painful concession.”

Prices – Corn Acres

As the Farm Bill debate moves forward, Associated Press writer Stevenson Jacobs reported yesterday that, “Agriculture futures rose broadly Thursday, with corn prices surpassing $6 a bushel for the first time as supply concerns spurred buying of the grain used to feed livestock and make biofuel.”

Mr. Jacobs added that, “Corn’s record-setting rally comes amid soaring global demand for the grain but also an expected drop in production from the United States, the world’s largest corn producer. In its annual planting report released this week, the U.S. Department of Agriculture projected farmers will plant 86 million acres of corn -an 8 percent drop from last year. The bigger-than-expected shortly will likely add to already tight supplies, leading to higher meat prices and soaring costs for producers of alternative fuel like ethanol.”

With respect to market signals and corn acres, a University of Illinois Extension article from today (“Historic and Projected Corn Versus Soybean Returns: Release of FBFM Corn and Soybean Results”- by Gary Schnitkey and Dale Lattz), stated in part that, “As acreage decisions are made, the difference between corn and soybean returns are of particular interest. In recent years, the difference between corn and soybean returns have increased, indicating that corn has become more profitable than soybeans. In northern Illinois, for example, corn minus soybean return was $31 in 2000, $0 in 2001, $21 in 2002, $62 in 2003, $46 in 2004, and $5 in 2005 (see Panel A of Table 1). Between 2000 and 2005, corn minus soybean return averaged $27 per acre. This difference widened to $98 in 2006 and $90 in 2007, considerably above the $27 average between 2000 and 2005.

“Projections for 2008 indicate that the differences between corn and soybean may be even wider than in 2006 and 2007. For northern Illinois, 2008 projections are based on projected yields of 179 bushels per acre for corn and 51 bushels per acre for soybeans, non-land costs of $400 per acre for corn and $251 for soybeans, and projected commodity prices of $5.35 for corn and $10.30 for soybeans. These prices reflect new crop bids in early April. Based on these yields, costs, and prices, corn is projected to $289 per acre more profitable than soybeans (see Table 1). The $289 exceeds differences in 2006 and 2007.”

Dr. Schnitkey discussed issues associated with corn production profitability yesterday with Todd Gleason of University of Illinois Extension on WILL-AM 580 Radio (Champaign, IL).

To listen to their conversation, just click here (MP3- 3:18).

Keith Good

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