FarmPolicy

September 17, 2014

318-106, House Passes Farm Bill Conference Agreement

Dan Morgan reported in today’s Washington Post that, “The House yesterday passed a final version of a new five-year farm bill by a vote of 318 to 106, a margin large enough to override President Bush’s promised veto of the nearly $300 billion measure.

“The bipartisan show of support came after intense lobbying by a coalition that included farm groups, anti-hunger advocates, environmental organizations and the biofuels industry. While continuing traditional farm subsidy programs, the bill increases spending on nutrition programs such as food stamps by $10.4 billion.

“Agriculture Secretary Ed Schafer released a statement saying the vote ‘sends the wrong message to the rest of the country who are not experiencing the boom of the agriculture sector,’ and, ‘This bill is loaded with taxpayer funded pet projects at a time when Americans are struggling to buy groceries and afford gas to get to work.’”

To listen to a FarmPolicy.com audio summary of yesterday’s House vote, just click here (MP3- 9:12).

The audio recap (MP3) includes comments on the Congressional Budget Office baseline issue from David Dreier (R-Calif.), which were made at Tuesday’s Rules Committee Hearing, as well as comments made yesterday by Ag Committee Chairman Collin Peterson (D-Minn.), Rep. Ron Kind (D-Wisconsin), Speaker Nancy Pelosi (D-Calif.) and Minority Leader John Boehner (R-Ohio).

In addition, a House Ag Committee press release on yesterday’s action can be viewed here, while a statement issued yesterday by Senate Ag Committee Chairman Tom Harkin on the House vote is available here.

Greg Hitt reported in today’s Wall Street Journal that, “In the House Wednesday, critics in both parties denounced the bill. They complained the measure retains the safety net that shields farmers from big swings in the economy but also pointed to more-targeted provisions, such as expanded research on salmon fisheries, as examples of government waste.

“‘We have earmarks that have been air-dropped into the legislation,’ said Rep. Jeff Flake, an Arizona Republican. A White House spokesman reiterated the president ‘will veto’ the bill, pointing to ‘its massive expansion of subsidies, special-interest earmarks and budget gimmicks.’

“But the measure attracted wide support in both parties. The House Republican leadership was split on the bill, and many rank-and-file Republicans — especially from farm states — crossed party lines to support it. The 318 votes in support of the package are more than enough to give a two-thirds majority to override a presidential veto. The Senate could vote on the bill as early as Thursday, clearing the way for the package to be sent to the White House.”

Senate debate on the Farm Bill Conference Committee agreement began yesterday. To listen to a FarmPolicy.com audio summary of some comments made on the Senate floor yesterday, just click here (MP3-8:47).

The audio summary features comments made by Ag Committee Chairman Tom Harkin (D-Iowa) and Budget Committee Chairman Kent Conrad (D-ND). Interestingly, both Senators made reference to EU agricultural policy in the course of their remarks- click here (MP3) to listen.

David M. Herszenhorn reported in today’s New York Times that, “The House voted 318 to 106 — well above the two-thirds needed to hand Mr. Bush the second veto override of his presidency — with 100 Republicans joining the Democratic majority in favor.

“The Senate was expected to follow suit with wide bipartisan support on Thursday, sending Mr. Bush a bill that he described this week as bloated and expensive and said ‘resorts to a variety of gimmicks.’”

The Times article added that, “The willingness of a majority of House Republicans to break with the White House reflected both the strong support for the bill and a growing alarm among many lawmakers about their election prospects in November.

“Mr. Bush himself made a similar political calculation in 2002, ultimately deciding to sign the farm bill that year even though he had strongly opposed it. A senior official at the time said the White House had concluded it would be ‘political suicide’ in the midterm elections to veto the bill that year.

“This year, though, Mr. Bush seems intent on refusing to sign the bill. He has criticized it for months, and on Wednesday he issued a forceful veto threat. He urged Congress to approve a one-year extension of current law, which he said would be better than adopting the new measure.”

(FarmPolicy Note: To listen to an audio excerpt of remarks Pres. Bush made when he singed the 2002 Farm Bill into law, just click here (MP3-1:00); the President’s complete remarks made at the signing of the ’02 law can be viewed here).

The Times article also indicated that, “At a news conference, the Agriculture Committee chairman, Representative Collin C. Peterson of Minnesota, said he expected the bill to reach the president by May 20 and a veto override to be approved before Congress leaves for a Memorial Day recess.”

DTN writers Chris Clayton and Adam Templeton reported yesterday (link requires subscription) that, “Republicans went to the floor Wednesday challenging the budget baseline for the bill, arguing that budget scores from the Congressional Budget Office had determined the bill would add $2.8 billion to the deficit if the 2008 budget projection were used compared to the 2007 budget projection. They repeatedly complained the bill waived the House pay-as-you-go rules Democrats put into place last year.

“‘What are our colleagues calling for? To use last year’s numbers instead of this year’s numbers,’ said Rep. David Dreier, R-Calif.”

