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Digesting the House farm bill

The staff of farm groups and members of Congress were still digesting the House Agriculture Committee's draft of a Farm Bill Friday, and finding parts of it more palatable than others.

To the National Corn Growers Association, the bill seems less market-oriented than the Senate's version. To the Environmental Working Group, it's too generous to commodities at the expense of conservation and nutrition programs. And to one member of the Senate Agriculture Committee it lacks payment reforms.

Both the Senate bill and the House draft eliminate direct payments, which accounts for most of the projected savings in federal spending on commodity programs over the next 10 years.

The Congressional Budget Office projected potential savings from both bills when each committee released a draft, comparing the savings with potential spending under current law. The CBO estimate of savings, known as a score, is broken down by the bill's sections, or titles--for commodities, conservation, nutrition, energy and more. But it also breaks it out by commodities. According o the CBO score released late Thursday, the House committee's savings from farm program spending on corn would be more than $11 billion over 10 years. The CBO scored savings from corn at $5.5 billion when the Senate Ag committee released a draft last April, half as much as the House version. (The final Senate bill was slightly different, with more spending added back for the energy title by the committee and crop insurance spending cut by a floor amendment that trims premium subsidies for high income farmers. But the House is where the Senate was last April, with more changes in the bill possible in the weeks ahead.)

Sam Willett, senior director or public policy for the Corn Growers, noticed the change in spending on corn.

"Corn accounts for about half of the savings in the commodity title,"  Willett told Friday. Other commodity groups have told the House Agriculture Committee that the Senate's new revenue protection program, Agriculture Risk Coverage (ARC), benefits corn farmers more because the bill starts at a time when corn prices have been boosted more than for other crops by demand for ethanol. So the House committee has added a target price program that farmers can choose instead of its own revenue program, Revenue Loss Coverage (RLC).

Willett said he doesn't yet know all the reasons why the CBO projects fewer benefits to corn from the House bill. But its RLC is less generous than the Senate's ARC.

ARC covers planted acres. LRC covers planted acres, but only up to a farm's historical base, or history, of acres planted to a crop. RLC starts when a county's revenue drops 15% below a five-year benchmark. ARC kicks in at an 11% loss in revenue. And RLC pays only at a county level. The Senate bill would allow farmers to sign up for farm-level coverage.

"Obviously, one contributing factor would be the loss of a farm option" in the House version of revenue protection, Willett said.

But the smaller spending level wasn't Willett's top issue with the newest version of a farm bill.

"I think our main concern, and it's a serious concern, is how it's structured," he said.

NCGA sees the House revenue program as having the possibility of influencing planting decisions. The Senate's ARC program uses an Olympic average to set a benchmark for measuring revenue. It's based on an average of five years of yields and prices, with the high and low years thrown out. The House version puts a target price into that calculation.

"They're setting a floor price for each of these years," Willett said. "Our concern is how this could prevent the program from being market oriented."

In spite of those misgivings, NCGA is working hard to support writing a farm bill this year as the number of days left for Congressional action dwindles before the 2008 law expires in September.

When the House Ag Committee starts to debate its farm bill draft next Wednesday, "NCGA is hopeful there will be a good, robust discussion of the commodity title where there is an opportunity to improve on what it is today," Willett said.

NCGA finds much to like in the House bill as well. It streamlines the process of approving genetically altered crops. It offers farmers regulatory relief and it preserves trade promotion.

The crop insurance title makes permanent a pilot program that allowed for higher insurance premium subsidies when a farm is insured as an enterprise unit, often a larger area that has less chance of collecting an indemnity payment. That's a change the NCGA advocated.  Nor does the bill tie crop insurance eligibility to conservation compliance, a provision that most farm groups, including NCGA, oppose.

The Senate's first draft of a farm bill didn't either, but when it was debated on the Senate floor, Senator Saxby Chambliss (R-GA) succeeded in getting an amendment approved to do that. And Senators Tom Coburn (R-OK) and Dick Durbin (D-IL) got and amendment passed by a two-thirds majority that trims premium subsidies for farms with adjusted gross revenue above $750,000. Commodity groups also oppose limiting premium subsidies for crop insurance.

If the House Ag Committee's bill comes up for a vote in the full House (which many farm lobbyists say is far from certain), then Willett expects the Chambliss and Durbin-Coburn amendments to have advocates there as well.

"I would be surprised if similar amendments were not attempted," he said.

One group that supports scaling back on crop insurance spending and linking it to conservation is the Environmental Working Group (EWG).

"It's hard to understand why Representatives [Frank] Lucas and [Collin] Peterson [leaders of the House Ag Committee] failed to include a provision that is overwhelmingly supported by farmers in poll after poll," Scott Faber, vice president of government affairs for EWG said, referring to the House bill's lack of conservation compliance. "Unfortunately, it seems it will be up to the full House to ensure that farmers who receive unlimited crop insurance subsidies must adopt basic environmental protections. At a time of record prices, it's just common sense to ask farmers to protect wetlands, grasslands and soil health in exchange for farm subsidies."

EWG also considers the House bill's new commodity programs and higher spending on crop insurance to be unfair when the bill would cut food stamps by $16 billion for low income Americans. And it criticized the bill's $6 billion cut in conservation spending, which is similar to conservation cuts in the Senate bill. Many conservation groups accepted those cuts. More than 600 other conservation and wildlife groups endorsed the Senate bill.

Senator Chuck Grassley, a member of the Senate Agriculture Committee, also said Friday that the House bill lacks reforms in payment limits that would save taxpayers more money.

According to a statement from Grassley, "The House Agriculture Committee’s draft doesn’t even stick with the status quo for payment limits.  It would actually increase the payment limits from the current law.  Currently, direct payments have a limit of $40,000 per farmer, and the counter-cyclical program has a limit of $65,000. The House draft bill would have a farmer choose between a counter-cyclical program and a revenue program and would increase the farmer’s cap to $125,000 no matter what program is chosen.

"Furthermore, this draft bill would not place any cap on the amount of benefits any one farmer could receive from the marketing loan program, leaving it completely uncapped. This is simply an indefensible approach for farm programs and will lead to a continuation of the largest 10 percent of farms receiving 70 percent of the farm program payments."

And, Grassley added, “The other glaring omission in the House’s draft bill is it doesn’t address any of the loopholes currently being used by non-farmers to exploit the farm program.  With tight budgets and a growing federal deficit, taxpayers aren’t going to stand by and accept non-farmers profiting from a program designed to be a safety-net for farmers."

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