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The incredible shrinking farm bill
The script says in 2012, a presidential election year, a dysfunctional Congress is supposed to write a five-year farm bill in a struggling economy with less money.
We saw a preview last fall, when a hurried-up version of a bill was drafted by the stars of this story, Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) and House Agriculture Committee Chairman Frank Lucas (R-Ok), minority leaders, and a slaving staff who might have wished they were a cast of thousands.
The goal was a farm bill with $23 billion in deficit reduction (over 10 years) for a Super Committee charged with finding more than $1 trillion in savings. The Super Committee failed.
Now the ag committees are starting a more normal process of hearings and bill drafting.
Some veteran farm group lobbyists think they'll be lucky if all that Congress shaves from the farm bill is $23 billion.
“Certainly we're not going to balance the federal deficit by cutting USDA, but production agriculture is less than 1% of the population. We're going to have to make a compelling case to have any support,” says Jon Doggett, vice president of public policy for the National Corn Growers Association in Washington, D.C.
“The thing we have to come back to that we can't ignore anymore: For every dollar the federal government spends, they have to borrow 42¢,” he says.
The new members of the House of Representatives are focused on cutting the deficit. And their goal is much bigger than the $1.2 trillion in across-the-board spending cuts that still start in 2013 as a result of the Super Committee's failure to identify other ways to save money. (Those cuts will be compressed into nine years.)
“I have talked to some of the Tea Party folks. They see no reason for the federal government to have any role in agriculture whatsoever,” Doggett says.
Doggett and others who lobby for farm groups expect the ag committees to try to start with cuts of $23 billion. But many expect a fight on the floor of the House of Representatives, where even bigger cuts could be introduced as amendments. The details of commodity programs worked out last fall, and never publicly released, are likely to change again. And the normally bipartisan approach to writing farm bills could collapse over the issue of funding for food stamps. Democrats in the Senate are pushing for only small food stamp cuts in a weak economy. Republicans in the House see the farm bill's largest program as wasteful and a source of money for ag-related spending.
When the 2008 Farm Bill was passed, it was projected to cost about $58 billion each year, with the majority, $38 billion, going for nutrition programs. The Great Recession and jobless recovery have exploded nutrition costs. Food stamps alone, the biggest part of the nutrition title of the farm bill, are costing more than $80 billion in this fiscal year. Compare that to a recent Congressional Research Service estimate of annual farm bill costs for commodities at $6.5 billion and conservation at $4.5 billion. The Ag Committee's deficit-trimming proposal was $2.3 billion a year, and nutrition programs escaped with only $400 million a year in cuts, or $4 billion over 10 years. Projected 10-year spending on nutrition last fall was $704 billion.
Mary Kay Thatcher, a lobbyist for American Farm Bureau Federation, thinks advocates for nutrition programs may ask for more money – not less – in a 2012 farm bill. And past alliances between urban and rural Congress members to write a farm bill could break down, she says. “I think there's a real chance of that.” Farm Bureau has advocated that nutrition take the same proportional cuts as other farm bill programs.
Gus Schumacher was Undersecretary of Agriculture in charge of farm programs under President Bill Clinton. He now works with Wholesome Wave, a nonprofit group that raises private donations to stimulate business for local agriculture by making produce more affordable for low-income customers at farmers' markets.
Schumacher says adding to the buying power of food stamps (now called SNAP or the Supplemental Nutrition Assistance Program) at farmers markets increases farmers revenue while also improving SNAP recipients' diets.
The food stamp program escaped heavy cuts in last fall's farm bill, he says. The bill eliminated automatic enrollment in the program for those receiving low-income home energy assistance from USDA. Since fewer recipients of heating assistance might sign up on their own, a nutrition savings of about 0.5% is projected over 10 years.
Schumacher says Senate Ag Committee Chairwoman Stabenow of Michigan, is a strong supporter of nutrition.
“Michigan's economy is in rough shape. It would be tough for her coming into an election with cuts in food stamps. She knows the safety net needs to stay strong,” Schumacher says.
Schumacher agrees with Farm Bureau's Thatcher that food stamp spending will be under pressure as the farm bill is negotiated this year. Cuts to the farm bill last fall were relatively small.
