FarmPolicy

February 23, 2019

Farm Bill Conference Agreement Announced, Pres. Bush Promises Veto

Categories: Audio /Farm Bill

Yesterday, Congressional negotiators announced a final farm bill conference agreement at a press briefing with reporters on Capitol Hill.

The agreement will lead to a formal conference report, which will then be passed by the Senate and House before being sent to the White House.

Some comments made at the conference by Senate Ag Committee Chairman Tom Harkin (D-Iowa) were included in a press release posted yesterday at the Senate Ag Committee Online; additionally, a FarmPolicy.com audio podcast summary of yesterday’s event is available here (MP3- 12:19).

The FarmPolicy.com audio podcast
(MP3- 12:19) includes some of the opening remarks made by Sen. Harkin and House Ag Committee Chairman Collin Peterson (D-Minn.), as well as extended excerpts from the discussion portion of the press briefing. Comments from Senate Budget Committee Chairman Kent Conrad (D-ND) were also included in this portion of the audio summary.

Note that a leaked copy of a summary of the Conference Committee Agreement has been posted at the Mulch Blog (Environmental Working Group); the Mulch update stated that, “I can’t vouch for the accuracy of this document, which was leaked to us. But it’s the only paper we’ve seen on the agreement.”

Dan Morgan reported in today’s Washington Post that, “House and Senate negotiators yesterday reached final agreement on a new farm bill that will spend close to $300 billion on nutrition, conservation, energy and farm subsidy programs over the next five years, but administration officials immediately announced that President Bush will veto it.

“‘This bill increases subsidies to farmers at a time of record farm income,’ Agriculture Secretary Ed Schafer said. The negotiators ‘have done a disservice to taxpayers.’

“The speedy reaction from the executive branch put the spotlight on congressional Republicans, many of whom support the legislation and might be hard-pressed to vote to uphold a veto in an election year.”

The Post article added that, “Rep. Robert W. Goodlatte (Va.), ranking Republican on the House Agriculture Committee, said that he is ‘favorably disposed’ toward the bipartisan compromise bill, but that lawmakers must decide for themselves whether to vote to override a veto. House Minority Leader John A. Boehner (R-Ohio) indicated that he will vote against the bill, saying, ‘I don’t think [it] represents our best effort.’

“House Speaker Nancy Pelosi (D-Calif.) supports the bill. Congressional leaders plan to bring it to the House and Senate floors next week for votes that could test the depth of support for it.

“The package, the product of weeks of closed-door bargaining, is stuffed with plums for key constituencies. Dairy farmers will get as much as $410 million more over 10 years to cover higher feed costs, and negotiators tucked in an annual authorization of $15 million to help ‘geographically disadvantaged farmers’ in Alaska, Hawaii, American Samoa and Puerto Rico.

“The bill assures growers of basic crops such as wheat, cotton, corn and soybeans $5 billion a year in automatic payments, even if farm and food prices stay at record levels.”

Mr. Morgan noted that, “Advocates of the bill stressed that eligibility will be tightened by prohibiting anyone earning more than $500,000 from off-farm sources to participate in the farm programs. Those earning more than $750,000 from farming would also be ineligible for the automatic payments. Currently, only those with more than $2.5 million in income from all sources are ineligible.”

Concluding, the article stated that, “The conferees added $1.5 billion over 10 years for conservation activities on working farms. The program is a top priority of Tom Harkin (D-Iowa), chairman of the Senate Agriculture Committee, who favors linking subsidies to a farm’s environmental efforts, along lines being tried in Europe.

“Almost $400 million would be available to help farmers reduce runoff of pollutants into Chesapeake Bay.”

Greg Hitt reported in today’s Wall Street Journal that, “The White House and Congress are on a collision course over agricultural policy, amid demands by President Bush to pare subsidies to wealthy farmers. But the fate of a sweeping farm bill is more likely to depend on commitments made to bolster nutrition assistance for the needy.”

“But senior Republicans from the House and Senate joined Democrats to tout the package. The event on Capitol Hill drew the top-ranking Republicans on the House and Senate agriculture committees and offered a bipartisan show of strength that could bode ill for efforts by Mr. Bush to block the bill from becoming law. The measure is expected to be brought before the full House and Senate next week.”

The Journal article noted that, “The bill also lays the groundwork for a shift in policy on ethanol production, which critics say has been a culprit in the run-up in food prices. Among other things, the measure would trim support of corn-based ethanol and steer new benefits to biofuels made by prairie grass, wood chips and farm waste. So-called cellulosic ethanol would benefit from a new production tax credit and some $300 million that would be set aside for research. At the same time, the existing tax credit for corn-based ethanol would be trimmed to 45 cents a gallon, a drop of 6 cents.

