A summary of the FAPRI report (at page one of the report) indicated that, “The U.S. Senate Committee on Agriculture, Nutrition and Forestry approved the ‘Agriculture Reform, Food and Jobs Act of 2012’ on April 26, 2012. This report examines the possible consequences of several key provisions in the proposed legislation.
1) The elimination of the current Direct and Countercyclical Payment (DCP) and Average Crop Revenue Election (ACRE) programs.
2) The establishment of the Agriculture Risk Coverage (ARC) program and the Stacked Income Protection Plan (STAX).
3) The reduction in the acreage cap for the Conservation Reserve Program (CRP) from the current 32 million acres to 25 million acres by 2017.
“Models maintained by the Food and Agricultural Policy Research Institute at the University of Missouri (FAPRI‐MU) are used to estimate possible impacts of these proposed policy changes. Results are presented relative to a baseline prepared in early 2012 that assumes a continuation of existing farm policies. The analysis uses a stochastic approach that considers 500 possible future outcomes for agricultural commodity markets to examine the consequences of continued market volatility.”
Jerry Hagstrom reported yesterday at Agweek Online that, “As the Senate appears ready to take up a farm bill that would make payments to farmers when their revenue goes down, House Agriculture Committee ranking member Collin Peterson, D-Minn., says after spending a week in his district, he is determined to put a target price and countercyclical payment program in the House version of the bill.”
Mr. Hagstrom explained that, “The core of the commodity title that Senate Agriculture Committee Chair Debbie Stabenow, D-Mich., and Senate Agriculture Committee ranking member Pat Roberts, R-Kan., have written is a program that would make payments to farmers for some of the losses not covered by crop insurance. But those payments would be based on the difference between a farmer’s revenue and a five-year Olympic average of revenues in past years. Peterson said this system would mean that if there were several years of low prices, the farmer’s base revenue would decline and so would any support. Therefore, he contends, the system of target prices that would trigger countercyclical payments should be continued and the target prices should be raised to levels in line with current commodity prices and the cost of production.
“Peterson said in a May 24 telephone interview that the farmers in his district ‘almost universally think (the target price and countercyclical program) is the preferred option.’ Peterson noted that the Minnesota Corn Growers Association ‘are on board with target prices,’ which puts them at odds with the National Corn Growers Association, which favors the revenue approach.”
“House Agriculture Committee Chairman Frank Lucas, R-Okla., is also in favor of including the target price option as well as the revenue option in the farm bill, which assures that target prices will be in the House bill,” yesterday’s article said.
Carolyn Lochhead reported yesterday at the San Francisco Chronicle Online that, “The Senate is poised to take up a new farm bill in the coming weeks that will set the nation’s food policy for the next five years and cost nearly $1 trillion over a decade.
“But California, the nation’s largest farm producer and a strong voice in environmental and health policy, is destined to cede billions of dollars to entrenched commodity interests in the Midwest and South.”
Farm Bill: Projected Costs, Timing, and Substantive Issues
David Rogers reported on Friday at Politico that, “New cost estimates Friday from the Congressional Budget Office predict that the Senate farm bill will save an estimated $23.6 billion over the next 10-years, about three-quarters of which would come from a net reduction in subsidies for major commodities.
“Beneath the surface, the 20-page report confirms a huge shift of resources toward new government-backed crop insurance options that would help farmers cover the deductibles they now pay. But even allowing for this investment, the Senate bill would save about $17 billion from what are generally seen as traditional support programs.
“A second wave of cuts from nutrition and conservation programs would save an additional $10.1 billion, about half of which would go to deficit reduction and half to pay for smaller energy, agricultural research, and specialty crop initiatives.”
David Rogers reported yesterday at Politico that, “Setting the stage for floor debate next month, the Senate Agriculture Committee formally filed its new farm bill with the full chamber late Thursday, after making final adjustments in a supplemental crop insurance option to ensure a lower-cost score from the Congressional Budget Office.
