In negotiations for crafting the 2012 farm bill, Gary Adams says, “there is one overriding theme — budget, budget, budget.

 “This farm bill is going to be one where the budget will dictate policy,” the National Cotton Council vice president for economics and policy analysis said at the annual joint meeting of the Mississippi Boll Weevil Management Corporation and the Mississippi Farm Bureau Federation’s Cotton Policy Committee.

“Our challenge is going to be to try and maintain the funding we have, and also to extend some of the programs in the 2008 farm bill that don’t have any baseline going forward. There are 38 programs in the 2008 law that are unfunded.

“Efforts to keep any of these programs would require that money be taken from other programs that have funding. So, not only are we confronted with trying to maintain agriculture’s baseline funding, but also with trying to pay for programs that currently don’t have any funding.”

There is “a lot of uncertainty about the outlook for both the 2012 farm bill and the cotton market,” Adams says.

“The 2011 and 2012 crops are still covered by the 2008 farm bill,” he notes, “so we hope that legislation will remain unchanged until we get those crops behind us and get the new farm bill in place for 2013 crops.

“There’s no guarantee, though, that there won’t be changes to the 2008 legislation. A lot of things can have an impact — most of them budget driven. Our efforts will certainly be directed toward trying to keep this legislation in place until the new farm bill takes effect.”

The overriding emphasis in debate on the Fiscal Year 2012 federal budget that was adopted by the House was that it include significant spending reductions, Adams says.

“Relative to what we could expect for spending under a continuation of the current programs, there would be roughly a 20 percent reduction for commodity programs and crop insurance.” Conservation, food/nutrition, and other programs would face sharp cuts also.

“We understand that, given the nation’s fiscal crisis, there will necessarily be cuts in funding, but our challenge is to try to make sure that the cuts are equitable,” Adams says. “If you look at agriculture’s share of the federal budget, some of these cuts are larger than what agriculture’s budget share actually is.”

On the Senate side, he notes, there hasn’t been much action on the budget process. Most of the activity in appropriations to this point has also been on the House side.

“This process caused a lot of concern because some of the committee’s agricultural appropriations amendments were approved by voice vote. They were later stricken when they went to the floor, but some were reintroduced in floor debate. Fortunately, most of the amendments were defeated, but it may be a sign of things to come that they talked about cuts to the cotton program, stricter means tests for determining eligibility for farm programs in general, and other changes.”

Rep. Jeff Flake of Arizona has been a long-time opponent of farm programs, Adams says, “and we don’t expect him to give up on that, so the actions in the Appropriations Committee may have set the tone for the kind of challenges we’re going to face as we move forward.”

Impact of debt limit on spending

The U.S. debt limit will be reached sometime in early August, Adams notes, and “we anticipate that the Congress will broker some kind of agreement with the group headed by Vice President Joe Biden. But any agreement to raise the debt limit likely will be coupled with spending cuts and cuts to agricultural programs.

“This could add more short term pressure if they need to move quickly to enact some kind of measure to increase the debt limit.”

Current spending on agriculture programs is fairly small, Adams points out.

“With commodity prices as high as they are, the government isn’t spending any money on countercyclical programs or the marketing loan. The biggest thing from the standpoint of spending on commodity programs is direct payments. I think we need to be prepared for direct payments to be the focus of a lot of attention as we go forward with the farm bill debate.”

There is going to be a lot of discussion, Adams says, as to whether farm programs and supports are equitable — not just across commodities, but across programs as well.

“Debate about reform of payment limits and eligibility, which we saw in the appropriations process, is likely to continue. Congress will give some scrutiny to whether there is duplication and overlap between programs such as SURE, ACRE, and others, and attempt to minimize those overlaps. And there will be a careful examination of alternatives that may be available for some of these programs.”

The plan for the new farm bill, he says, is for 2011 to be mostly for hearings and 2012 to be for writing the legislation.

“Hearings are under way now by both the House and Senate. The House is reviewing various parts of the 2008 legislation. The Senate has announced some field hearings. Mostly, they’re just trying to lay the groundwork for 2012, which is when the heavy lifting will take place in crafting the new legislation.”

The debt limit agreement and potential changes or cuts to the 2008 farm bill could alter that timetable.

“We expect that the next year and a half will be very busy, particularly through the next election cycle,” Adams says, “and we will continue to need the support of everyone in agriculture.”

Recently, he says, in the appropriations debate in the House, “NCC members stepped up and made calls to their representatives to let them know how important it was that they fight amendments that would’ve done a lot of damage to the cotton program.

“This kind of action may be required several times as we move forward with this process of trying to preserve a strong safety net for agriculture.”