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Pay limits a thorn in farm bill negotiations

Last week the members of a House-Senate conference committee tasked with putting together a final farm bill talked a lot about bipartisan compromise at their first public meeting on October 30.

Aside from the well-publicized differences over cuts to food stamps -- $4 billion over 10 years in the Senate bill and nearly $40 billion in the House nutrition bill -- most of the potential sticking points to getting a bill passed this year aren't partisan. One is a provision that would finally close nearly all loopholes that allow very large farms to circumvent limits on commodity program payments.

Senator Chuck Grassley, the Iowa Republican on the Senate Agriculture Committee who has championed tighter limits for years, told reporters Tuesday that if the final bill doesn't have payment limits, "I probably will vote against it."

Grassley, who isn't on the conference committee, authored a provision in the Senate bill that puts a cap of $250,000 on the amount a farming couple could receive from programs in the bill's commodity title. That includes a limit of $50,000 per person on all commodity program benefits, except loan deficiency payments and marketing loan gains, which would have a separate cap of $75,000. Put those two together, and the individual cap is $125,000, or twice that for a husband and wife.

This doesn't affect crop insurance payments (which could be subject to different reforms), and with loan rates for most crops far below even today's falling market prices, the whole issue might seem theoretical.

But it's not to some members of the conference committee, mostly from the South, who Grassley said are the main opponents of payment limit reform.

The payment limit cap also closes a loophole that in the past has allowed 20 people tied to one farm to claim that they were making management decisions. According to a report released this fall to Grassley by the Government Accountability Office, a farm in Louisiana collected $651,910 in payments last year, with 16 individuals and four spouses claiming management of the farm.

Grassley's provision limits farms to only one off-farm manager.

Grassley has had support for his stricter payment limits from Senate Agriculture Chairwoman Debbie Stabenow (D-MI), but after reports of opposition by some House members of the conference committee, he and 10 other senators wrote Stabenow and the committee's ranking Republican, Thad Cochran of Mississippi, urging them to support that part of the bill.

"We believe farm programs should offer support in tought times, but like other economic safety nets, the assistance should be limited. The new limits have been approved by both bodies of Congress, and any changes by the conference committee would contradict the will of Congress…" said the letter, whose signers included Democrats from blue states, Al Franken of Minnesota and Kirsten Gillibrand of New York, as well as some of the Senate's most fiscally conservative Republicans, including Tom Coburn of Oklahoma. Former Agriculture Secretary Mike Johanns, another Republican member of the Senate Agriculture Committee, also signed on.

In the House, Representative Jeff Fortenberry (R-NE) offered an amendment to the farm bill last summer that is virtually the same as Grassley's payment limit provisions. It passed with strong, bipartisan support of 230 votes.

"It also is an amendment that the [Agriculture] committee doesn't like, by the way," Fortenberry told Tuesday.

Fortenberry served eight years on the House Ag committee and now is a member of the House Agriculture Appropriations Subcommittee.

"This is not about penalizing someone for their success. This is actually celebrating it," Fortenberry says of the very large farms that would be getting fewer payments.

All farms will be getting fewer payments under the new farm bill, since both the House and Senate versions eliminate direct payments, which have cost the federal government about $5 billion annually. Part of that savings would be added back in by some form of revenue protection and target price programs.

But at a time when other federal programs are being cut, Fortenberry thinks its only fair to have a solid cap on commodity program payments.

"We're trying to tighten our belt, and necessarily so, because we're overspending," he said.

Having the government unwittingly subsidize the very largest farms isn't good for agriculture, either, he says.

"Agriculture's viability depends upon large numbers of members in the marketplace," he said.

The payment cap "is a balanced and fair thing to do," he said. And he thinks keeping it in the farm bill will improve the odds of the House voting for the final version of a bill.

Ferd Hoefner, a lobbyist for the National Sustainable Agriculture Coalition, which supports the payment limit, told Tuesday that he agrees.

No one knows how the final farm bill will do in a vote in the House, where any compromise on cuts to food stamps is likely to be too small for some Republicans and too big for Democrats.

Reforms in the farm bill like the Fortenberry amendment were popular, Hoefner said. In the House, "these days, getting 230 votes for anything is difficult."

"They don't want to be in a position where they're taking popular reform measures out," he said of the conference committee.

Hoefner thinks the tough payment limits have a good chance of surviving the conference committee.

"I don't think it's really endangered because it passed by strong bipartisan majorities in both houses," he said.

The payment limits also bring a small savings to the federal budget, about $160 million over 10 years, according to the Congressional Budget Office. Hoefner thinks the savings could be larger and says the CBO believes large farms will still find a way around the tougher rules, which is why the nonpartisan budget office didn't put a higher number on it.

Traci Bruckner, an agricultural policy specialist at the Center for Rural Affairs in Lyons, Nebraska, is frustrated that payment limits are an issue for the conference committee.

"I think it's ludicrous that we even have to be talking about this. It's in both bills," she said Tuesday. "They should be talking about where the differences are and not about something that's in both bills. It would be completely undemocratic if they strip that from the final bill."

One veteran senate staffer agreed that ironing out just the differences between a House and Senate bill "is the way it's supposed to work in textbooks."

But Congress doesn't always follow the rules.

"That's not at all unheard of for a conference committee to abandon both bills," he said.

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