“Midwest popcorn producers and a desert terminal lakes program— important to Nevada and Senate Majority Leader Harry Reid—were also the subject of new language. But the much bigger issue—and dollars—centered on revisions to clarify that farmers who enroll in the new supplemental coverage will be subject to a 10 percent deductible.
“Committee staff said this was always the intent going back to when the bill was first reported from the panel in late April. And the clarification was required now only because of a change since then in the CBO’s scoring methodology.”
Steven T. Dennis and Emily Pierce reported yesterday at Roll Call Online that, “Senate Agriculture Chairwoman Debbie Stabenowsaid today that the farm bill will come to the floor next month after the Senate finishes a measure on equal pay for women.
“Though the Michigan Democrat has struggled to cobble together a bill that meets the concerns of different areas of the country, she said she has a filibuster-proof 60 votes. However, she noted that she will continue to address any issues that arise once it is on the floor or after it is passed and heads over to the House.
“One Senate Democratic aide said Majority Leader Harry Reid (D-Nev.) pledged to bring up the bill as the second order of business when the Senate returns from next week’s Memorial Day recess.”
A news update yesterday from the Western Growers Association stated that, “If Congress fails to pass a farm bill this year, it could simply extend the old 2008 farm bill—a process that could leave certain specialty crop programs that don’t have permanent funding influx. That’s according to U.S. House Agriculture Committee Chairman Frank Lucas (R-Okla.) who was in Irvine at the Western Growers headquarters today to visit with farmers.
“‘There is a high probability one way or another that we’ll see an extension of the 2008 farm bill,’ Lucas told the group. His committee is under pressure to cut at least $33 billion from the federal farm legislation. That, combined with the current political climate and upcoming presidential election could stall the farm bill in the political process.”
Yesterday’s update added that, “Programs like the Specialty Crop Research Initiative, which helps fund research and innovation in the specialty crop industry, is one of those programs that doesn’t have permanent funding. Lucas said his committee would essentially have to strategically find funding for it.
DTN Political Correspondent Jerry Hagstrom reported yesterday that, “Senate Agriculture Committee Chairman Debbie Stabenow said here [Monterey, Calif.] late Friday she expects the farm bill to come up on the Senate floor in early June and to garner at least the 60 votes needed to end debate and move the bill to passage.
“In an exclusive interview with DTN before she gave a speech here, Stabenow, D-Mich., said Senate Majority Leader Harry Reid, D-Nev., will bring up the bill ‘the first week in June.’
“One lobbyist said there have been signals that the bill will come up on the floor June 5, but Stabenow said she was ‘not ready to confirm’ a specific date.”
The “Washington Insider” section of DTN Friday (link requires subscription) reported that, “The growing unhappiness with the Senate Ag Committee’s farm bill draft was highlighted this week in a House Ag Subcommittee hearing. Both lawmakers and stakeholders pushed for a new and different bill than the one approved by the Senate Committee in April.
“The hearing was before the House Ag Subcommittee on General Farm Commodities and Risk Management, and the testimony was from ag economists and leaders of top farm groups. The focus was commodity programs and crop insurance, one of the contentious parts of the debate, likely second only to proposals to cut nutrition programs.”
DTN Ag Policy Editor Chris Clayton reported yesterday that, “After two days of blasting holes in the Senate Agriculture Committee farm safety net, House Agriculture Committee leaders have made it clear they want a target-price program for farmers. [prepared testimony from the House hearings from Wednesday and yesterday can be viewed here and here].
“A House Ag Subcommittee repeatedly examined how the Senate safety net, the Agriculture Risk Coverage program, or ARC, would work with insurance, or not work at all depending on the commodity or region. The best option going forward is an alternative program that offers farmers a target price for crops.
“To satisfy farmers in various regions and commodities, a target price program would likely have to increase the prices for at least some commodities from the current counter-cyclical program target prices. Farmers now lament that the current counter-cyclical target prices are well below the cost of production.”
