House Agriculture Committee members were expected to consider two versions of the 2007 farm bill when they held a mark-up session for the new law that is expected to guide farm policy for the next five years.
Chairman Collin Peterson said the first version would be a bill that would deal with Congress’ Pay-Go requirements; that is, any increases in farm program spending in the new law will have to be offset with increased revenue or cuts in expenditures.
The second would rely on the $20 billion reserve fund that was created by the House in its fiscal 2008 budget resolution for increased spending. The second bill would take effect only if Congress was able to use the reserve fund at a later date, according to the Minnesota Democrat.
Peterson’s proposal, which was scheduled to be taken up during committee meetings on Capitol Hill July 17-19, has drawn the support of major farm organizations, such as the American Farm Bureau Federation and the USA Rice Federation and U.S. Rice Producers Association — and sharp criticism from environmental groups.
“This is where I’ve been all along,” Peterson said. “We need a bill that continues the strengths of the current programs because of the budget situation we find ourselves in.”
Farm Bureau President Bob Stallman said the Peterson proposal or chairman’s mark provides a strong safety net for producers while providing funding for critical conservation, rural development, nutrition and energy programs.
“Farm Bureau, like Congress, must balance the interests of all sectors of American agriculture,” he said. “Farm Bureau is cognizant of that fact, and it thinks the chairman’s mark represents the largest measure of fairness to various interests represented in the bill.”
The proposal, which the AFBF’s board of directors has voted to support, maintains baseline funding for both the commodity and conservation titles, reauthorizing each of the three safety net components (direct payments, counter-cyclical payments and loan payments) and increasing funding for conservation programs like the Environmental Quality Incentives Program.
When Congress passed the 2002 law, the federal government was coming off record expenditures for farm programs because of low commodity prices and yield-reducing weather patterns.
Since then, the increasing demand for ethanol and biodiesel have pushed corn and soybean prices sharply higher, reducing government outlays for counter-cyclical payments and loan deficiency payments for those crops and for wheat.
Last year, USDA made $17 billion in such payments, a decrease of more than $10 billion from the 2000 fiscal year, and is projected to reduce annual outlays for commodity programs even further over the life of the new farm bill.
The projected decline has created some problems for farm-state congressmen, reducing the baseline for farm program spending by $62 billion over the next 10 years, according to calculations by the Congressional Budget Office.
Peterson and other lawmakers have said the baseline reductions mean Congress should continue the current programs, extending the commodity title of the farm bill for five years. Other government officials and Washington ag policy wonks have disagreed, calling for an overhaul of the farm bill.
Agriculture Secretary Mike Johanns has issued a number of suggestions for the new farm bill, including initiating a revenue-based counter-cyclical program that would compensate farmers when yields and prices fall and a new adjusted gross income limit or means test for farmers receiving farm program payments. The General Farm Commodities Subcommittee rejected those.
Reps. Ron Kind, D-Wis., and Jeff Flake, R-Ariz., meanwhile, have introduced legislation that would do away with much of the current commodity title and replace it with savings accounts growers could use to cover losses when crop prices or yields are down.
Although the House General Farm Commodities Subcommittee voted not to include the Kind-Flake legislation in the new farm bill, Kind is expected to introduce the proposal as an amendment when the House ag committee reports its farm bill on the House floor.
The first Peterson bill does include a number of proposals aimed at making U.S. cotton and the U.S. textile industry more competitive in world markets. The National Cotton Council and other cotton interest groups helped draft the proposals.
“When it comes to policies impacting cotton, protecting the safety net provisions contained in the current commodity title is of primary importance,” says Plains Cotton Growers Executive Vice President Steve Verett.
Verett said the General Farm Commodities Subcommittee’s unanimous vote to extend the provisions of the 2002 farm bill was a strong signal to farm bill opponents in Congress and the Bush administration that U.S. agriculture strongly supports the provisions of current farm law.
“The issues driving this debate are largely centered around the budget and there not being enough guaranteed money available to do all the things we would want to extend and improve on the current program,” concludes Verett.
But organizations such as American Farmland Trust have issued statements highly critical of the Peterson approach, saying it would “extend the outdated, broken system of the past.”
“The House ag committee proposal is moving policy in the wrong direction and making bad policy worse.” said Ralph Grossi, president of AFT and a third generation farmer. “We must create policies that provide producers with a safety net while also ensuring that farm and food policy keeps current with a changing world.”
AFT and other groups contend large numbers of producers were left out of the safety net system in the 2002 farm bill and received little or no protection in times of need.
“Farming is a risky business and the government should provide a safety net and tools to help producers manage risk — but extending the existing counter cyclical programs will not do that,” Grossi said. “The current system in which Congress sets support prices will encourage overproduction of certain crops, distort the marketplace and continue to leave many farmers unprotected when they face declines in yield.”
Instead of following this “disastrous” path, the House should follow the lead of USDA, American Farm Bureau Federation, the National Corn Growers Association and American Farmland Trust who have called for new safety net programs based on revenue protection, he said.