“That would have been the best of all worlds for everybody, including food and nutrition,” he says.
Although the details of the so-called secret farm bill were never released, it's widely assumed by lobbyists that the $23 billion in cuts broke down into $4 billion from nutrition, about $6 billion from conservation, with the rest coming from commodity programs.
Dennis Nuxoll, a lobbyist for American Farmland Trust, points out that the across-the-board cuts, called sequestration, treat agriculture differently from the secret farm bill. “We don't know where things end up, but we do know where they start,” he says.
Sequestration would trim between $15 billion and $16 billion from USDA spending over 10 years. That's really similar to last fall's secret farm bill, because sequestration exempts nutrition programs and some long-term USDA contracts including those for the CRP. Last fall's farm bill didn't cut crop insurance. Sequestration would, Nuxoll says.
Nuxoll, Doggett of the Corn Growers, and others see signs that Congress will cut more than the $23 billion the ag committees are likely to use as a starting point for a 2012 farm bill. Some examples:
● Senator Richard Lugar (R-IN) and Representative Marlin Stutzman (R-IN) – both members of the ag committees – have introduced a bill to trim USDA spending by $40 billion over 10 years. It makes steeper cuts to commodity and conservation programs than last fall's farm bill and trims nutrition spending by 2%.
● House Budget Committee Chairman Paul Ryan (R-WI) last year proposed cutting nutrition programs by $128 billion over 10 years and farm spending by about $30 billion, suggesting that those cuts come from direct payments and crop insurance.
● Before deficit-cutting talks collapsed in the summer of 2011 (leading to creation of the Super Committee), a bipartisan group from Congress that met with Vice President Joe Biden agreed to trim farm programs $33 billion over 10 years.
The ag committees may want to keep spending cuts to $23 billion, but Doggett expects the rest of Congress to want to go higher.
“Do we start at $23 billion? Do we start at $33 billion? Is it in-between or do we go up from $33 billion?” Doggett asks.
No one knows. The only certainty is that the ag committees will have much less money to work with in 2012.
Here is the outlook for three key parts of the farm bill:
1. Commodity title
Commodity programs brought out the usual regional tensions in the secret farm bill last fall. It eliminated direct payments. It kept marketing loans, raising loan rates above the cost of production for rice, critics say. It created a new revenue protection program, Ag Risk Coverage. And it included a shallow-loss crop insurance plan for upland cotton.
That three-part approach was criticized by Farm Bureau.
“The government should be there to cover catastrophic losses, not shallow losses,” Farm Bureau's Thatcher says.
And some members of the Senate Agriculture Committee expect the ag committees to scrap the three-pronged approach.
“I don't expect it to be carried forward,” Senator Charles Grassley (R-IA) told reporters late last year.
Farm Bureau, which made its own commodity title proposal later than commodity groups, will promote what it has called the Systemic Risk Reduction Program. It would provide area revenue protection, something like Group Risk Income Protection insurance, up to 60% or 65% coverage, depending on its cost to the federal government. Farmers would then buy crop insurance policies for individual requirements above that level.
National Farmers Union, meanwhile, is lobbying for a voluntary farmer-owned reserve. Commodities placed into the reserve would not be released until prices hit 160% of a loan rate set slightly above variable production costs, says NFU president Roger Johnson.
“This looks at trying to moderate some of the wild price swings without interfering with the market,” he says.
Doggett of the Corn Growers is confident that the ag committees will ultimately write good farm policy.
“I think the story is less the difference between Northern crops and Southern crops and target-price programs and shallow-loss programs, whatever you want to call them,” Doggett says.
But he expects those programs to come under attack when the farm bill comes up for a vote on the House floor. “I think we're going to have a very, very difficult time coming out of there unscathed,” he says.
Thatcher and most lobbyists expect direct payments to be left out of any future farm bills.
“The wild card is probably Senator (Pat) Roberts,” says Farmers Union's Johnson. “The direct payment was his baby.” And Roberts was reportedly not happy with the commodity title in last fall's secret farm bill.
