FarmPolicy

October 26, 2014

Farm Bill Issues; Supercommittee Developments; and Regulations

Categories: Audio /Budget /Farm Bill

Farm Bill Issues

A Reuters news article from yesterday (article posted at DTN, link requires subscription) reported that, “A new U.S. farm law would wipe out traditional crop subsidies except for a program that assures grain, soybean and cotton growers of a minimum return on their crops, a lawmaker drafting the plan said on Thursday.

Revenue protection — assuring growers of a guaranteed portion of their usual crop revenue — would become the new base of the U.S. farm program in the plan being drawn by the four leaders of the House and Senate Agriculture committees.

“Leaders hope to unveil the package by the end of the week. It would cut agricultural funding by $23 billion and could become law as part of a government-wide deficit-cutting bill later this year.”

The Reuters article pointed out that, “Minnesota Rep. Collin Peterson, one of the four leaders, said the revenue package was expected to begin payments to growers after they absorb ‘a shallow loss’ of revenue. Crop insurance would cover major losses.

“The ‘marketing loan’ would be retained, said Peterson.”

Yesterday’s article added that, “Cost of revenue protection would be offset by ending the $5 billion-a-year direct payment subsidy, a high-profile target of reformers. Eliminated in most cases would be counter-cyclical payments that are made when returns from sales and other subsidies do not meet targets set by law.

Rice and peanuts may stay on the counter-cyclical payment track because crop insurance is not well developed for them.”

David Rogers reported last night in a lengthy article at Politico that, “In the weeks since [the executive branch released its proposed cuts to agricultural spending], in fact, most attention has focused on a new ‘shallow-loss’ program that would add another layer of protection — again at public expense — on top of crop insurance.

“Farmers would still be encouraged to buy coverage up to about 75 percent for themselves. The next increment — up to 90 percent — would be more of a shared community risk, based on area-wide average losses, but also free.

“Proponents argue that it is a win-win, giving farmers some added protection while costing significantly less than the $5 billion that now goes out the door each year in direct payments. But the American Farm Bureau Federation is already raising warning flags, suggesting the new initiative is a bridge too far and ‘radical shift in the structure of government support.’”

The article noted that, “House Agriculture Committee Chairman Frank Lucas hails from a western Oklahoma farming district that knows well the risks of weather — and changing federal policy.

“Yet the 51-year-old Republican, thrust into power in January, must write his first farm bill as chairman under extraordinary circumstances, given the political pressure for change and the compressed — but erratic — schedule of the deficit reduction process this fall.”

Last night’s article concluded with this quote from Chairman Lucas: “‘How do you come up with a proposal that steps away from the traditional programs and still provide a safety net to all crops in all regions. … How to craft a program that works for everybody?’ he told POLITICO. ‘I represent a part of the country that was devastated in the ’30s and the 1980s. I don’t want to be part of crafting bad policy that sets off an economic chain reaction in rural America.’

“‘If we can’t get it right, I would just as soon step back, take a deep breath and start all over.’”

Meanwhile, Tom Lutey reported yesterday at The Billings Gazette Online (Montana) that, “The fate of farm subsidies, worth billions to the Montana economy, is expected to be decided in the next three weeks by a deficit-cutting supercommittee looking to chop $1.2 trillion from the federal budget.

Considering the alternatives, the quick haircut of $23 billion or more might be the best option, said U.S. Sen. Max Baucus, D-Mont. A supercommittee member, Baucus indicated Wednesday that were the cuts left to the full membership of House and Senate, they might be too deep.

“‘This might be an opportunity to trim but not eviscerate the programs,’ Baucus said.”

Mr. Lutey explained that, “National farm groups have come to Washington with their own proposals for subsidy cuts, most of which involve cutting things like direct payments but providing better, federally subsidized insurance programs to protect farmers from financial losses due to weather or unexpected price drops.

“The groups argue that farming is a risky business requiring operating loans of a half million dollars or more, which need to be covered in case of disaster.

“Baucus said the supercommittee presents an opportunity to take those subsidy proposals into account, though he wouldn’t go into specifics about proposals the committee favored.”

Yesterday on the Red River Farm Network’s Agriculture Today program, Mike Hergert provided an update from Washington, D.C. on the Farm Bill and supercommittee process.  His report, which can be heard here (MP3- 2:23), included observations from Sen. John Hoeven (R-ND), and John Keeling Executive Vice President and CEO of the National Potato Council.

With respect to the supercommittee process, recall that House Agriculture Committee ranking member Collin Peterson (D-Minn.) pointed out in an interview earlier this week with Mike Hergert of the Red River Farm Network (unofficial transcript available here) that, “And I think the super committee is going to pass something. It may not be the whole deal. It may be part of the cuts and then some other thing that’s delayed till the first of the year like tax reform, and then if that doesn’t work, the sequestration. But I think something is going to pass.