“Food-aid programs make up more than two-thirds of spending in the bill, which includes provisions that would make millions of Americans eligible for wider assistance at a time of rising public concern with high food prices.”

After explaining some of the details of the conference committee agreement, Mr. Hitt indicated that, “By far, the biggest conflict is over the bill’s continued support for producers of commodities, such as corn, soybeans and wheat. The bill does step toward the White House on the issue of subsidies. Among other things, the measure would eliminate the ability of farmers to manipulate current law by collecting triple payments. All government subsidies would be capped for individuals with nonfarm income of $500,000 or more. And the measure would limit so-called direct payments, which are designed to provide income support, for farmers with earnings of $750,000 and more.

“In recent negotiations, Mr. Bush urged lawmakers to cut off all benefits for farmers with incomes of at least $500,000.”

David Rogers reported yesterday evening at Politico.com that, “Meeting with reporters at his department, the secretary [Agriculture Secretary Ed Schafer] was openly disdainful of new income caps in the farm bill, which seek to bar wealthy individuals from receiving direct payment subsidies. ‘Is there even one farm that would be removed from the program with these taxpayer-supported payouts?’ Schafer asked in a mocking tone.”

“But beyond the tough words, it is still an open question as to how far the administration will go to pressure Republicans to fall in line if the Democratic Congress should attempt to override a Bush veto.”

Mr. Rogers noted that, “The secretary spoke just minutes after — and blocks away from — a rival press conference on Capitol Hill where farm bill negotiators had released a more detailed outline of the proposal to be filed next Tuesday.

“Technical changes could still be made, since the Congressional Budget Office has yet to complete a full scoring of the five-year, $300 billion-plus measure. But the measure includes a major expansion of funding for nutrition programs even as the traditional commodity title spending shrinks as a percentage of total spending.

“Fruit and vegetable growers are promised new assistance, and an additional $4 billion is provided for conservation programs. More than in the past, energy programs are part of the mix, including loan guarantee programs for the construction of commercial-scale bio-refineries and an adjustment in tax credits to favor a shift from corn ethanol to cellulosic biofuels.”

DTN writer Chris Clayton reported yesterday afternoon (link requires subscription) that, “With the conference report on the farm bill ready to be rolled out Thursday afternoon, the top leaders of the House both expressed reservations Thursday morning on so-called reforms in the bill.

“House Speaker Nancy Pelosi, D-Calif., said she was satisfied with the way the farm bill added more money for nutrition programs and would provide as much as $1.3 billion for fruit and vegetable growers — important in her own state — yet she would have liked more changes in the way payments are made to commodity producers.

“‘I certainly would have wanted more reform,’ Pelosi said. ‘This bill has enough reform for it to pass.’”

Mr. Clayton explained that, “Under the conference report, if a three-year average of adjusted gross income from non-farm sources is greater than $500,000 for a single person or $1 million for married couples, then the person or couple is excluded from receiving direct payments. These people would still be eligible for counter-cyclical or loan-deficiency payments if they have actual farm operations.

“If a three-year average of net farm income (income after all business deductions) is greater than $750,000 for a single farmer or $1.5 million if the spouse is also engaged in the operation, then the farmer or couple loses eligibility for direct payments. However, producers also may be able to shift income from one spouse to another to avoid the effects. The farmer or couple would still be eligible for counter-cyclical or loan-deficiency payments.

“Pelosi said she thought that the adjusted-gross income level ‘has been greatly improved upon in the farm bill.’ Pelosi added that she has not seen the final version, but ‘in terms of policy, there is great improvement in terms of who gets payments.’”

Bob Meyer reported yesterday at Brownfield that, “Throughout the entire farm bill process, Wisconsin Congressman Ron Kind has led an effort to completely reform farm policy. With the announcement of the Conference Committee report on Thursday, the La Crosse Democrat called it a, ‘Missed opportunity.’ Kind says special interests just had too much influence to overcome, ‘Especially your rice and cotton producers in the southern states who wanted to see an expansion of these subsidy payments.’ He says at a time of record farm prices, ‘We should not be sending taxpayer dollars to wealthy individuals in this farm bill.’

“The new farm bill does cut-off direct payments to anyone making more than $750,000 adjusted gross income per year from any source. Kind says that is too high, ‘Remember adjusted gross is after you deduct all the business expenses and all the inputs you have in the business. So basically, it’s $750,000 of profit.’ On top of that, two entities per farm can qualify, ‘So that takes it to $1.5 million.’ He points out there are no caps on the loan deficiency and counter-cyclical programs.