2. Conservation title
Conservation programs were consolidated in the secret farm bill, with major programs cut by 10%. Lobbyists in the conservation community expect a similar level of cuts as the starting point in any new farm bill. But delays could make conservation cuts deeper.
That's because the biggest chunk of conservation cuts came from lowering the amount of acres enrolled in the CRP – from 32 million acres to 25 million. That counted for nearly $4 billion in savings over 10 years.
But next year, the Congressional Budget Office, which estimates the future costs of farm bills, may not count the savings as high. That's because farmers are leaving the program during a time of strong crop prices.
“By next year, the CRP cut won't yield as much as $4 billion,” says Ferd Hoefner of the National Sustainable Agriculture Coalition. Hoefner says the secret farm bill kept a small amount of money to encourage landowners leaving the CRP to keep their land in grass. “I thought that was an excellent idea,” he says.
Hoefner and AFT's Nuxoll were disappointed that last fall's farm bill didn't require farmers buying crop insurance to meet the same conservation compliance standards now required for direct payments and other commodity programs.
Nuxoll says conservation compliance for crop insurance was required from 1985 to 1995, and that nearly all farmers who buy crop insurance are already enrolled in commodity programs that require compliance.
“I think that's going to be the big battle,” says Hoefner. “They didn't extend it (compliance) in the secret farm bill. We and many other conservation groups will try to turn it around.”
Farm Bureau opposes linking conservation compliance to crop insurance, says Thatcher, and she believes most farm groups will as well.
3. Energy title
Cellulosic ethanol, which is struggling to get off the ground, could die with the 2008 Farm Bill's energy title. Its programs are among 37 different farm bill programs costing some $9 billion over 10 years that expire with the current farm bill. One energy title program, the biomass crop assistance program (BCAP), increases the amount of money available to farmers who sell corn stover or crops like switchgrass to ethanol plants.
“Cellulosic ethanol won't go anywhere without it,” says Johnson of National Farmers Union, a group that wants an energy title included in the next farm bill.
Parts of the energy title, including BCAP, were included in the secret farm bill, at reduced levels of funding.
Johnson worries if Congress can't write a farm bill this year and votes to extend the 2008 Farm Bill for another year or two that all of the unfunded programs expiring last year or this year will disappear. It would require cutting farm bill spending by $9 billion more than the $23 billion in cuts already proposed. Restoring those funds will be politically difficult.
“These 37 programs, by and large, were the new ideas that were drafted in the 2008 Farm Bill,” Johnson says. “The sad reality is that if we're dealing with an extension, it's likely that all of these 37 ideas will not be extended.”
One new idea that continues to have bipartisan support is the need to help beginning farmers. Late last year Representatives Jeff Fortenberry (R-NE) and Tim Walz (D-MN) and Senator Tom Harkin (D-IA) introduced the Beginning Farmer and Rancher Opportunity Act to be included in the farm bill. It targets certain credit and conservation funds to beginners, and it supports beginning farmer training programs.
Will Politics Delay A Farm Bill?
Some in Washington are speculating that the ranking Republican on the Senate Agriculture Committee, Pat Roberts, will try to delay writing a farm bill until after the 2012 election. His party believes it has a good chance of taking control of the Senate, which would give Roberts the chairmanship. Roberts was open about his displeasure with the way the so-called secret farm bill was crafted.
Mary Kay Thatcher, who lobbies for the American Farm Bureau Federation, doesn't buy it. After the 2012 election, pressure to cut the federal deficit will only increase, she believes.
“I'm sure he'd like to be chairman, but I'm sure he recognizes that budget realities will be worse in 2013,” she says.
Lobbyists say that a farm bill must be written by Memorial Day to get it passed before election-year politics paralyze Congress. “It's possible we won't finish. That certainly won't be our strategy,” Thatcher says. “We'll push to get it done.”
Differing views on food stamps could also bring partisanship to ag committees.
“Farm bills have not only been bipartisan, they've also tended to be nonpartisan,” says Jon Doggett of the National Corn Growers Association. “Hopefully, the toxic atmosphere in Congress doesn't spill over into the ag committees.”