“And if something passes, we need to be in it. And as part of the deal, that if there is a further sequestration, that we would be exempt from that because we’ve done our part, so they don’t get two bites of the apple. So I’m still optimistic we can get this done, but there’s a lot of tough work to do yet.”

Later in the interview, Rep. Peterson noted that, “And I, as the author of the last farm bill, the same things that I heard then are still being talked about now. You know, it’s nothing new. I know where the wheat guys are coming from and I know where the peanut guys are coming from, and I know where the environmentalists are coming from. So it’s not like we’re operating in some kind of vacuum and not taking into account, because at the end of the day, what we come up with needs to be something that our members can live with. They may not all be happy, but we want to have 75, 80% of the committee be supportive of what we’ve done.”

A news release yesterday from Rep. Ron Kind (D-Wis.) stated that, “[Rep. Kind] today with a bipartisan group of 26 members sent a letter to the Joint Select Committee on Deficit Reduction (Super Committee) expressing concern over the intent of the House and Senate Agriculture Committees to push through a ‘secret’ Farm Bill.

“‘Very few Members negotiating and adding new entitlements to a secret farm bill is not the kind of deficit reducing farm reform we need,’ said Rep. Kind. ‘Targeted agriculture spending cuts should definitely be on the table but creating costly new farm programs should not. The Super Committee should avoid pushing through a complex new farm bill without giving Congress the opportunity to debate and amend this important legislation.’”

Brett Neely reported yesterday at Minnesota Public Radio Online that, “[Rep. Collin Peterson] rejected the charge that the House and Senate Agriculture Committees were acting in secret, arguing that the super committee asked every House and Senate committee to offer suggestions for cuts.

“‘I was not a big fan of the super committee but Congress passed it, the President signed it,’ Peterson said.  ‘It asked the committees to do this, we did it, we’re the only committee that did. Ron Kind’s committee didn’t come up with anything.’”

Also yesterday, Daniel Looker reported at Agriculture.com that, “Congressional ag committees could miss a chance to submit farm bill ideas to the Super Committee charged with drafting a deficit trimming plan by November 23, a member of the Senate Agriculture Committee said Thursday.

“‘I’m not certain they’ll have it by then,’ the committee’s former chairman, Senator Tom Harkin (D-IA) told agriculture.com.

“Harkin said he’s being told that an abbreviated version of a farm bill designed to trim $23 billion from the federal deficit over ten years will be available soon. But soon could mean before the end of this year or next spring, he said.”

The article noted that, “‘There’s a big disagreement over abolishing direct payments entirely or retaining them partially,’ said Harkin. He favors ending direct payments. That, he said, would save about $33 billion over 10 years and some of the extra savings over the committees’ goal of $23 billion in cuts could be used to strengthen a revenue program similar to ACRE (the Average Crop Revenue Election program).”

“When asked whether he thinks conservation compliance will be reinstated for crop insurance in the next farm bill, Harkin said, ‘That’s going to be very hard to adopt for crop insurance. That’s why I keep saying conservation programs are critical to maintain.’”

DTN Executive Editor Marcia Zarley Taylor reported earlier this week at the Minding’s Ag Business blog that, “Historic rewrites of farm programs could be submitted to Congress’s super committee only days from now. But if crop insurance becomes the centerpiece of the government’s official farm safety net, a growing number of farm economists and conservationists worry there will be nothing stopping fragile lands from being farmed with the federal government’s help, as DTN’s Farm Policy Editor Chris Clayton has reported regularly.”

Ms. Taylor indicated that, “But the USDA study concluded the benefits of crop insurance, disaster assistance, and marketing loans increased cropland acreage by less than 3% between 1998 and 2007. A much bigger factor to date is pure economics. Much of this plow down has more to do with the fact that the season-average cash price of corn has ballooned to $6.25 in 2011, up from $1.97 only a decade ago. That’s lifted commodity prices across the board.”

In other developments yesterday, Senators Chuck Grassley (R-Iowa) and Tim Johnson (D-SD) sent a letter to the supercommittee regarding the issue of “tighter payment limitations for Title I commodity programs.”

And a news release Wednesday from Congressman Tim Huelskamp (R-Kansas) stated that, “[Rep. Huelskamp], a fifth-generation farmer, announced this morning that he will introduce legislation to add a Regulatory Title to the ‘Farm Bill.’ The Freeing Agriculture to Reap More (FARM) Act will prevent and prohibit job-killing overregulation of agriculture.”

In developments regarding dairy policy, which was also discussed at some length in Rep. Peterson’s Red River Farm Network interview, a news release  yesterday from the International Dairy Foods Association stated that, “Top executives of six of the country’s biggest dairy exporters strongly object to the Dairy Security Act of 2011. In a letter sent today to members of the Joint Select Committee on Deficit Reduction, they outlined the negative effects the act would have on domestic and global dairy markets and said it has no place in deficit-reduction talks. It is expected that the dairy program will be part of the recommendations submitted by House and Senate Agriculture Committee leaders to the supercommittee for inclusion in the debt-reduction bill.”