“Kind was a member of the expanded House Ag Committee when the last farm bill was written but was not involved this go-round. He doesn’t think his presence would have made a difference this time, ‘Over 70% of these agricultural subsidies are going to just 30 congressional districts. Well guess who’s well represented on the Agriculture Committee, members from those congressional districts.’ As a result, he says it is unrealistic to think real reform of farm policy is going to come from the Ag Committee.”

The Associated Press reported today that, “Married couples with joint incomes of up to $1.5 million from their farm operation could still qualify for crop subsidies under a five-year, $300-billion farm bill compromise that would boost the Agriculture Department’s food and farm programs.

“Some farm couples with incomes totaling $2.5 million — assuming $1 million is from other, nonfarm sources — could also qualify. That’s far too rich for the Bush administration, which renewed a threat to veto the package as being too generous to wealthy farmers.”

Philip Brasher reported in today’s Des Moines Register that, “The bill’s writers will focus attention on a $10 billion increase in spending over 10 years for food stamps and other nutrition programs. The bill loosens rules on food stamps to increase benefits and provides additional commodities to food banks.

“‘This bill goes way beyond where we’ve been before’ on nutrition, said Sen. Saxby Chambliss, R-Ga.

“Administration officials, however, have argued that the bill doesn’t go far enough in overhauling farm programs and focused much of their criticism on its eligibility rules for subsidies.

“Under the final bill, a married couple with as much as $1.5 million in annual farm income, after expenses, and $1 million in nonfarm income could still qualify for crop subsidies. The administration had proposed a strict means test of $200,000. Under current law, there is no income limit on recipients who get most of their earnings from farming.

“Mary Kay Thatcher, a lobbyist for the American Farm Bureau Federation, said she believed that Congress would probably override a veto of the bill.”

In a separate DTN article from yesterday evening, Chris Clayton pointed out (link requires subscription) that, “For Midwest grain farmers, the program changes include some minor adjustments in loan rates and target prices, but the biggest change includes the creation of the Average Crop Revenue Election Program, or ACRE, a counter-cyclical, revenue-assurance program pushed by groups such as the National Corn Growers Association.

“Under the ACRE, farmers who sign up would agree to give up 20 percent of their direct payments and also take a 30 percent cut in their loan rates for loan-deficiency payments. In return, farmers would be eligible for state-based revenue guarantee on acres planted, up to 90 percent of the state average yield calculated against a national average price for the crop.

“The program will be optional for farmers starting next year, but there are projections that as many as 80 percent of corn and soybean farmers would enroll in the program.

“‘I’m really skeptical of that number, but that’s what (the Congressional Budget Office) thinks,’ said House Agriculture Committee Chairman Collin Peterson, D-Minn.”

Mr. Clayton also elaborated on the issue of direct payments, this DTN article stated that, “Deputy Secretary Chuck Conner defended USDA’s position to support the annual $5.2 billion direct payments despite record farm incomes.

“‘We believe that the safety net needs to be non-trade distorting,’ Conner said. ‘You don’t need any better example than the market situation today to understand that. Our farmers need maximum flexibility and our country needs maximum flexibility to choose the crop that is best for the market for them to plant, not the crop that the government program is telling them to plant.’

“The battle in philosophy over direct payments was reflected in comments by Peterson, who claimed that direct payments, created in the 1996 bill, do not make sense to average people specifically because they are given to farmers regardless of price. After this farm bill is over, Peterson said he plans to go to work to reshape the argument over direct payments for the next farm bill.

“‘It’s very hard to explain to our urban colleagues why we are paying farmers when prices are high,’ Peterson said.”

Meanwhile, Reuters news noted yesterday that, “Ethanol incentives would be revised under the bill to encourage development of renewable fuels from cellulose, found in grasses, trees and crop residue. The tax credit for corn-based ethanol would be cut by 12 percent and a cellulosic ethanol credit of a dollar would be created.”

And Peter Shinn indicated yesterday at Brownfield that, “While biofuels have gotten an outsized-share of the blame for global food price inflation recently, few question the impact of high feed costs on livestock producers. And Senate Agriculture Committee Chairman Tom Harkin pointed to the farm bill’s energy title as a solution to that problem.

“‘The new farm bill will dramatically ramp-up the agricultural sector’s capacity to produce clean, renewable energy,’ Harkin said. ‘Significantly, it provides more than a billion dollars to expand the supply of biofuels made from biomass and crop by-products other than grain.’”

In other provisions of the conference agreement, Bloomberg writer Alan Bjerga pointed out yesterday that, “International commodity-aid programs, a growing concern because of global food inflation, also received more money. A four-year pilot program to buy food for emergency aid from farmers in the country where the help is needed is funded at $15 million annually. About $6 million a year is earmarked for the McGovern-Dole program for school lunches in developing nations.”

Keith Good

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