House and Senate ag committee conferees face four options, including extending current farm law, as they work toward a farm bill reconciliation.
They can reach a consensus with the White House, which has threatened to veto both the House and Senate versions of a 2007 farm bill.
They can accept a veto, modify their bill and try again.
Or they can over-ride a veto.
If none of those options pan out, Congress may have to extend current law beyond March 15, “with or without modifications,” said John Maguire, National Cotton Council senior vice president for Washington operations.
Maguire, speaking at the opening session of the Beltwide Cotton Conferences in Nashville, said the Bush administration’s reasons for vetoing bills currently up for conference review include budget concerns and a tax off-set of $7.5 billion.
The administration also claims current proposals do not provide adequate reform, especially for adjusted gross income limits.
Timing may be a critical factor, Maguire said. “Conferees have set an early February target for a conference report. With these complex bills, that’s ambitious.”
Farmers with winter wheat and spring planted crops need to know what to expect as soon as possible, Maguire said.
He said the Farm Security and Rural Investment Act of 2002 was “universally praised by farmers,” many of whom would prefer to extend that law with some modifications. “But the law was criticized from the first day it was signed,” Maguire said. “And cotton was singled out as needing major reform.”
He said criticism included unfounded claims that the U.S. cotton program was responsible for the demise of the West African cotton industry. “It was wrongly criticized as too expensive and as a stimulus to overproduction and persistently low prices.”
He cited other claims, including the high cost of the cotton program and for being “out of balance with other commodity programs. He said critics claimed the cotton program built excessive stocks and potential forfeitures as well as a failure “to adjust to new market realities.”
Brazil’s cotton case also resulted in adverse decisions for the U.S. cotton industry. And the DOHA round calls for more expeditious and more ambitious results from (the U.S. cotton program).
Maguire said budget concerns pose a serious obstacle for maintaining the current level of cotton support. “The budget baseline for commodities is 42 percent below 2002,” he said. “Budget resolutions included contingency funds but no real dollars.”
And fewer dollars have to support more programs, including specialty crops, an energy title, and a permanent disaster program. “With renewable fuels programs driving commodity prices, there is less concern about traditional farm programs.”
Maguire recapped the long process that Congress and USDA has taken to craft a farm bill. It started back in 2005 with USDA hearings across the farm belt. House and Senate hearings followed.
Maguire said the administration offered its own proposal, including a $200,000 adjusted gross income limit for payments.
The industry’s response included a proposal to maintain key components of the current program, including a market loan, direct payments and the target price.
“We addressed criticism by promoting inclusion of industry’s 14-point plan to enhance market orientation and competitiveness and to improve flow to market and assist domestic manufacturers.”
Maguire said maintaining the status quo on payment limits “was not an option. We need a reasonable alternative to more draconian proposals.”
The House passed a bill July 27, with 19 Republicans in support. The Senate suffered through many delays and multiple plans before passing a bill last fall, 79 to 14.
As the conference committee hammers out a compromise, Maguire said, they have to look at several areas of disagreement.
“First they have to establish a budget baseline and reconcile the House versus the Senate revenue packages. They also have to consider savings through adjustments in timing of payments and allocations between programs.”
Other decisions include:
• Payment limitations — how much reform?
• Revenue plan options.
• Permanent disaster program.
• Specialty crop funding.
• Livestock country of origin labeling and packer ownership.
Maguire said cotton faces several challenges through 2008 and beyond. Chief among those is the economy. Elections and resulting changes in leadership positions will affect agriculture. China and India’s effect on world commodity markets will also affect U.S. cotton. Other challenges include the value of the dollar, rising input costs, renewable fuels competition for acres and the resulting effect on infrastructure and rural economies, resolution of the Brazil cotton case, progress of DOHA, and Canada’s challenge to all U.S. programs.
Maguire said informal discussion have begun with full conference hearing still “a few weeks away.”