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Farm bill funding squeeze

By now,  it’s
common wisdom that a tight federal budget is likely to make writing the next
farm  bill harder than usual.

At the Iowa Soybean Association’s annual policy meeting
Tuesday,  an experienced Washington
lobbyist, Stephen Frerichs of AgVantage, LLC,  laid out more details on just how hard it will be.

“The next farm bill isn’t going to be any fun at all,”
said Frerichs, who has lobbied for the crop insurance industry for many years
and now includes the Iowa Soybean Association among his clients.

Even before the Congressional Ag Committees have to start
trimming programs, they will start with about a $16 billion shortfall, he said,

That’s because 37 programs in the current farm bill will
expire before the next one takes effect, Frerichs said. They include the new
permanent disaster program called 
SURE (Supplemental Revenue Assistance Payments), the Wetlands Reserve
and Grasslands Reserve and energy programs, Frerichs said. SURE, the largest of
those temporary programs, will likely be out of funds in 2011, he said.

Altogether, the cost of keeping those programs going for
another five years in the next farm bill would be $9.8 billion above the cost
of the current law, estimated to cost about $300 billion at the time it was
passed in 2008.

The other $6 billion comes from cuts to crop insurance,
about half of that made when the farm bill was passed and another $600 million
per year negotiated by the USDA this year for its new standard reinsurance
agreement with the industry.

“The main lesson from the 2008 Farm Bill was that
commodity programs and crop insurance were cut to pay for other spending,”
Frerichs said. “I expect that to be the case in the next farm bill as well.”

When the 2008 Farm Bill was passed, the Congressional
Budget Office estimated that roughly two-thirds of the money in the Farm Bill
would go to nutrition programs. But, as the recession worsened and employment
lagged in a weak recovery, the share of spending on food assistance has gone
up.

According to the House Ag Committee’s 10-year projection
last March for costs for the USDA and other programs under the Farm Bill,
three-fourths of farm bill spending now goes to nutrition, with nearly all of
that being food stamps.

Under that 10-year projection, the second biggest farm
program budget outlay is crop insurance, at 9% (before the USDA trimmed another
$6 billion over 10 years in the reinsurance agreement)

The third biggest outlay is conservation programs, at 7%,
closely followed by commodity programs, at 6.9%  Most of the commodity program spending consists of direct
payments, which account for 5.3% of the projected ag budget.

With about half of the Democrats on the House Ag
Committee defeated in the November elections and most of the larger Republican
membership for the next Congress unknown, Frerichs didn’t pretend that he could
predict the outcome of the next farm bill. And, he thinks it’s likely to be
passed a year late, in 2013, not 2012 when it expires. That’s usually the case
with farm bills, he said.

 Still, he made a few predictions:

“I think you will see direct payments stay in some shape
or form,” he said. They’re popular in Oklahoma, the home state of the next
House Agriculture Committee Chairman, Representative Frank Lucas. And Lucas has
argued that direct payments are easier to defend against legal challenges under
the World Trade Organization.

Because crop insurance is now the largest program used by
farmers, environmental groups will lobby to tie crop insurance to conservation
compliance rules that now apply to commodity programs, he said.

“I expect that will be a major issue in the next farm
bill,” Frerichs said.

Some conservation programs may face pressure, too.

“With Tom Harkin no longer being chairman of the Senate
Agriculture Committee, I guarantee you the conservation stewardship program will
be on the table,” Frerichs said.

 

 

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