Agri-Pulse Senior Editor Stewart Doan provided executive branch perspective on the Farm Bill process in an audio report from yesterday, the Agri-Pulse report included remarks from Secretary of Agriculture Tom Vilsack.

 

Budget and Supercommittee Developments

Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “The House on Thursday afternoon decided for the first time this year to conference with the Senate on H.R. 2112, a FY 2012 spending bill that both chambers have approved, but in different forms.

“In the House, the bill is a 2012 agriculture spending bill. But in October, the Senate amended that bill to include Commerce/Justice/Science and Transportation/Housing and Urban Development.

“The House approved the motion to go to conference with the Senate by unanimous consent.”

David Rogers reported yesterday at Politico that, “House Republicans signaled Thursday that they are prepared to restore money cut from food assistance and law enforcement as part of a spending compromise bill which the Appropriations leadership hopes to negotiate with the Senate by Nov. 14.”

A more detailed analysis of the appropriations issue is available in this Congressional Research Service report from last week titled, “Agriculture and Related Agencies: FY2012 Appropriations.”

Meanwhile, Naftali Bendavid and Janet Hook reported in today’s Wall Street Journal that, “House Speaker John Boehner gave new urgency to the drive for a deficit-cutting deal by saying he would press lawmakers to approve any agreement a congressional supercommittee makes, no matter what it contains.”

Lori Montgomery reported in today’s Washington Post that, “Washington’s latest exercise in debt reduction appeared to be at an impasse Thursday, as members of a special congressional committee barreled toward a Thanksgiving deadline with no movement on the fundamental question of whether to raise taxes.

“Talks continued between congressional leaders and members of the supercommittee, but the panel had no further meetings scheduled and no path to compromise on a plan to slice at least $1.2 trillion from projected borrowing over the next decade.

“Aides in both parties said the prospects for a bigger deal were fading rapidly, and that the panel committee could be left struggling just to meet its minimum target.”

The Post article added that, “‘In a word, it’s stolid. Not stalled, but stolid,’ said supercommittee member Max Baucus (D-Mont.), chairman of the Senate Finance Committee, suggesting that talks had slowed to a crawl.

“As GOP supercommittee members huddled Thursday afternoon with House Speaker John A. Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.), GOP aides and lawmakers close to the process said they were still trying to horsetrade with Democrats over revenue increases and cuts to entitlement programs, such as Medicare and Medicaid.”

Sean Lengell reported yesterday at The Washington Times Online that, “As pressure mounts on the congressional supercommittee to reach a debt-reduction deal, Capitol Hill lawmakers – from House leaders to rank-and-file members – appeared less than confident Thursday the panel would make its Thanksgiving deadline.

“House Speaker John A. Boehner described the mood on Capitol Hill as ‘one of nervousness’ and that both parties in both chambers were feeling pressure to reach an agreement.”

But Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Sen. Rob Portman (R-Ohio), a member of the deficit-reduction supercomittee, insisted Thursday that the panel’s members are still actively seeking a deal despite concerns from many lawmakers that the group is deadlocked.”

 

Regulations

A news release yesterday from the House Energy and Commerce Committee stated that, “The Energy and Commerce Subcommittee on Energy and Power, chaired by Rep. Ed Whitfield (R-KY), today approved bipartisan legislation to provide much-needed certainty and regulatory relief to America’s farmers, ranchers, and rural businesses. H.R. 1633, the Farm Dust Regulation Prevention Act, passed the panel by a vote of 12-9 and now moves to the full Energy and Commerce Committee for consideration.”

And DTN writer Todd Neeley reported yesterday (link requires subscription) that, “While the EPA issued its general permit for pesticide applicators Monday, following a lawsuit from environmental groups, agriculture interest groups say the agency raised more questions than it answered about who has to follow the regulation.

“Effective Nov. 1, EPA requires permits for pesticides applicators in the National Pollution Discharge Elimination System, or NPDES. EPA’s general permit covers operators who apply pesticides that result in discharges into waters of the U.S. from mosquito and other flying insect pest control, weed and algae control, animal pest control and forest canopy pest control.

“The agency did not create a blanket permit for other applicators, as the agency has held the rules around NPDES only apply to those listed.”

Mr. Neeley added that, “Ag groups aren’t so sure.

“The lack of a general permit or permits from approved state-level programs specifically for row-crop farmers, in combination with what is a broad definition in the Clean Water Act of ‘waters of the U.S.,’ are reasons for producers to take notice, said Mark Gaede, director of government affairs for environmental policy at the National Association of Wheat Growers.

“‘I told our folks that if they’ve got a wet spot on land and EPA wants to exert jurisdiction, that is compounded by not allowing farmers to get general permits,’ he said. ‘It is a matter of time before someone is found in violation of the Clean Water Act. It exposes our folks to horrendous liability.’”

Keith Good

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