DTN Ag Policy Editor Chris Clayton reported yesterday that, “Conflicting views between the House and Senate Agriculture Committees on fairness in the farm bill played out simultaneously Wednesday morning.
“Leaders on a House Agriculture Subcommittee on Commodities and Risk Management questioned whether the farm bill passed by Senate counterparts is fair for all commodities and regions of the country. Several House members and farmers testifying on Wednesday criticized the Senate’s ‘one-size-fits-all approach’ to the safety net.
“Meanwhile, Senate Agriculture Committee leaders argued — literally as the House hearing kicked off — that the farm bill that passed out of committee on a bipartisan vote treats everyone equally. Moreover, that Senate bill is going to get a floor debate soon.”
Mr. Clayton noted that, “Speaking to reporters in a conference call, Senate Ag Chairwoman Debbie Stabenow, D-Mich., said she was anxious to go to the floor with the farm bill. Senate Majority Leader Harry Reid, D-Nev., is committed to bringing the bill up and doing so in short order, she said.
“‘I’m confident we are going to see it coming up in the next few weeks,’ Stabenow said.”
“In a letter to Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., senators stated, ‘With our constant focus on job creation, we write to urge you to schedule floor consideration of the ‘Agriculture Reform, Food and Jobs Act of 2012’ as soon as possible.’”
“‘Federal crop insurance provides an effective risk management tool to farmers and ranchers when they are facing losses beyond their control,’ the letter stated. ‘It reduces taxpayer risk exposure; it makes hedging possible to help mitigate market volatility; and it provides lenders with greater certainty that loans made to producers will be repaid.’”
The release added that, “NCGA has previously stated that crop insurance remains the number one priority in the new farm bill as well as a market oriented, risk management tool to cover multi-year price declines.”
Dr. Westhoff noted that, “Compared to simply extending current law, the bill would cut net federal spending by $23 billion over the next 10 years, according to estimates by the Congressional Budget Office. Spending is cut by reducing farm subsidies and making smaller changes in conservation programs and the supplemental nutrition assistance program, or SNAP, formerly known as the food stamp program.”
“The draft farm bill uses some of the savings from eliminating direct payments to create a new Agriculture Risk Coverage program. The program would pay farmers for smaller losses that are not covered by crop insurance. The proposed formulas are complex, but farmers would get a payment when per-acre revenues fall by at least 11 percent from a recent average. Farmers are expected to use the existing crop insurance program to protect themselves against losses of more than 21 percent.”
DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “The crop insurance industry could benefit from ‘common sense structural changes,’ according to a pair of senators, who cite a recent government study in calling on the Senate Agriculture Committee to further investigate reducing premium subsidies to farmers.
“In a bi-partisan letter, Sens. Tom Coburn, R-Okla., and Dick Durbin, D-Ill., wrote earlier this week to Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., and ranking member Pat Roberts, R-Kan., asking them examine ways to find taxpayer savings in crop insurance. Coburn and Durbin cited a Government Accountability Office report last month requested by Coburn that highlighted the growing costs of the crop insurance program.”
DTN Political Correspondent Jerry Hagstrom reported yesterday that, “All crops need a farm program that protects them from multiyear price drops, House Agriculture Committee Chairman Frank Lucas said Tuesday, a position with which House Agriculture ranking member Collin Peterson agrees.
“In a wide-ranging exclusive interview with The Hagstrom Report and DTN, Lucas, R-Okla., praised Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., for her ‘herculean efforts’ to get a bill through committee, and said that he would not underestimate her ability to convince Senate Majority Leader Harry Reid, D-Nev., to provide time on the Senate floor to debate the bill.
“However, Lucas said although the Senate bill’s ‘shallow loss’ revenue program that would cover some losses beyond crop insurance is ‘a great tool’ in good times when prices are high, it would not provide a proper safety net if prices plummet.”