The DTN article noted that, “House Speaker Nancy Pelosi, D-Calif., said the bill takes a ‘critical step’ for reform though she acknowledged it could go further. The bill would help families deal with high food prices and continue pushing more support for renewable energy. She also said more than $1 billion will go to boost research and aid for fruit and vegetable growers.”

Clayton and Templeton went on to explain that, “For farmers, the bill would create a new, permanent disaster program for producers that could pay them up to $100,000 in a loss of total farm income. The bill also creates a new counter-cyclical program for farmers, the Average Crop Revenue Election program, that goes into effect next year. There also are small adjustments upward in loan rates and target prices for wheat and soybeans, though those programs do not change for corn. Direct payments would take a 2 percent cut for a portion of the farm bill as well.

“The bill also boosts conservation spending, including the expansion of the Conservation Security Program, which is renamed the Conservation Stewardship Program. The CSP gets $5 billion over the next five years, bumping up to $12 billion over the next decade. That should allow USDA to enroll up to 13 million acres of working farmland every year in the program. The CSP could easily expand to more than 100 million acres. The CSP pays farmers on a tiered scale based upon scored environmental stewardship practices and also includes a cost-share program for projects on farms and ranches.

“In energy, the bill emphasizes a shift to cellulosic ethanol with a $1.01 tax credit for cellulosic ethanol production through 2012. The bill cuts the current ethanol blenders’ credit from 51 cents to 46 cents a gallon, a savings of $1.2 billion. The bill also extends the import tariff for ethanol, which is 54 cents a gallon.”

David Rogers reported today at Politico.com that, “Shaken by new election losses, scores of House Republicans abandoned President Bush in favor of a $307 billion Farm Bill that sailed through the chamber Wednesday by a veto-proof majority.

“Smelling defeat in advance, Minority Leader John A. Boehner (R-Ohio) made no serious attempt to whip his party in line, but the collapse of discipline was nonetheless striking as a hundred Republicans broke ranks to give united Democrats a solid 318-106 victory.

“The floor action followed an intense Republican Party meeting Wednesday morning as the rank and file began to sort through the wreckage of Tuesday’s special election defeat in a conservative Mississippi House district, the third such loss in recent months.”

Mr. Rogers noted that, “Senate action on the new five-year Farm Bill could come as early as Thursday. With Minority Leader Mitch McConnell (R-Ky.) pledged to support the measure, passage is all but certain.

“The White House has vowed to veto the bill, forcing a showdown with many in the president’s own party. But the chances of Bush winning are greatly diminished after Wednesday’s vote in the House, which had been his stronger arena.”

The Politico.com article also noted that, “But in demanding more reform, the administration often seemed a prisoner of its trade agenda. The White House was never willing to embrace serious changes in the most costly of all subsidies, a decade-old system of direct payments that distribute $5.2 billion each year without regard to current prices or production.

“This mechanism makes the payments more acceptable to the World Trade Organization and the White House even proposed to increase the funding levels. But the system invites ridicule at a time of record commodity prices. By not addressing the payments, the administration missed a chance to court potential allies in Congress.”

With respect to House Democratic Leadership, Mr. Rogers indicated that, “The administration was matched as well against Speaker Nancy Pelosi, who took a much more activist role than past speakers in advancing the Farm Bill. The California Democrat faces criticism in liberal circles for not having been more aggressive in insisting on more reforms, but she secured a major $10 billion increase in nutrition programs. She saw the larger bill as an important part of competing with Republicans in the same type of rural districts where her party has won already in special elections.

“‘The Farm Bill used to be my least-informed vote,’ Pelosi, laughing, said to Politico. ‘Now I know more about it than I ever wanted to know. It’s fascinating.’”

Reuters writer Charles Abbott reported yesterday that, “Written every few years, farm bills are panoramic legislation covering dozens of programs. Land stewardship programs were allotted a $4 billion increase, biofuel development $1.2 billion and specialty crops $1.35 billion.

“Funding for crop supports and crop insurance was cut by several billion dollars.

“In a shift in emphasis on biofuels, the bill reduces the tax credit for corn-based ethanol by 12 percent, to 45 cents a gallon beginning in 2009. It offers a $1.01 a gallon tax credit through 2012 for ethanol from cellulose, found in grasses, woody plants and crop residue.”

Mr. Abbott explained that, “For months, farm subsidy rules were regarded as the test of reform for the bill. Under a final-round proposal, the bill would bar all farm subsidies to people with more than $500,000 in off-farm income and deny ‘direct’ payments to those with more than $750,000 income from farming.

“‘We put a limit on farm income for the first time,’ said Peterson. ‘This is a good bill. It has a lot of reform.’

“The income limits are estimated to save $62 million a year. Direct payments, guaranteed to growers annually, total $5.2 billion a year. Two other subsidies, price supports and counter-cyclical payments, are available when prices are low.

“Congress spent more than two years developing the farm bill. During that period, grain and soybean prices soared around the world, making food security an issue.”

Peter Shinn reported yesterday at Brownfield that, “But House Ag Committee ranking Republican Bob Goodlatte noted the vast majority of the farm bill spending goes to feeding the needy. And he added that spending on commodity programs, when measured as a fraction of the federal budget, fell sharply from the level included in the 2002 farm bill level.

“‘The truth is that only 17% of the farm bill spending is devoted to farm bill programs, while nearly 70% goes to the nutrition title alone,’ Goodlatte said. ‘In fact, there is very little farm in a farm bill anymore.’”

Associated Press writer Mary Clare Jalonick reported today that, “Rejecting a veto by Bush would be even easier in the Senate because farm states have greater representation than they do in the House. Congress has only overridden one veto, on a water projects bill, during Bush’s two terms.”

The AP article noted that, “The bill would also extend dairy programs, increase loan rates for sugar producers, and include new money for fresh fruits and vegetables that have not previously been included in farm bills.”

Ian Swanson reported yesterday at The Hill Online that, “The Republicans who voted for the farm bill also went against their new flag-bearer, Sen. John McCain (R-Ariz.), who has said he would veto the farm bill.”

The Hill article stated that, “Office of Management and Budget Director Jim Nussle on Wednesday criticized Congress for considering this farm bill at a time of record farm income. ‘Commodities are strong and farmers are finally making money in the marketplace,’ he said. ‘What this bill does is increase the spending above current spending for agricultural programs by almost $20 billion at a time when there is record farm income.’”

Philip Brasher, writing yesterday at The Des Moines Register Online, noted that, “‘I don’t see any way that it is not overridden,’ said Rep. Tom Latham, R-Ia., who voted for the bill.”

And the Los Angeles Times editorial board noted today that, “After more than a year of wrangling over the farm bill, this is the best our tireless reformers in Congress could do to trim agricultural subsidies: Farm couples making more than $1.5 million a year will no longer receive taxpayer money. In other words, a historic opportunity to end this country’s most wasteful and economically ruinous corporate welfare system has been lost.”

Commodity / Food Prices

Associated Press writer Stevenson Jacobs reported yesterday that, “Wheat prices plunged to a five-month low Wednesday as investors bet that U.S. crop yields will meet demand and ease price increases for flour, bread, pasta and other foods.

“Other commodities traded mostly lower in a broad sell-off, with crude oil retreating and precious metals also falling.”

The AP article added that, “Wheat for July delivery fell 31.75 cents to settle at $7.64 a bushel on the Chicago Board of Trade, after earlier falling to $7.63, its lowest level since December.

“Wheat has shot up some 50 percent in the last year but is well off its all-time highs reached in March, when priced topped $12.70 a bushel.”

Mr. Jacobs noted that, “Corn futures for July delivery lost 11 cents to settle at 5.9625 a bushel on the CBOT, while July rice futures fell 75 cents to settle at $21.49 per 100 pounds. July soybeans, meanwhile, settled flat a $13.795 a bushel.

“In energy futures, crude oil fell after an Energy Department report offered a mixed view of U.S. petroleum reserves.

“Light, sweet crude for June delivery fell $1.58 to settle at $124.22 a barrel on the New York Mercantile Exchange after the EIA report said crude inventories rose by 200,000 barrels last week, less than the expected 2.5 million barrel increase analysts surveyed by research firm Platts had expected.”

Ian Berry reported in today’s Wall Street Journal that, “Chicago Board of Trade rice futures dropped to their exchange-imposed daily trading limits for the second straight day Wednesday, as the market continued its retreat from its rally last week, amid signs of rising world rice supplies.

“Nearby May rice fell 61 cents to $21.39 per hundredweight, and most-active July rice slid 75 cents to $21.49.

“Prices have fallen $1.30 since Friday’s U.S. Department of Agriculture supply-and-demand report projected record world rice crops.”

Meanwhile, the Associated Press reported yesterday that, “The Bush administration is disputing the International Monetary Fund’s claim that increased production of biofuels is the biggest factor in rising food prices.

“The IMF estimates the shift of crops out of the food supply to produce biofuels accounts for almost half of the recent increases in global food prices. Rising food prices have exacerbated hunger problems in developing countries.

“But the administration’s chairman of the Council of Economic Advisers, Edward Lazear, says that biofuel production has played a small part.”

And Howard Schneider reported in today’s Washington Post that, “Rising global grain prices helped spark the largest increase in monthly food costs in nearly 20 years, as consumers paid more in April for cereals and baked goods, and the dairy, meat and other animal products that rely on feedstocks, the government reported yesterday.

“Food prices have risen at a seasonally adjusted annual rate of 6.1 percent past three months. The 0.9 percent rise from March to April was the biggest one-month advance since January 1990, according to the Bureau of Labor Statistics.”

Keith Good

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